What's the difference between a Foreign LLC and a Domestic LLC? | LLC Univeristy®

Last updated October 12, 2020

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

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.

31 comments on “What’s the difference between a Foreign LLC and a Domestic LLC?”

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.

  1. 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
    • 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. 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
    • 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. 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
    • 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. 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
    • 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. 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
    • 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. 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
    • 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. 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
    • 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
  8. I registered my LLC in Delaware but I currently reside in Texas. My company is a consulting firm that subcontract (1099) for another company NY. I travel to client’s site occasionally however these clients are not my client, they are the customers of the company that I subcontract with. I have elected to be taxed as S Corp and thereby receiving salary from my LLC. For state tax purposes, do I need to be licensed in TX and all other states that I visit? or just DE or both DE and TX only?

    Reply
    • Hi Funvi, we’re unable to state exactly where your LLC is legally transacting business, however, at initial glance, it looks like your LLC is doing business in states besides Delaware. Furthermore, payroll taxes are filed at three levels (federal, state, and local). So if you’re going to pay payroll in Texas, you need to register your LLC with the Texas Workforce Commission (in addition to other payroll steps). We’re not sure if the TWC requires an out-of-state LLC to be registered as a Foreign LLC in Texas. However, once you begin paying payroll to an employee (in this case, yourself), that is usually considering legally transacting business and you’d want to register your Delaware LLC as a Foreign LLC in Texas. Hope that helps.

      Reply
  9. Hey Matt, great site. To clarify my situation. I live in MO and am working to start an internet based coaching business. I have a potential business partner that lives in KY, but is expecting to move in the future (not likely to be MO). Based on what I’ve read, I think:
    1. Forming a LLC with a partner is doable, legal, and makes sense. Am I correct?
    2. Based on my location, and business partner’s pending move, we can register a domestic business in MO. This will likely complicate my business partner’s taxes, but mine (since I live in MO) should be straight forward. Is this correct?

    Reply
    • Thanks Phil! Forming an LLC with another person (a Multi-Member LLC) is certainly legal and doable. You can form an LLC in Missouri and then register it as a foreign LLC in your partner’s future state for simplicity (after they move). For federal taxes, the LLC will file a 1065 Partnership Return with the IRS (due in March). For state income taxes, you’ll both pay taxes in your respective states. The LLC may have a partnership type filing with the Missouri Department of Revenue, however, you’ll want to check with an accountant on this.

      Reply
  10. Hello there. Thanks for the great info. I have a question. I am starting a company using Amazon AWS Marketplace. The company (LLC) will basically just be a middleman for local (Kansas) white-labeled goods, and the goods will be branded by a new company (my online company) and shipped nationally based on the orders we receive. The company name I’d like to use (for which I own the trademark) is not available in Kansas. The question then becomes: can I register my online company in Nevada (or someplace similar) as a domestic LLC using a corporate registered agent there, and if so, would I then have to register as a foreign LLC in Kansas as well (even though the Kansas “location” is basically just a shipping center)? Thx in advance.

    Reply
    • Hi Jen, I’ll respond with more details in my next reply. Where are you running the business/operations from? In Kansas?

      Reply
    • Matt – just to clarify – yes, the products will be made by the vendor and packaged in KS, and then we will ship from KS and our business platform is completely online [AWS]. The only hang up is that we already went through the process to get the federal mark, but we cannot use that name as an LLC in KS. Trying to figure out a work-around, if there is one. Thanks!

      Reply
      • Hi Jen, it sounds like the LLC is transacting business in Kansas. That means the LLC should be formed in Kansas. Or if formed out of state, it should then be registered as a foreign LLC in Kansas. If you form out of state under your desired LLC and then register it as a foreign LLC in Kansas under the same name, you must include a letter with your Foreign Limited Liability Company Application (Form FA) stating that the LLC will list its home state as a means of identification and in its advertising in Kansas. These requirements come from Section 17-7933 of the Kansas Statutes.

        Here’s another thing to consider. Why have your LLC name match your trademark exactly? It’s not necessary. Your trademark could be “Bingo” and your LLC name could be The Bingo Company LLC, Bingo Games LLC, Bingo Manufacturing LLC, Bingo Company LLC, Bingo Associates LLC, etc.

        Another thing to consider: let’s pretend the trademark name is Bingo. You could form an LLC in Kansas and call it Bingo Games LLC. Then have the LLC do business under a fictitious name (aka DBA)… a DBA matching your trademark. Problem solved! Thoughts? In fact, the state of Kansas has no official filings of DBAs (a unique quirk among the states). To be safe, you can call the County Clerk in the county where the LLC will be doing business and check if they have a DBA/Fictitious Name filing requirement. If not, you can just call your LLC whatever you’d like and then do business under the trademark name.

        A lot to digest, I know. Hope it helps though.

        Also, does your LLC own your trademark? If not, and it’s owned personally, you may want to consider filing an amendment with the USPTO so the LLC becomes the owner.

        Reply
  11. Hello Matt. Thank you for all your thorough videos and articles. I read a few of the previous comments and scenarios and I am still unsure if I need to register my LLC in other states as a foreign entity. My LLC provides ceramic workshops to different high schools. My partner and I technically do all the planning and organizing from PA, the domestic location, but offer and perform the service to other customers (high school teachers) in other states. So does this count as doing business in other states (therefore foreign) or is the organizing and planning the structure in the state of PA count as doing business domestically, just to customers in other jurisdictions? Thank you in advance for the help.

    Reply
    • Hi Gee, you’re very welcome :) Since the workshops occur from time to time (and in different places) and the LLC’s primary activities take place in Pennsylvania, you are likely fine with just forming your LLC in Pennsylvania. Hope that helps.

      Reply
  12. Matt,
    Formed LLC in FL and a Foreign LLC in NJ.
    If I dissolve FL LLC, what happens to NJ FLC?
    Does FLC continue to exist? Convert it to LLC in NJ?

    Reply
    • Hi Marvin, no, the New Jersey Foreign LLC would become invalid. You can do one of three things:

      1. Keep the Florida LLC active along with its foreign qualification in New Jersey. Benefit of this is keeping the same EIN and the same bank account and keeping company history. Disadvantage is maintaining two LLC filings.

      2. Withdraw foreign LLC registration in New Jersey, dissolve Florida LLC, and then form a new LLC in New Jersey. Benefit is you eliminate the need to maintain 2 LLC filings. Disadvantage is you can’t use same EIN or the bank account and you lose company history.

      3. Domesticate (“convert”) your Florida LLC into a New Jersey LLC by filing an Articles of Domestication along with a Certificate of Formation (aka Public Record Filing). Disadvantage is it’s tedious and more work upfront. Benefit is you eventually end up with one LLC filing and you retain the same EIN, bank account, and company history.

      Hope that helps :)

      Reply
  13. Hi Matt,

    I’m planning to make a move to another state, and want to start an LLC there. Can I register it now and set up the LLC’s bank account before I even move there? I won’t be moving for several months, and I won’t be selling or providing any services (basically no operations or business activity except adding funding) until I get there. I have a registered agent in that state I will be utilizing for this business, and a physical mailing address and I don’t have an LLC in my current residing state; starting fresh. Will this set up be considered a Foreign LLC or a Domestic LLC? Thanks so much for the helpful information you’ve provided!

    Reply
    • Hi Shippipy, this would just be a domestic LLC in the state you are moving to. The only way you’ll be able to open a bank account for your LLC is if the bank has branches in both states. If it does, you’ll still want to call the bank and speak to the branch manager to confirm. If the bank doesn’t have branches in both states, or doesn’t allow opening an account while not in state, you’ll need to wait on the opening of the LLC checking account until after your move. Hope that helps.

      Reply
  14. Hello Matt,

    Thank you one more time for your great effort and time that you are putting towards educating mostly the beginners and startups as well as existing business entities or their owners, and you do it very professionally, easily, and understandingly.

    I have one main question and i hope you will help me to answer it:

    I am forming a company in NY, for its main operations at this time, transporting goods to US and selling it in NY, while, i am planning to sell the same goods to other states (meaning that i will have customers in other state/s as well), what is your recommendation, do i have to form an LLC in NY as a foreign entity (LLC) or a domestic one?

    Regards,
    Lasha

    Reply
    • Hi Lasha, you are very welcome! Thank you for the kind words :) No, in this case, you don’t need to register your New York LLC as a foreign LLC in the states where you are transporting goods. That is not “transacting business” (the term used to describe when an LLC needs to register as a foreign LLC). This is instead known as interstate commerce. Interstate commerce is the opposite of intrastate commerce (aka “transacting business” in a state). Hope that helps.

      Reply

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