Do you own a limited liability company (LLC) created in a state other than Connecticut, but you want to expand your business to the The Constitution State? If so, you’ll need to qualify your foreign LLC in order to transact business in Connecticut.
What is a foreign qualification and how do foreign LLCs function within the state of Connecticut? In this guide, we’ll answer these questions and more.
Rocket Tip: If you’d rather hire an online service to handle this process for you, many of the best LLC services can handle it for you.
What Is a Foreign Qualification?
A foreign qualification enables your limited liability company to do business in the state of Connecticut. It doesn’t matter which state you originally formed your business in ― or in other words, the state your domestic LLC is located in ― as the qualification process to register a foreign LLC in Connecticut is the same regardless of where your domestic LLC is based.
The confusion surrounding foreign qualification usually centers on what it means to “do business” in a state outside of your primary state. This gets especially problematic considering some states don’t strictly define what it means to transact business in that state. Though Connecticut does not clearly define the term “doing business,” it has adopted the Revised Model Act, which outlines activities that do NOT qualify as “doing business” in the state.
What Qualifies as ‘Doing Business’ in Connecticut
The Connecticut Secretary of State does not provide a definition of “doing business,” instead relying on the statutes of the Revised Model Act to define business activities in the state. Whether or not a particular entity is considered to be doing business is determined on a case-by-case basis.
What Does NOT Qualify as ‘Doing Business’ in Connecticut
The Connecticut Business Corporation Act, in accordance with the Revised Model Act, provides an outline of certain activities that do not qualify as “doing business” in Connecticut. The following activities are exempt:
How to Get Foreign Qualification in Connecticut
To obtain Foreign Qualification, you must file a Foreign Registration Statement. This form will require the following information:
Filing Fee: $120. Checks must be made payable to “Secretary of the State” and can be mailed to the following address: Commercial Recording Division Connecticut Secretary of State
P.O. Box 150470
Hartford, CT 06115-0470
Commercial Recording Division Connecticut Secretary of State P.O. Box 150470 Hartford, CT 06115-0470
What Is the Penalty for Not Getting Foreign Qualification in Connecticut?
The sanctions for conducting business without first acquiring Foreign Qualification are very steep in Connecticut. The following penalties may apply:
Should I Hire a Business Service Provider to File My Connecticut Foreign Qualification?
If you don’t want to handle your foreign qualification on your own, you have options. Some entrepreneurs choose to hire a lawyer to prepare and file their Certificate of Authority, which can be a good option if you’re concerned about getting the job done right. However, attorney’s fees can be quite expensive.
The other option is to hire a business service provider like Incfile or ZenBusiness to register your foreign LLC with the state of Connecticut.
These companies can typically get your foreign qualification done for a fraction of the price of an attorney. This is our preferred route if you don’t want to go with the DIY option.
Getting Foreign Qualification in Connecticut is not overly complicated. It does not take a lot of paperwork and the fees are reasonable. Wait times are also minimal, with most businesses waiting just a few weeks for confirmation. However, considering the consequences of doing business as an unregistered foreign entity, this is not a step that you should take lightly. The penalties can be extremely expensive for unregistered businesses ― especially if your business has been operating in the state for a long time without Foreign Qualification.
We hope this article managed to answer your questions about obtaining a Connecticut foreign qualification, and we wish you a prosperous business future!