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Doing Business in Another State: What You Need to Know
If you find it time to begin expanding your business beyond the borders of your home state, we have some information that can help you along the way. As your business continues to grow, your customer base will parallel that growth and allow you to expand in numerous ways. If you're selling your product or service online, then you certainly already have customers in other states and areas of the country. Setting up a physical location can propel your business forward in an exciting direction. Before you jump the boarder and expand your territory, there are a few aspects of your business you must evaluate.
First (and most importantly), you need to register your business in the state where you conduct most of your businesses activity. If your business has already expanded with outposts in other states, you will likely be required to attain a certificate of authority for a foreign business in those other states. This is also known as Qualifying to do business in a foreign or other state.
Business activity isn't limited to having one physical location, however. Business activity also envelops having employees and even advertising campaigns based in a state beyond your present locale or home state. Every state has separate regulations, so when you begin to plan your expansion check each states registration office or Secretary of State Office for their specific requirements to ensure your business operation is in compliance.
If registration of your business is not necessary, but you find yourself needing a certificate of authority, you will need to provide appropriate business documentation, pay a filing fee and find a registered agent for your business. The registered agent can be one of three people; an employee, business partner or an authorized third party who will receive legal documents on your behalf. This registered agent must also reside in the particular state where you are filing for a certificate of authority.
If your business maneuvers happen irregularly and your business in alternate states is happening via your online space, your business activity may be eligible for an exemption (this will need to be verified with the state's registration office). It is important to note that if you fail to file the correct paperwork and pay the appropriate fees, your business could be liable for a corrective action by the state, including possible penalty fees.
Wherever your business is registered or incorporated, you pay taxes on your business income in that state because that is where your operations are generating the most revenue. In most cases, that is your home state. Your home state may require you to report out-of-state income if you're performing business in other states. Your business will also be taxed in the states where you're conducting business with respect to a specific project inside a state that remains outside of your business's primary base of operations. It is important to report to the correct state department to avoid any further confusion. Consult with a tax professional to determine your exact tax liabilities.
If you intend to follow the correct regulations and set your business on a successful road for expansion, consulting with experts like attorneys and tax professionals is recommended. A service like The Company Corporation can help you in the qualifying or registration process by gathering paperwork, researching each state's registration costs, submitting your payments and signed paperwork and delivering the final evidence of registration to make all things run smoothly.
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