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:
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:
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.
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!