How to get Foreign Qualification in Massachusetts

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

What is a foreign qualification and how do foreign LLCs function within the state of Massachusetts? 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 Massachusetts. 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 Massachusetts 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, Massachusetts state law does define exactly what qualifies as “doing business” in the state.

What Qualifies as ‘Doing Business’ in Massachusetts

According to Massachusetts state law, the following activities qualify as “doing business” in the state:

• “The ownership or leasing of real estate in the commonwealth;
• Engaging in the construction, alteration or repair of any structure, railway or road; or
• Engaging in any other activity requiring the performance of labor.”

What Does NOT Qualify as ‘Doing Business’ in Massachusetts

Meanwhile, the following activities are not considered to be “doing business” in Massachusetts, and you do not need to qualify a foreign LLC to pursue them:

• “Maintaining, defending, or settling any proceeding;
• Holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs;
• Maintaining bank accounts;
• Maintaining offices or agencies for the transfer, exchange, and registration of the corporations own securities or maintaining trustees or depositories with respect to those securities;
• Selling through independent contractors;
• Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside the commonwealth before they become contracts;
• Conducting an isolated transaction that is not one in the course of repeated transactions of a like nature;
• Transacting business in interstate commerce; or
• Performing activities subject to regulation under chapter 167 (banks) or chapter 175 (insurance companies), if the foreign corporation has complied with the applicable chapter.”

How to Get Foreign Qualification in Massachusetts

According to the Massachusetts Secretary of State, “a foreign corporation must file a certificate of registration within 10 days after it starts to transact business in the commonwealth. A certificate of legal existence or good standing issued by an authorized officer or agency in the jurisdiction of organization shall accompany the certificate of registration.” This form can be printed off and submitted to the Secretary of State’s office. It will require the following information:

• Federal identification number
• Name of business
• State or jurisdiction of formation
• Date of formation
• Names and addresses of LLC members
• Address of the principal office (in the formation state and/or Massachusetts)
• Name and address of the registered agent
• Contact information
• Signatures of at least one authorized LLC member and the registered agent
• Certificate of Existence (obtained from your state of formation)

Filing Fee: $500, with the check made payable to the “Secretary of the Commonwealth.”

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

There are two major penalties for failing to qualify a foreign LLC in Massachusetts. First, your business will not be able to file lawsuits against a third party in a Massachusetts court. And second, your business could be liable for penalties of up to $500 per year.

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

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 foreign qualification in the state of Massachusetts isn’t too complicated, but it is significantly more expensive than most other states. However, the penalties for not registering as a foreign entity could potentially be much more expensive in the long-term. In short, this is not a process that any business can take lightly. The penalties for not qualifying a foreign LLC in Massachusetts can be severe in some cases ― especially if you have been doing business as an unregistered foreign entity for an extended period of time.

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