Virginia “Foreign” Business Entities
Have you ever considered branching your business into other states? If so, you are considering a “foreign” business entity registration.
Domestic “Foreign” Entities
Don’t let the term “foreign” mislead you – in business, a foreign business entity is an entity that is established outside of the registered state. So, if you have a business in Vermont but you intend to expand into Virginia, your business is a foreign entity.
Foreign “Foreign” Entities
Owning a business that operates in another country and seeking to branch that business into another country also creates a foreign business entity. However, a foreign business entity that operates outside of the home country is a different registration process than a business that is already operating from within the country.
Establishing Domestic “Foreign” Business Entity
Any foreign business entity – corporation, LLC, partnership, etc. – that is established in another state must be additionally registered to operate in Virginia. A business that is not registered to operate in Virginia cannot legally practice business within the state.
While you will need to register with the State Corporation Commission, the Clerk cannot determine your exemption by the Virginia Code’s definition of “transacting business.” Therefore, it is imperative that you meet with a lawyer to discuss your filing before you register your foreign business entity. It is best to consult with a Virginia registered lawyer for the most knowledgeability of the state’s business laws.
Keep in mind that there are severe financial and legal reprimands should you fail to properly register your business.
Registration v. Domestication
When you register your foreign business entity, you are obtaining permission to conduct business within that state. However, if you are domesticating your business, you are seeking to register as a Virginia business with the intent of becoming a Virginia business.
For example, if you own your own business and you move to Virginia, you would seek to domesticate your business, rather than registering it as a foreign entity.
The key difference between registering and domesticating your business lies in the incorporation, or formation, of the business. When you register your business as a foreign entity, you are obtaining the ability to conduct business in one state while following the incorporation laws of another. Conversely, when you domesticate your business, you are changing the state incorporation of your business.
Therefore, if you register your Vermont business in Virginia, you are a Vermont incorporated business that is able to conduct business in Virginia. However, if you own a Vermont business that you seek to domesticate in Virginia, you are transitioning into a Virginia incorporated business.
You must consult with a lawyer in your current incorporating state to determine whether or not you are able to “re-domesticate” your business in another state. By Virginia Code, only foreign corporations, LLCs, and business trusts can “re-domesticate” as a Virginia incorporated entity.
Registering a “Foreign” Business Entity
In order to register your foreign business entity in Virginia, you must first complete the adjoining application. Each business entity that qualifies for Virginia registration has its own application. You are recommended to consult with a Virginia lawyer prior to completing an application. An attorney can determine which application you are responsible for completing. Additionally, you are responsible for completing any other registrations or licenses.
Once you have completed the proper application for your business, you must also obtain a certified copy of your original organizational documents. These are the forming documents that you filed with the Secretary of State upon the formation of your business. A certified copy is requested upon your original filing of these documents.
Once you complete your application requirements, you are able to calculate your fee. In addition, you are required to provide the Office of the Clerk with all documents, including the application and fees.
Registered Agent & Office
By law, you are required to establish a registered agent and a registered office for your foreign business entity. Your registered office must be established in Virginia, otherwise you are not able to conduct business within the state.
In addition, your registered agent must meet all standard requirements of Virginia registered agents. This means that your registered agent must be a resident of Virginia. Many businesses choose to have an attorney represent the business as the registered agent.
Each year, you are responsible for filing an annual report detailing your business activity. This report is mailed to your registered agent for your review. After you have obtained your report, you must file the report with the Office of the Clerk. You are also responsible for paying the annual registration fee.
When you register your business in Virginia, you are responsible for reporting to multiple Virginia entities. First, you apply to register your business with the Commission. Then, you file that registration with the Office of the Clerk.
Once your foreign entity is accepted, you are required to register your business with the Virginia Department of Taxation. This is required no matter what type of business you own. You must also register with the Virginia Employment Commission if your Virginia business entity has employees. However, if you are the sole proprietor and there are no additional employees, you are not subject to this requirement.
Classification as a foreign business entity occurs whether your business is outside of the country or outside of the state. Therefore, it is important to follow all of the requirements that allow you to legally conduct business.
Schedule a consultation with a business law attorney in order to discuss your foreign business, to register in Virginia, or to act as your Virginia registered agent.