Domestic LLCs vs. Foreign LLCs (Main Differences)

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For those that have just started the LLC formation journey, you may have heard the terms domestic and foreign LLCs floating about. When hearing the term ‘foreign’, you may think this is an LLC formed outside of the US, however this is not the case. A foreign LLC is an LLC that has still been created within the United States.

What is a Foreign LLC?

The difference between these two terms is that a foreign LLC is one that has been formed in one state, but has registered to do business in another state. For example, if you have filled out your Articles of Organization in Florida, but want to also conduct business in California, then you will also have register your business as a foreign LLC in the state of California. So, in this case, the term ‘foreign’ means that the LLC is foreign to the state of California.


What’s a Domestic LLC?

A domestic LLC on the other hand is one that was not only formed in its home state, but also does business in its home state. This means that the business is also subject to the laws and taxations of the state in which it was formed. If you form your LLC in one state, and also conduct your business in that state, then you have a domestic LLC.

If they want to do business in another state, then they would have to register to do this. If you do end up doing business in another state, you will be illegally transacting business.

3 Steps on How to Create a Foreign LLC

To file a foreign LLC in another state, you will have to fill out an Application for Certificate of Authority for Foreign Liability Company for the additional state that you are branching out to. The exact requirements for forming a foreign LLC in another state will vary, and depends on the state’s specific laws.

Step 1: Biz Name Search

The usual process includes conducting a business name search to see if your business name is also in use in the new state. If it is already in use, then you will need to use a fictitious name in its place. You will then need to assign your business a registered agent that is based in the new state. They will file and manage all the necessary documentation in that state.


Step 2: Certificate of Good Standing

You will then need to get a Certificate of Good Standing from your home state to show that while you were just operating as a domestic LLC, you have met all the necessary requirements for that state, such as filing annual reports and paying taxes on time.


Step 3: LLC Foreign Qualification Form

Lastly, you will have to file your LLC Foreign Qualification form. This will ask you lots of questions about your business, such as the address where your domestic LLC is located, the details of your registered agent, the names of other business members, and various others.


When Should I Register a “Foreign” LLC/Corporation?

You will need to register your LLC as a foreign LLC in another state if you are ‘doing business’ in that state but live in another. The term ‘doing business’ varies from state to state, so you will have to look at the requirements for each individual state. If you are unsure if you need to register or not, you could reach out to an attorney who will give you advice.

In general, the term ‘doing business’ means that you would like a physical presence in that other state, and you may also want to have employees in that state, sell directly from the state, and do banking in that state etc.


Need Help Forming a Domestic or a Foreign LLC?

There are several ways you can go about forming a domestic or a foreign LLC. Some people prefer to save the money and go through the whole process themselves, while others save themselves the time and hassle and get an outside provider to do all the hard work for them. Although this may cost a little more, you can rest assured the process will be conducted right and efficiently.

There are many companies out there that can help you through the process of forming domestic and foreign LLCs, but two of the best are Northwest Registered Agent and Zenbusiness. Let’s take a look at the pros and cons of both.

#1: Northwest Registered Agent

Pros

  • One of the biggest pros of Northwest is its incredible customer service, which is one of the best in the business. The company has premium in house support, with team members being professionally trained as Corporate Guides. They will go above and beyond to answer any questions you may have.
  • With any LLC formation service, they also include a full year of registered agent service, which is a great perk.
  • They are very private and will not share or sell your information to third party companies.

Cons

  • Compared to other LLC formation services, the company are on the pricier side. Some people would argue that you get what you pay for, but there are other options that could save you around $185, so is not a good option if you are on a budget.
  • There are fewer reviews online than other competing companies.

Here’s a full review of Northwest.

starts at $35+

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Rating: 4.9/5
Review count: 4150+

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Form an LLC today with Nortwest. They have 98% customer satisfaction rating and over 4150+ verified reviews. They will include 1 year of free registered agent service!


#2: ZenBusiness

Pros

  • Zenbusiness is an extremely affordable LLC formation services, with their basic package costing just $49, while still providing everything you need to form a business.
  • As part of their worry free guarantee, which is included in the pro package, the company will take care of annual report filing and other ongoing maintenance.
  • They have great customer feedback, with literally thousands of positive reviews online.
  • Creating an LLC with Zenbusiness is very approachable, with minimal pushiness when it comes to ad ons. They do offer additional services, but these are advertised in a tasteful way.

Cons

  • Although the company is very affordable, it is not the cheapest LLC formation service out there.

Check out our full review of Zenbusiness here.

$49

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Rating: 4.8/5
Review count: 4000+

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Form an LLC today with ZenBusiness for only $49. They Have 98% customer satisfaction rating and over 4000+ verified reviews.


FAQs About Foreign & Domestic LLCs

If I have customers in another state, do I have to register as a foreign LLC?

This is where things can get a little confusing. If you are a domestic LLC but have customers that come from another state, you don’t have to create a foreign LLC.

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About the Author
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Founder & author

Ian Broderick is an avid author and owner of LLCGuys.com. He's been involved with the LLC formation field for over 4 years. On top of that, he has worked in several well-known LLC formation service providers. Now he decided to share his knowledge and advice with everybody. Since there are a lot of questions and concerns surrounding this field - his aim is to make LLCGuys a top-notch information provider in regards to LLC creation, service reviews and etc..

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