The Process of Qualifying to Do Business in Another State

If your Florida-based business has operations in more than one state, you should be aware of the operating requirements for each state in which you do business — a process known as “qualifying to do business.” Whether or not your company must qualify to do business in another state depends on whether it engages in intrastate commerce or interstate commerce.

When Must You Qualify to Do Business?

You must qualify to do business in another state if at least part of your business is conducted entirely within another state’s borders, which is known as intrastate commerce. For example, if your company has a distribution center in another state that ships to locations within that state, you are engaged in intrastate commerce and must qualify to do business in that state.

Your company does not need to qualify to do business in a state where you conduct only interstate commerce. For example, if you make and ship products from Florida to other states, but no part of your manufacturing or shipping process occurs in any of these states, you are engaged in interstate commerce.

Certain types of businesses are exempt from having to qualify to do business in other states, even if they would otherwise meet the requirements. These businesses include:

• Maintenance of a website in another state, even if a website is the only presence your business has in any state
• National advertising to consumers in other states
• Telephone or mail order sales as your only business
• Sales through independent contractors in other states

The Process of Qualification

Once it is determined that your business in engaged in intrastate commerce, the process to qualify to do business in another state is fairly simple. It consists mainly of preparing and filing paperwork with the other state that is very similar to that which was filed when your business first formed. There is a filing fee that must be paid, and you must designate a registered agent within the state. Once your business is qualified to do business in another state, it must then pay income and sales taxes in that state as well as abide by that state’s employment and tax filing requirements.

Penalties for Non Compliance

If you qualify to do business in another state and fail to file the proper paperwork to register there, your business may be subject to fines for late qualification. In addition, while your business may still be named as a defendant in a lawsuit in that state, it may be prevented from initiating a legal complaint as a plaintiff.