How to get Foreign Qualification in New Jersey

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

What is a foreign qualification and how do foreign LLCs function within the state of New Jersey? 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 New Jersey. 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 New Jersey 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. New Jersey is a state that does not define “doing business.”

What Qualifies as ‘Doing Business’ in New Jersey

New Jersey does not define “doing business” in the state, so business activities are evaluated on a case-by-case basis to see if they qualify. However, in general, you’ll need to form a foreign LLC in New Jersey if your business pursues any of the following activities in this state:

• Having a commercial domicile in the state
• Having one or more individuals performing services in the state
• Directing activities at New Jersey 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 New Jersey

Meanwhile, according to New Jersey 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 an action or proceeding;
• Carrying on any activity concerning its internal affairs, including holding meetings of its members or managers;
• Maintaining accounts in financial institutions;
• Maintaining offices or agencies for the transfer, exchange, and registration of the company'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 electronic means or through employees or agents or otherwise, if the orders require acceptance outside this State before they become contracts;
• Creating or acquiring indebtedness, mortgages, or security interests in real or personal property;
• Securing or collecting debts or enforcing mortgages or other security interests in property securing the debts and holding, protecting, or maintaining property so acquired;
• Conducting an isolated transaction that is completed within 30 days and is not in the course of similar transactions; and
• Transacting business in interstate commerce.
  • For purposes of this section, the ownership in this State of income-producing real property or tangible personal property, other than property excluded under subsection a. of this section, constitutes transacting business in this State.
  • This section does not apply in determining the contacts or activities that may subject a foreign limited liability company to service of process, taxation, or regulation under law of this State other than this act.”

How to Get Foreign Qualification in New Jersey

If you want to foreign qualify your LLC in New Jersey, you’ll need to file a Business Registration Application with the New Jersey Department of Treasury. This is the same form that must be filed by all business entities (both domestic and foreign) in the state of New Jersey. This application will require general information about your business, formation state, registered agent, and LLC members.

Filing Fee: There is no fee to file this form, however there may be a special fee associated with your particular business type. If fees are required for your business, you can make the checks payable to the “State of New Jersey - LMF.”

What Is the Penalty for Not Getting Foreign Qualification in New Jersey?

There is one major penalty for failing to qualify a foreign LLC in New Jersey. You will not be able to file a lawsuit against a third party in the state of New Jersey without a Certificate of Authority. 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 New Jersey 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 New Jersey.

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 New Jersey is not too complicated, although the form does require more information than many states. In addition, New Jersey’s rules and regulations regarding which LLCs need to foreign qualify are considerably looser than many states. Still, this isn’t a process that should be overlooked or taken lightly, because the penalties for not qualifying a foreign LLC in New Jersey 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 New Jersey foreign qualification, and we wish you a prosperous business future!