How to get Foreign Qualification in Washington

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

What is a foreign qualification and how do foreign LLCs function within the state of Washington? 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 Washington. 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 Washington 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, Washington state law does provide examples of activities that qualify as “doing business” in lieu of a definition.

What Qualifies as ‘Doing Business’ in Washington

According to the Department of Revenue: “Out-of-state businesses must register with the Washington State Department of Revenue if:

• the business meets either retail sales tax registration threshold
• the business conducts activities that establish nexus sufficient for imposing B&O tax or the public utility tax
• the business collects retail sales, use tax, or other taxes administered by the Department
• the business collects Washington's use tax”

What Does NOT Qualify as ‘Doing Business’ in Washington

Meanwhile, the state of Washington also recognizes certain activities that do not qualify as “doing business.” The following activities are not considered to be “doing business” in Washington, and you do not need to qualify a foreign LLC to pursue them:

• “Maintaining, defending, mediating, arbitrating, or settling an action or proceeding, or settling claims or disputes;
• Carrying on any activity concerning its internal affairs, including holding meetings of its interest holders or governors;
• Maintaining accounts in financial institutions;
• Maintaining offices or agencies for the transfer, exchange, and registration of securities of the entity or maintaining trustees or depositories with respect to those securities;
• Selling through independent contractors;
• Soliciting or obtaining orders by any means if the orders require acceptance outside this state before they become binding contracts and where the contracts do not involve any local performance other than delivery and installation;
• Creating or acquiring indebtedness, mortgages, or security interests in property;
• Securing or collecting debts or enforcing mortgages or security interests in property securing the debts;
• Conducting an isolated transaction that is completed within thirty days and that is not in the course of repeated transactions of a like nature;
• Owning, without more, property;
• Doing business in interstate commerce; and
• Operating an approved branch campus of a foreign degree granting institution.”

How to Get Foreign Qualification in Washington

If you want to foreign qualify your LLC in Washington, you’ll need to file a Foreign Registration Statement with the Secretary of State’s office. You can file this form online or by mail (you can download the form here). In either case, you will need to provide the following information:

• Business name (and name reservation number, if applicable)
• State of jurisdiction
• Name, address, and signature of the registered agent
• Date of formation
• Nature of the business
• Certificate of Existence dated no more than 60 days prior to filing (must be obtained from the state of formation)
• Signature of the applicant

Filing Fee: $180.

What Is the Penalty for Not Getting Foreign Qualification in Washington?

There are two major penalties for failing to qualify a foreign LLC in Washington. First, your business will not be able to file a lawsuit against a third party in a Washington court. And second, the business will be liable for all processing fees and additional penalty fees to be determined by the state of Washington.

Should I Hire a Business Service Provider to File My Washington 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 Washington.

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 Washington isn’t particularly complicated compared to some other states. Most of the paperwork can be filed online very easily. However, you will need to obtain a Certificate of Existence from the business’ state of formation, which can delay the process by a few days or weeks. Still, this isn’t a process that should be overlooked or taken lightly, because the penalties for not qualifying a foreign LLC in Washington can be severe ― especially if the state decides to impose heavy penalty fees on your business.

We hope this article managed to answer your questions about obtaining a Washington foreign qualification, and we wish you a prosperous business future!