How to get Foreign Qualification in Mississippi

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

What is a foreign qualification and how do foreign LLCs function within the state of Mississippi? 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 Mississippi. 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 Mississippi 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. Mississippi state law does not provide a definition of “doing business” in the state.

What Qualifies as ‘Doing Business’ in Mississippi

Without a clear definition of “doing business,” foreign entities are evaluated on a case-by-case basis. However, in general, you’ll need to form a foreign LLC in Mississippi if your business pursues any of the following activities:

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

Additionally, Mississippi state law provides the following stipulation regarding foreign entities:

• “A foreign corporation which is general partner of any general or limited partnership, which partnership is transacting business in this state, is hereby declared to be transacting business in this state.”

What Does NOT Qualify as ‘Doing Business’ in Mississippi

Meanwhile, according to Mississippi state law, the following activities are not considered to be “doing business,” 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 corporation’s 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 this state before they become contracts;
• Creating or acquiring indebtedness, mortgages and security interests in real or personal property;
• Securing or collecting debts or enforcing mortgages and security interests in property securing the debts;
• Owning, without more, real or personal property;
• Conducting an isolated transaction that is completed within thirty (30) days and that is not one in the course of repeated transactions of a like nature;
• Transacting business in interstate commerce;
• Being a shareholder in a corporation or a foreign corporation that transacts business in this state;
• Being a limited partner of a limited partnership or foreign limited partnership that is transacting business in this state;
• Being a member or manager of a limited liability company or foreign limited liability company that is transacting business in this state.”

How to Get Foreign Qualification in Mississippi

If you want to foreign qualify your LLC in Mississippi, you’ll need to file an Application for Registration on the Secretary of State’s website. The information required in the Certificate of Authority includes:

• Your company’s name
• The state where the domestic LLC is located
• Mailing address of the domestic LLC
• Name and address of your Mississippi registered agent
• Name and address of the LLC manager
• Certificate of existence (obtained from your business’ state of formation)
• Signatures of LLC manager and registered agent

Filing Fee: $250

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

If your company conducts business without obtaining a Certificate of Authority, your business will not be able to bring a lawsuit against a third party in a Mississippi court. However, you can still defend against lawsuits. While many states institute fines and penalty fees for operating as an unregistered foreign entity, Mississippi does not. Nonetheless, this means that individuals and businesses could fail to honor contracts with your business, and you wouldn’t be able to do anything about it legally.

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

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 in the state of Mississippi isn’t particularly complicated compared to some other states. In addition, Mississippi’s rules and regulations regarding which LLCs need to foreign qualify are considerably looser than many states. Still, this isn’t a process that can be taken lightly, because the penalty for not qualifying a foreign LLC in Mississippi can be severe ― especially if someone you do business with doesn’t live up to their end of a contract and you’re unable to sue them.

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