How to get Foreign Qualification in Wisconsin

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

What is a foreign qualification and how do foreign LLCs function within the state of Wisconsin? 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 Wisconsin. 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 Wisconsin 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. Wisconsin state law does not define “doing business” in the state.

What Qualifies as ‘Doing Business’ in Wisconsin

While there is no set definition of “doing business” in the state, you will generally need to form a foreign LLC in Wisconsin if your business pursues any of the following activities:

• Having a commercial domicile in the state
• Having one or more individuals performing services in the state
• Directing activities at Wisconsin customers for the purpose of selling them goods or services
• Deriving income from, or attributable to, sources within this state

What Does NOT Qualify as ‘Doing Business’ in Wisconsin

Meanwhile, according to Wisconsin 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:

• “Maintaining, defending or settling any civil, criminal, administrative or investigatory proceeding.
• Holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs.
• Maintaining bank accounts.
• Maintaining offices or agencies for the transfer, exchange and registration of the foreign corporation’s securities or maintaining trustees or depositaries with respect to those securities.
• Selling through independent contractors.
• Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts.
• Lending money or creating or acquiring indebtedness, mortgages and security interests in property.
• Securing or collecting debts or enforcing mortgages and security interests in property securing the debts.
• Owning, without more, property.
• Conducting an isolated transaction that is completed within 30 days and that is not one in the course of repeated transactions of a like nature.
• Transacting business in interstate commerce.”

How to Get Foreign Qualification in Wisconsin

If you want to foreign qualify your LLC in Wisconsin, you’ll need to file an Application for Certificate of Registration with the Wisconsin Department of Financial Institutions. This can be filed online or by mail. In either case, you can find all the necessary information on the WDFI website. This application will require general information about your business including the business name, address, registered agent, and contact information.

Filing Fee: $100.

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

There are two major penalties for failing to qualify a foreign LLC in Wisconsin. First, your business will not be able to file a lawsuit in a Wisconsin court. And second, your business will be liable for all fees that would have otherwise been paid, in addition to penalty fees of up to $5,000.

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

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 foreign qualification in the state of Wisconsin isn’t particularly complicated. You can file the paperwork online or by mail, and it is considerably less expensive to do than in many other states. In addition, Wisconsin’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 Wisconsin can be severe ― especially if your business is hit with heavy penalty fees.

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