Your business is growing. Opportunity is calling and it’s now time to expand your company’s presence and operations beyond your “home” state where you initially registered your business.
But before you can move forward with any plans to expand to new states, you’ll need to apply for your Certificate of Authority.
What Is a Certificate of Authority?
A Certificate of Authority is a certificate that allows you to legally conduct business outside the state where you initially filed your company — no matter if you're a limited liability company (LLC), C Corp, or nonprofit.
Also referred to as Foreign Qualification, a Certificate of Authority is important as it allows an LLC or corporation to conduct business “lawfully” outside the state and abide by compliance matters governed within each state. (Note: the word “foreign” as used here does not constitute markets outside the United States, but rather the states other than your home, or domestic, state that may have different rules and processes, as well as tax-related conditions.)
How Do I Know When I Need A Certificate of Authority?
If you are planning to conduct business in another state than the sate you formed your business in, you'll need a Certificate of Authority. This can include different types of business operations, including:
- Operating out of a physical location, such as a dedicated office space or store.
- Hiring employees from the state where you are applying for the Certificate of Authority.
- Maintaining a bank account in the state.
Without a Certificate of Authority, you will not be able to conduct business in other states. Whether it’s selling tangible goods or offering a service, a Certificate of Authority will be required for each state.
Applying for a Certificate of Authority
If you are ready to make deals, sign contracts, and open a store or office in a new state, you will need to submit your Certificate of Authority or Foreign Qualification application.
- First, you'll need to submit and fill out your application. The fee will vary, but you can expect to pay anywhere from $25 to several hundred dollars.
- Next, you'll need to submit documents that prove your business is in good standing, including, but not limited to a Certificate of Good Standing issued by the office of the Secretary of State.
- Finally, you can pay extra for expedited filing, or you can wait the standard one to two weeks for your application to be approved.
It’s also a good idea to speak to a lawyer or work with a Registered Agent as laws and requirements may vary from state to state. Any errors in the filing or missing documents will result in a rejected application and the need to reapply and pay another registration fee.
The Benefits of a Certificate of Authority
There are several benefits to filing for a Certificate of Authority, including:
- Being able to grow your company without having to incorporate as a new business.
- Being able to collect taxes on goods and services.
- Taking advantage of favorable tax breaks in specific states.
- Avoiding fines by conducting business "unlawfully" in another state.
Having a Certificate of Authority in multiple states is essential for an expanding business. It is also a true sign that you and your company are on the path toward success.
Get a Certificate of Authority With Incfile
Incfile can assist you when it comes to filing for your Certificate of Authority/Foreign Qualification, as well as acquiring your Certificate of Good Standing. Incfile has helped over 250,000 customers establish their businesses, file documents, and apply for their Certificate of Authority.
Use our Foreign Qualification service to guarantee that your documents and fillings are updated and renewed year after year, so your focus can stay on the growth and the success of your business.
Peter Mavrikis
Peter Mavrikis is an author and editor with over 25 years of experience in publishing. He has worked as the Editorial Director for Barron’s Educational Series, as well as Kaplan Test Prep, where he ran the test prep, foreign language, and study guide divisions. Peter has also written several books on history, exploration, science, and technology.
