What’s the difference between a Foreign LLC and a Domestic LLC?

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When most people hear the word “Foreign LLC” they usually think this is an LLC formed outside of the United States. This is not the case. A Foreign LLC still refers to an entity created in the United States.

What is a Foreign LLC?

A Foreign LLC is an LLC that was formed in one state, but has registered (also referred to as “qualifying”) to do business in another state.

For example, if you form an LLC in Florida (by filing an Articles of Organization), but wish to expand your operations to Georgia, you need to register your Florida LLC as a Foreign LLC in Georgia.

This is accomplished by filing an Application for Certificate of Authority for Foreign Limited Liability Company (with the Georgia Secretary of State).

The term “foreign” simply means that the LLC is foreign to Georgia (since Georgia and Florida are different jurisdictions).

Does Foreign LLC mean it’s owned by a foreigner?

The term “Foreign LLC” doesn’t mean that the LLC is owned by a foreigner (non-US resident). It actually has nothing to do with who the owners of the LLC are. Again, it’s just to refer to an LLC that is doing business outside of its home state.

Although not an official term used by state governments, the IRS will often refer to an LLC owned by a non-US resident as a “foreign-owned LLC”.

What is a Domestic LLC?

A Domestic LLC is an LLC that was formed in its “home state” and it does business in its home state.

Unless the LLC registers to do business in another state, a Domestic LLC’s activities are confined to its home state.

For example, if you form an LLC in Florida (by filing an Articles of Organization), then you can only operate your business in Florida, since that’s the only state the LLC is qualified to do business in.

If you operate your Domestic LLC in another state without registering as a Foreign LLC this is known as illegally transacting business.

Do I have to register my LLC as a Foreign LLC in every state my customers are in?

Many readers often get confused and think they need to register their LLC in every state where they have customers, or in every state where they have sales tax nexus.

This is not the case.

Where to form your LLC is dictated by where you’re doing business. You can learn more about this here: what’s the best state to form an LLC.

Terms to help you differentiate a Foreign LLC from a Domestic LLC

The terms “register”, “qualify”, and “authority to transact business” are generally associated with the registration of a Foreign LLC.

On the other hand, the terms “form” or “create” are connected with the creation of a Domestic LLC.

Using the correct verbs can help you better understand Foreign LLCs vs Domestic LLCs. It’ll also be helpful if you’re calling your Secretary of State’s office or speaking with your accountant.

Hopefully that quick comparison helps you understand the difference between a Foreign LLC and a Domestic LLC.

The costs and requirements to register a Foreign LLC vary by state. For everyone’s convenience, we’ve created a table showing the fees and forms required by each state to qualify as a Foreign LLC. You can view the table on this page: Foreign LLC Fees by State.

Need help filing a Foreign LLC Registration?

If you need help registering your LLC in another state (called “foreign qualification”), we recommend using IncFile ($149 + state fee) or LegalZoom ($229 + state fee).

Matt Horwitz
Founder & Educator, LLC University®
Forming an LLC shouldn't be so complicated. Our step-by-step guide will make the process a breeze – and no complex legal jargon! LLC University® teaches people how to form an LLC for free in all 50 states. We hope you find our free guides and resources helpful in your business journey.
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Disclaimer: Nothing on this page shall be interpreted as legal or tax advice. Rules and regulations vary by location. They also change over time and are specific to your situation. Furthermore, this comment section is provided so people can share their thoughts and experience. Please consult a licensed professional if you have legal or tax questions.

14 Comments

  1. TOM CALGARO April 3, 2018

    Hi, I’m starting a new business that sells home buyer contact leads to various nationwide retail merchant vendors such as Home Depot and a nationwide insurance company. Since my company is merely the purveyor of leads would my LLC have to register as a Foreign LLC in other States? My LLC State will be Arizona…

    reply
    • Matt Horwitz April 8, 2018

      Hey Tom, no, likely not, unless you are “doing business” in those states. “Doing business” has much more to do with where you are operating from, not where you’re clients are. Hope that helps.

      reply
  2. Airon Veras May 27, 2018

    Hello,

    I’ am Airon Veras, I live in the Dominican Republic. I’m creating an online website to sell personalized items mainly in the USA. My supplier in the united states requires that I have a TAX ID or EIN, and to receive the credit cards payments I need to have a bank account in the USA.

    I know I can obtain EIN filling the SS-4 form and have a bank account with my passport but I wish to have an LLC to separate personal of business.

    What do you recommend me in this case?

    Thanks,

    reply
    • Matt Horwitz June 17, 2018

      Hi Airon, you are correct. You can get an EIN by filing SS-4 with the IRS (enter “Foreign” on line 7b) and then visiting the U.S. to open your bank account. You’ll do those after your LLC is approved though. Also, you’ll need to open a bank account in the state where you form an LLC. The U.S. doesn’t have any residency or citizenship requirements so you can form an LLC in any state. Once you determine the state where you want to form an LLC, we recommend hiring Northwest Registered Agent. They’ll serve as your LLC’s Registered Agent and they’ll also let you use their office address throughout your LLC filing. Then any mail that is sent to your LLC will be scanned by them and uploaded to your online dashboard. Hope that helps!

      reply
  3. Joe Davis June 27, 2018

    I’m forming an LLC for an online information-based business with a California-based partner. It makes sense to me (thanks to your excellent “best state” article) to form the LLC there. We intend to expand beyond CA, and so I understand the idea of registering in other states as a foreign LLC. It seems like we’ll need to do that in all 50 states, since I’d hate to turn a customer away because we can’t do business in that potential customer’s state. (OK, maybe we don’t need this on day one, but..) My question is whether an LLC is still the right business structure for this kind of scenario, or whether an S or C corporation might be more appropriate. I realize they are more paperwork, but 50 LLCs doesn’t seem like any fun either.
    Thanks in advance…
    – Joe

    reply
    • Matt Horwitz July 31, 2018

      Hey Joe, great question. “Doing business” is about where you’re operating from, not where your customers are located. So you don’t have to register your CA LLC in all states. The same would apply to a Corporation. An S-Corporation is not a legal entity like an LLC or Corporation, but rather, it’s a tax election with the IRS that “sits on top of” either an LLC or Corporation. More info here if you’re curious: LLC being taxed as S-Corp.

      reply
  4. Brian November 2, 2018

    Hi,
    I’m forming Domestic LLC in Texas and registered agent is in Texas and I will be presenting in Texas after forming LLC. Most of business activities will occur in Texas. I’m trying to sell monthly/yearly subscription based online IT(Cloud S/W) products and services which our product and service are on Amazon AWS Marketplace. The customers may from other states/countries through online to Amazon AWS Marketplace and look around our product & services and purchase subscription services through online. Should I file Foreign LLC in all those other states in addition to Texas ?

    Thanks a lot for your great articles and it helps a lot to me.
    Best Regards,
    Brian

    reply
    • Matt Horwitz November 22, 2018

      Hi Brian, no, you don’t have to register as a Foreign LLC in all the location where your customers are. It comes down to where you’re doing business (running the business from). From what you said, it sounds like that’s just Texas. Hope that helps.

      reply
  5. Summit December 24, 2018

    Matt – I have developed desktop based and web-based information product for businesses. The development/sale/marketing etc will be done from India. We will have no employees/offices in any US states as such (at least for time being).

    If I understand correctly, in that case, I can just form LLC in any state (and also get a registered agent) and sale across the US states? Anything else I should think about?

    reply
    • Matt Horwitz January 6, 2019

      Hey Summit, yes, you are correct. You can pick any state you’d like. We also recommend having a conversation with an account to check if you’ll have US filing requirements. If the LLC will have 1 owner, you’ll need to file Form 5472. Please see Form 5472 for foreign-owned single-member LLC. If the LLC will have 2 owners, you’ll need to file an informational Partnership 1065 return. Hope that helps.

      reply
  6. Bruce January 18, 2019

    I will have an Arizona llc but I will have real estate investments ( new manufactured homes installed) in az, nv, CA. Will I be required to file as a foreign llc if I’m based in az? Thank you.

    reply
    • Matt Horwitz January 22, 2019

      Hi Bruce, you’ll be transacting business in all those states. There’s many ways to structure your entity/entities. It’s best to have a conversation with a real estate attorney. Discuss one LLC registered as a foreign LLC in all other states (1 LLC owning all properties)… or a property-state LLC for each property… or a holding company LLC (say in Wyoming) that owns child LLCs in all the property states. Hope that helps.

      reply
  7. Tammy February 19, 2019

    My husband is a transporter of travel trailers . He plans to operate out of Texas. A lot of his loads will come from all over the country. Will he need a foreign LLC ? Thanks so much for your time.

    reply
    • Matt Horwitz February 21, 2019

      Hi Tammy, your husband likely just needs to form an LLC in Texas. In the context of drivers operating in multiple states, it’s interstate business, which doesn’t require a foreign LLC filing. There may be taxes or filings due in certain states, but those details are outside our wheelhouse. Hope that helps and thanks for your understanding.

      reply

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