How to get Foreign Qualification in Louisiana

Do you own a limited liability company (LLC) created in a state other than Louisiana, but you want to expand your business to the Bayou State? If so, you’ll need to qualify your foreign LLC in order to transact business in Louisiana.

What is a foreign qualification and how do foreign LLCs function within the state of Louisiana? In this guide, we’ll answer these questions and more.

What Is a Foreign Qualification?

A foreign qualification enables your limited liability company to do business in the state of Louisiana. 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 Louisiana 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. However, Louisiana state law does not explicitly define what qualifies as “doing business in the state.”

What Qualifies as ‘Doing Business’ in Louisiana

There is no set definition of “doing business” in Louisiana. Businesses are evaluated on a case-by-case basis. However, the following activities may constitute “doing business” in the state of Louisiana:

• Having a commercial domicile in the state
• Having one or more individuals performing services in the state
• Directing activities at Louisiana customers for the purpose of selling them goods or services
• Deriving income from, or attributable to, sources within this state

What Does NOT Qualify as ‘Doing Business’ in Louisiana

The state of Louisiana does list some activities that do not qualify as “doing business,” and therefore do not require a Certificate of Authority in the state. According to Louisiana state law, you do not need to qualify a foreign LLC to pursue the following activities:

• “Maintaining or defending any action or suit, or any administrative or arbitration proceeding, or effecting the settlement thereof or the settlement of claims or disputes;
• Holding meetings of its directors or shareholders, or carrying on other activities concerning its internal affairs;
• Maintaining bank accounts;
• Maintaining offices or agencies for the transfer, exchange and registration of its securities, or appointing and maintaining trustees or depositaries with relation to its securities;
• Soliciting or procuring orders, whether by mail or through employees or agents or otherwise, if such orders require acceptance outside this State before becoming binding contracts, including all preliminary incidents thereto;
• Creating evidences of debt, mortgages or liens;
• Securing or collecting debts or enforcing any rights in property securing the same;
• Transacting any business in interstate or foreign commerce;
• Conducting an isolated transaction completed within a period of thirty days, and not in the course of repeated transactions of like nature;
• Acquiring and disposing of property or a property interest, not as a part of any regular business activity.”

How to Get Foreign Qualification in Louisiana

If you want to foreign qualify your LLC in Louisiana, you’ll need to file an Application for Authority to Transact Business in Louisiana with the Commercial Division of the Secretary of State’s office. The information needed to obtain the Certificate of Authority includes:

• Company name
• State of formation
• Date of formation
• Period of duration
• Principal office address in formation state
• Principal office address in Louisiana
• Name and address of your Louisiana registered agent
• Nature of business
• Names and addresses of members and managers
• Certificate of Existence or Good Standing (this must be obtained from the proper authorities in the formation state and dated within 90 days of your application)
• Signature of applicant and notary public

Filing Fee: $150, with checks made payable to the “Secretary of State.”

What Is the Penalty for Not Getting Foreign Qualification in Louisiana?

There are two major penalties for failing to qualify a foreign LLC in Louisiana. First, your business cannot file a lawsuit in a Louisiana court, though it can still defend against lawsuits. And second, your business will be liable for all fees and taxes that would have otherwise been paid as a registered entity, plus additional fines.

This means that your business could face heavy fines and be unable to pursue legal action against a third party, even in the case of an unfulfilled contract.

Should I Hire a Business Service Provider to File My Louisiana 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 Louisiana.

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.

Conclusion

The process for getting a foreign qualification is simple, but it does require notarization of your application and a Certificate of Existence form the state in which your business was formed. These can both take more time and require additional fees.

However, Louisiana’s rules and regulations regarding which LLCs need to foreign qualify are considerably looser than many states. Despite the accommodating rules, this is not a process that should be taken lightly, because the penalties for not qualifying a foreign LLC in Louisiana can be severe.

We hope this article managed to answer your questions about obtaining a Louisiana foreign qualification, and we wish you a prosperous business future!