Learn how to qualify your LLC to conduct business in Texas.
If you own a company that was founded in a state other than Texas, you must qualify or register it in Texas in order to conduct business there. The requirements for qualifying your international (non-Texas) limited liability corporation (LLC) to conduct business in Texas are summarized here.
Texas, unlike other states, does not have particular regulations for registering international LLCs. Instead, Texas has a set of statutes that govern foreign company registration in general. These companies are referred to as “foreign entities” under Texas law.
What exactly is a Foreign LLC?
If your LLC is founded in another state, it is referred to as a foreign LLC in Texas. In other words, being foreign does not imply being from another nation. Instead, it signifies that your company was formed under the laws of another state. A domestic LLC, on the other hand, is one that is created in the state in which it operates. This is a prevalent phrase in the United States. An LLC founded in Indiana, for example, is a foreign LLC in Illinois.
Texas Business Transactions
If you are “transacting business” in Texas, you must register your foreign LLC with the state of Texas, according to Texas foreign entity requirements. What exactly does this mean? Well, Texas law, like other states’, does not define the word “transacting business” in respect to overseas registrations.
State regulations determining when foreign enterprises must collect state sales tax in their state, on the other hand, give some advice on the subject. To be obligated to collect state sales tax on sales to citizens of a state, a firm must have a physical presence in, or nexus with, that state. In general, physical presence and nexus are synonymous and refer to:
a storage facility in the state
A shop in the state, an office in the state, or a sales representative in the state are all examples of state-based businesses.
Certain exclusions may apply, and the regulations might become more convoluted in situations such as Internet sales. However, if you have an office, a shop, a warehouse, or workers in another state, you must register your LLC as a foreign corporation in that state.
Some Activities Are Exempt
Texas legislation for foreign enterprises, like other states, stipulates specific acts that do not constitute conducting business in the state. Among the objects mentioned are:
defending or settling a lawsuit dealing with internal business affairs such as holding member or manager meetings having a bank account in the state handling your company’s own securities voting the interest of an entity your LLC has acquired selling through independent contractors creating, as borrower or lender, or acquiring indebtedness or a mortgage or other security interest in real or persona
Check Section 9.251 of the Texas Business Organizations Code for a complete legal definition of each of the components. The procedures governing the acquisition and collection of debts, in particular, are quite complex. The legislation states that the above list is not exhaustive. In other words, actions other than those specified above may also be exempt.
If your LLC’s only operation in Texas is one or more of the activities mentioned above, you should not be required to register with the state.
Registration Application
You must submit an Application for Registration of a Foreign Limited Liability Company with the Texas Secretary of State to register your firm in Texas (SOS). The application form may be downloaded on the SOS website.
To complete the application, you must give the same information that you would provide to register an LLC in your home state. More precisely, for a Texas registration application, you must provide:
If necessary, the full legal name of your LLC as stated in its formational document (usually the articles of organization), as well as the assumed name under which your LLC will operate in Texas (an assumed name is required if your LLC’s original name or something very similar is already in use by another Texas registered business, or the original name does not meet the state’s LLC naming requirements because it lacks the words “limited liability company,” “limited company,” or an abbreviation of the words “limited liability company,”
your LLC’s federal employment identification number (EIN), the state in which it was created, and the date it was formed
a statement at the time of filing that you certify that your LLC exists as a valid LLC under the laws of the state where it was formed a statement of the purpose your LLC will pursue in Texas and a statement that the LLC is authorized to pursue such purposes under the laws of the state where it was formed the date your LLC first transacted, or will transact, business in Texas
the street and postal location of your LLC’s primary office
a statement that your LLC agrees to have the Texas Secretary of State receive service of process (legal filings) in accordance with Section 5.251 of the Business Organizations Code (covering situations where you do not have a registered agent, your registered agent cannot be found, or your LLC’s registration has been revoked).
the name and address of at least one “governing person” for your LLC (often members or managers), as well as an approved signature.
If you need to use an assumed name in Texas, you must submit an assumed name certificate (Form 503) and follow the state’s assumed name laws.
The application must be submitted in triplicate. The application cost is $750.
What Happens If You Do Not Sign Up?
If your LLC operates in Texas without being registered, it will be unable to file a lawsuit in any of the state’s courts. Furthermore, the LLC will face a civil penalty equivalent to all fees and taxes it should have paid if it had been registered, plus extra fines, interest, and late filing costs. However, not being registered does not render your LLC’s contracts null and void or bar your LLC from defending a lawsuit in Texas. Furthermore, a member or management of an LLC is not accountable for the debts, obligations, or liabilities of the LLC just because the organization conducts business in Texas without being registered.
For further information, see the Secretary of State’s two foreign entity websites.
Establishing a Foreign Corporation in Texas
The regulations and standards for international qualifying in Texas are generally the same whether your company is structured as a corporation or an LLC. For paperwork, information, and filing requirements for registering a foreign company in Texas, see the Texas Secretary of State’s website.