Do you own a limited liability company (LLC) created in a state other than Virginia, but you want to expand your business to the Mother of States? If so, you’ll need to qualify your foreign LLC in order to transact business in Virginia.
What is a foreign qualification and how do foreign LLCs function within the state of Virginia? 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 Virginia. 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 Virginia 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. Virginia state law does not define “doing business” in the state.
What Qualifies as ‘Doing Business’ in Virginia
While Virginia does not provide a definition, there are a few activities that usually qualify as “doing business.” In general, you’ll need to form a foreign LLC in Virginia if your business pursues any of the following activities in this state:
What Does NOT Qualify as ‘Doing Business’ in Virginia
Meanwhile, according to Virginia 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 Virginia
If you want to foreign qualify your LLC in Virginia, you’ll need to file an Application for a Certificate of Registration to Transact Business with the Virginia State Corporation Commission. Additionally, you will need to provide a certified copy of your business’ articles of organization. The registration form will require the following information:
Filing Fee: $100.
What Is the Penalty for Not Getting Foreign Qualification in Virginia?
There are two major penalties for failing to qualify a foreign LLC in Virginia. First, your business will be unable to file a lawsuit against a third party in a Virginia court. And second, every LLC member who conducted business in Virginia without a Certificate of Authority will be liable for a fee ranging from $500 to $5,000.
Should I Hire a Business Service Provider to File My Virginia 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 Virginia.
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 Virginia isn’t particularly complicated compared to some other states. In addition, Virginia’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 Virginia can be severe ― especially if your business has multiple members who must pay a hefty fine.
We hope this article managed to answer your questions about obtaining a Virginia foreign qualification, and we wish you a prosperous business future!