Do you own a limited liability company (LLC) created in a state other than Rhode Island, but you want to expand your business to the Ocean State? If so, you’ll need to qualify your foreign LLC in order to transact business in Rhode Island.
What is a foreign qualification and how do foreign LLCs function within the state of Rhode Island? 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 Rhode Island. 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 Rhode Island 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. Rhode Island state law does not define “doing business” in the state.
What Qualifies as ‘Doing Business’ in Rhode Island
While Rhode Island does not provide a definition of “doing business,” in general, you will need to form a foreign LLC in Rhode Island if your business pursues any of the following activities:
What Does NOT Qualify as ‘Doing Business’ in Rhode Island
Meanwhile, according to Rhode Island 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 Rhode Island
If you want to foreign qualify your LLC in Rhode Island, you’ll need to file an Application for Registration by a Limited Liability Company with the Secretary of State. This form requires the following information:
Filing Fee: $150, with the check made payable to the “Secretary of State.”
What Is the Penalty for Not Getting Foreign Qualification in Rhode Island?
If you fail to qualify a foreign LLC in Rhode Island, you will not be able to file a lawsuit against a third party in a Rhode Island 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 Rhode Island 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 Rhode Island.
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 Rhode Island isn’t particularly complicated compared to some other states. The form is simple and the process generally takes a few weeks. However, you will need to obtain a Certificate of Good Standing from the state in which your business was formed, which can lengthen the process. Still, this isn’t a process that should be overlooked or taken lightly, because the penalties for not qualifying a foreign LLC in Rhode Island 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 Rhode Island foreign qualification, and we wish you a prosperous business future!