Before we jump into what a Foreign LLC is, let’s make sure you’re familiar with a domestic LLC. A domestic LLC refers to the state the LLC was initially formed in. For example, Chris has a T-shirt business that he started in Florida. He completed his initial LLC formation documents on the Florida Secretary of State’s website. The Florida LLC would be considered a domestic LLC because it was started and formed in the state that it operates in.
Chris’ business is skyrocketing and after three years of running his business in Florida, Chris considers opening up another location in Texas. If he were to create a storefront in Texas, he wouldn’t have to start a completely new LLC. He could apply for a Texas Foreign LLC to operate in Texas. When an LLC expands beyond state lines, it is considered “foreign” by all states except the one it was founded in. (So, if you were thinking foreign LLC meant out of the country, it only means out of its initial state of formation.)
Depending on the type of business you are conducting, you may or may not need to set up a foreign LLC when transacting in business in another state. A Foreign LLC is usually formed to expand one's business operations or to open an additional retail or brick-and-mortar location in a new state.
Failure to set up or register your LLC appropriately can result in financial penalties and voiding of important legal contracts.
Stay tuned for more information on when a Foreign LLC is required or recommended.
Note: All LLCs (domestic and foreign) as well as other business entities require a registered agent prior to business formation.
Strategic Training & Consulting, LLC provides Texas Registered Agent Services.