Florida Foreign LLCs and the Foreign Qualification process
Owners of foreign limited liability companies (LLC) looking to expand into Florida may be able to do so without having to form a new local entity. Similar to other states, the Florida Revised LLC Act (“Act”) requires that foreign or out-of-state LLCs seeking to transact business in Florida to register and acquire a certificate of authority prior to operating in the state through a process known as “foreign qualification.”
This article provides a brief guide as to the required steps and conditions by which a foreign LLC may register to operate in Florida.
Transacting Business within Florida
First, it’s worth looking into the official definition of a Florida Foreign LLC. A Florida Foreign LLC is a company formed in another state (as opposed to another country) whose owners wish to operate and transact business within Florida.
While physical presence within the state (such as having an office or store) will likely warrant a foreign qualification application, the undertaking of “transacting business” in Florida is not clearly defined in the Act.
However, it does indicate certain activities that do not constitute “transacting business” within the state and, as such, do not require registration.
Examples of types of transactions that may not require a Foreign LLC to register in Florida include, but are not limited to, the following:
- Filing, defending, or settling a lawsuit;
- Owning real estate or personal property located in Florida that does not produce income (note: the statute makes a specific exception for an income-producing property);
- Opening and owning a Florida bank account;
- Obtaining orders from customers within Florida, so long as those orders require acceptance outside of Florida to become binding contracts;
- Operating through independent contractors;
- Holding manager or member meetings;
- Having managers or agencies for the transfer, exchange, and registration of the LLC’s own securities;
- Owning and/or controlling a subsidiary corporation or LLC incorporated in or transacting business in Florida;
- Acquiring indebtedness, mortgages, and security interests in real estate or personal property;
- Collecting on debts or enforcing mortgages;
- Transacting business in interstate commerce;
- One-off transactions that are completed within 30 days; and
- Being a limited partner in a limited partnership that is transacting business in Florida.
Steps to Registering a Foreign LLC to do business in Florida:
If it is determined that the Foreign LLC is transacting business in Florida and must go through the foreign qualification process, then the following four steps must be followed:
- Provide a Certificate of Existence/Good Standing from the originating state.
Florida law requires the Foreign LLC to provide a document issued by the originating state showing that the LLC is in good standing by meeting all state requirements and paying all outstanding fees.
This document is referred to as a Certificate of Existence or Good Standing and is used by the Division of Corporations when assessing the application.
- Confirm Foreign LLC meets Florida’s Registration Requirements
In Florida, registered LLCs must have a unique name and contain certain designations such as “LLC”. If the name of the Foreign LLC is already taken in Florida, it may be necessary to select a different name.
A registered agent will also have to be named, as well as, the name and contact information for the owner of the LLC or those responsible for the application. Each of these requirements must be met for the Foreign LLC as well.
Other information that may be required include: the original name of the Foreign LLC in the originating state, the originating state, the Foreign LLC’s tax identification number and all relevant mailing addresses.
- File the Application and Pay the Fee
When all relevant information is available, the owner of the Foreign LLC must file the application to transact business in Florida. This application, which can be found on Florida’s Division of Corporation’s website, must be signed by an individual with authority to act on the LLCs behalf and the registered agent. The mandatory fee is to be paid at this time.
- File yearly Annual Report to continue Registration
Like all Florida LLCs, registered Florida Foreign LLCs must file an annual report each year and pay the $138.75 fee. Failure to file the annual report may result in the dissolution of the Florida Foreign LLC.
Penalties for Not Registering a Foreign LLC
If an owner chooses not to register their Foreign LLC prior to operating within Florida, they may be subject to certain fines dependent on the length of time they were operating unregistered within the state. This penalty may be $500 to $1,000 for each unregistered year plus the current registration filing fees.
Failing to register also affects the Foreign LLC’s ability to file a lawsuit in a Florida court. Although, the company may defend against lawsuits.
It should be noted, however, that any contract entered into by the Foreign LLC remains valid despite it not being registered.
Any owner of a Foreign LLC who may be considering operating in Florida would be best served to register the entity and go through the foreign qualification process. Any potential time delays or costs incurred are far outweighed by the possible risk of penalties and the disadvantage of not registering.
To learn more about the foreign qualification process or to get assistance with registering a Foreign LLC in Florida, it’s always best to seek the counsel and guidance of an experienced attorney.