Understand How to Do Business Outside of your State

April 30, 2013

If your company or non-profit organization wants to conduct business in states other than the state where you have incorporated, then you might need to “qualify” to do business in those states.  But how do you know if you need to qualify?

Determining whether you need to qualify to do business in other states can be a complex and time-consuming task, and the rules can differ from state to state. Also, the consequences of making the wrong decision can be harsh, ranging from monetary penalties for a corporation to jail time for its officers and directors.

Over the years, service representatives at Corporation Service Company have received many queries from our clients regarding the rules and procedures of qualification. It became evident that there was a need for a resource with the relevant statutes, annotations, analyses and forms to help our clients better understand the process.

In response to those requests, we created the Guide to Doing Business Outside of your State: The CSC® 50-State Qualification Handbook to provide customers with the information they need to make the important decisions about qualifying in states where they plan to do business.

“There is a real need in the legal and corporate communities for a qualification resource,” says Jennifer Mailander, director of CSC®Publishing. “Qualifying to do business is vital to any corporation looking to expand its activities, and making the wrong decision could be a costly error. Business executives and their legal representatives need a reference that can help them navigate the process.”

The book begins with a discussion of the Model Business Corporation Act (MBCA), which serves as a template for most states’ laws governing foreign corporations’ business activities within their borders. It then provides an overview of those activities listed in the MBCA that are not subject to regulation, and those activities which will require a foreign corporation to register to do business. Both types of activities are illustrated with relevant case law, and are also summarized in an easy-to-use chart that lists by state the activities that do not constitute doing business. A second chart lists the consequences of failing to qualify by state.

We have also included the qualification statutes for the 50 states and the District of Columbia, complete with case annotations. New cases and annotations are added to the Qualification Handbook each year to ensure that readers are working with the most current information and case law available.

The easy-to-read chapter material, case illustrations and charts make the book an excellent resource for the non-attorney, while the annotated statutes make it equally valuable for the legal community. A companion CD-ROM provides the qualification forms for each state.

The 2013 Edition includes a number of important updates: There are new case illustrations in the chapter material, including recent cases that address the issue of which Internet activities require qualification, as well as new annotations in the statutory section. The chapter that discusses qualification for non-profit organizations has been updated to reflect changes in how different states handle qualification for these organizations; the charts have been updated to reflect statutory changes, and many forms have been updated or added to the companion CD ROM.