Alabama Foreign Corporation: Everything You Need to Know
An Alabama foreign corporation is required to obtain a certificate of authority before operating within the state.3 min read
An Alabama foreign corporation is required to obtain a certificate of authority before operating within the state.
Just because you're eligible to operate in one state doesn't mean that you're legally qualified to do so in every state. If your registered limited liability company (LLC) would like to operate outside your home state, you'll most likely need to register with the state that you're looking to operate in.
Registering your LLC in Alabama will ensure that you're conducting business legally there. For example, in Alabama all LLCs that have been created in another state are referred to as foreign LLCs. The term "foreign" doesn't indicate that the LLC is from a foreign country. Rather, it indicates that the company was formed within the jurisdiction of a different state.
Conducting Business in Alabama
Domestic LLCs are created in the state in which it's operating. To clarify, an LLC created in Wisconsin is considered a foreign business in Iowa, but a domestic LLC in Wisconsin. All LLCs looking to operate in another state must register with that state's Secretary of State (SOS) to qualify as a foreign business or LLC. All companies operating in Alabama must be registered with the state of Alabama.
State sales tax is collected on foreign LLCs by Alabama state law. Generally, the law states that a business needs to be physically present in order to operate within the state. This is also known as nexus. To have nexus in Alabama implies the following:
- A warehouse is being operated
- There's a store
- There's an office
- A sales employee works within the state
Transacting business in Alabama does not include the following activities:
- Conducting an isolated transaction (usually one in thirty days and not one in the course of similar, repeated transactions)
- Creating or acquiring indebtedness
- Organizing internally
- For example, holding manager or member meetings
- Opening an account with a bank within the state
- Designating an agency, office, or other individuals to handle your entity's financial investments
- Owning without real or personal property
- Collecting or securing particular debts
- Allowing independent contractors to perform the majority of business
- Settling or defending a lawsuit
- Seeking or securing orders when they require authorization in another state prior to becoming contracts
- Transacting business through interstate commerce
In order to register a business, a foreign LLC application must be filed with the SOS. The application may be downloaded on the SOS website. The application will request the following information:
- A statement certifying that the LLC exists because of the laws of another state
- An authorized signature
- The full legal name of the LLC
- The mailing address and street of the LLC's main office
- The date on which the LLC will begin, or first began, conducting business in Alabama
- The formation date of the LLC
- The fictitious name (DBA) under which your LLC will operate in Alabama
- The name of the registered agent
- The state where the LLC was originally formed
- The street and mailing address of the LLC's registered agent
The filing amount is about $150.
Steps to Registering a Foreign Business in Alabama
There are three steps in registering a foreign corporation in Alabama:
- Reserve the business name
- The cost is about $28
- To conduct business, request the application for certificate of authority of a foreign corporation
- Mail/file the application for certificate of authority
Next Steps After Forming a Foreign Corporation in Alabama
There are four steps to take after forming an Alabama foreign corporation:
- Request a business license in the city and county in which you're operating
- File the applicable reports for an Alabama foreign corporation
- Store all records properly
- Pay the correct amount of taxes in a timely manner
How Long Does It Take to Form a Foreign Corporation in Alabama?
The typical processing time for an Alabama foreign corporation application is about 15-20 business days. An additional two to three business days will be needed to ship the documents by mail. The probate judge will send the filing to the SOS for indexing. For an additional fee of about $100, the SOS will expedite the indexing of the application once they've received it from the probate judge.
If you need help registering an Alabama foreign corporation, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.