Do you own a limited liability company (LLC) created in a state other than Ohio, but you want to expand your business to the Buckeye State? If so, you’ll need to qualify your foreign LLC in order to transact business in Ohio.
What is a foreign qualification and how do foreign LLCs function within the state of Ohio? 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 Ohio. 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 Ohio 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, Ohio state law does not define exactly what is meant by “doing business” in the state.
What Qualifies as ‘Doing Business’ in Ohio
According to Ohio state law: “What constitutes transacting or doing business in Ohio within the purview of the Foreign Corporation Act is a fact question to be determined on the basis of all the facts in the particular case.” In other words, each business is unique and must be evaluated on a case-by-case basis to determine if it needs to obtain foreign qualification in Ohio. However, the law does provide two examples (though not a precise definition) that do qualify as “doing business” in in the state:
What Does NOT Qualify as ‘Doing Business’ in Ohio
Meanwhile, according to Ohio 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 Ohio
If you want to foreign qualify your LLC in Ohio, you’ll need to file the Registration of a Foreign Limited Liability Company form with the Secretary of State. This can be done by mail or online. The information required in this form includes:
Filing Fee: $99, with the check made payable to the “Secretary of State.”
What Is the Penalty for Not Getting Foreign Qualification in Ohio?
There is one major penalty for failing to qualify a foreign LLC in Ohio. If you transact business in Ohio without first registering the business with the Secretary of State, you will not be able to file a lawsuit against a third party in an Ohio court. 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 Ohio 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 Ohio.
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 Ohio isn’t particularly complicated compared to some other states. In fact, the forms do not require much information, and you can file your registration by mail or online. However, Ohio’s rules to determine which businesses must apply are more limiting than many other states. So, this isn’t a process that should be overlooked, because the penalties for not qualifying a foreign LLC in Ohio can be severe ― especially if someone 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 an Ohio foreign qualification, and we wish you a prosperous business future!