QUESTION
Do I need to 'Foreign Qualify' in all states where my customers are ?
Asked on Nov 20th, 2012 on Business Law - Illinois
More details to this question:
I am in research phase about setting up business. Based on my business structure, i have decidec to setup an LLC. Lately, i read about Foreign Qualification. I am very much confused and need help on that. I want to sell my products to customers all across USA. My home state is Illinois. To serve my customers quickly and to cut down on shipping cost, i am planning to have warehouses in 4 states, assume NY, CA, TX, IL. I will dispatch products from nearest warehouse to customer's destination. In this way i can cover most of the states in USA. My question is where all do i need to foreign qualify Option 1, Only in the states where i have a warehouse Option 2, All states where my customers are Option 3, Both states of option 1 and 2. Any opinion and suggestions would be much appreciated. Any further reading regarding this will also be helpful.
1 ANSWER
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As a general matter, an entity must qualify only in states where it has offices or employees or carries on a meaningful business. An entity is not required to qualify in those states where its customers reside if the means of serving those customers is interstate shipping from outside the customers' states. Based on your enumerated options, the answer is "2."
Answered on Nov 21st, 2012 at 10:16 AM