Foreign LLC Registration in Delaware: Qualifying to Do Business

In business-entity law, "foreign" doesn't mean international. It means formed under the laws of another U.S. state. An LLC organized in California is a "foreign LLC" from Delaware's point of view, and vice versa. Foreign qualification is the process of registering an out-of-state LLC so it can lawfully transact business in a state other than the one where it was formed. Delaware's statute calls this step "registration" rather than qualification, but the idea is the same.

If your LLC is already registered somewhere else and you now want it to operate in Delaware (open a Delaware office, hire Delaware employees, sign regular contracts there), you don't form a second LLC. You register the existing one as a foreign LLC with the Delaware Division of Corporations. The company keeps its original home state and identity, and the law of that home state continues to govern its internal affairs and the liability of its members and managers. Delaware simply grants it authority to do business there.

Foreign qualification vs. forming a new Delaware LLC

• Forming a new Delaware LLC creates a brand-new entity that lives in Delaware.
• Foreign qualifying takes your existing out-of-state LLC and gives it permission to operate in Delaware without creating a separate company.

Which one you want depends on your situation. A company being built to raise venture capital often forms fresh in Delaware. A business already established elsewhere that's expanding into Delaware usually registers as a foreign LLC instead. The form, fee and certificate rule are covered on our Delaware foreign qualification page.

Delaware requires a foreign LLC to register before it does business in the state. The statute never defines "doing business." Instead, it lists activities that do not count, and it says that list is not exhaustive. That means the practical test is whether your company has a real, continuing presence in Delaware that goes beyond those protected activities.

Activities that typically point toward registering

• Maintaining an office, store, or warehouse in Delaware.
• Having Delaware-based employees.
• Regularly conducting in-person business or providing services within the state.
• Entering into contracts in Delaware as an ordinary part of your operations.

Activities Delaware says are not doing business

• Defending, settling, or maintaining a lawsuit.
• Holding meetings of members or managers and handling other internal affairs.
• Maintaining a bank account.
• Selling through independent contractors.
• Taking orders that only become contracts once they are accepted outside Delaware.
• Borrowing money or creating security interests.
• Collecting debts, foreclosing on collateral, and holding the property you acquire that way.
• Conducting a one-time transaction that is not part of a series of similar deals.
• Engaging in interstate commerce.
• Serving as a member or manager of an LLC, which does not by itself count as doing business.

Activities such as holding a bank account or making a single isolated deal do not trigger registration on their own. The statute also says it does not settle questions of taxation or service of process, so a Delaware tax issue can exist even when registration is not required.

The line can be genuinely gray. If you're unsure, it's worth asking an attorney, because operating without registering carries real consequences, covered below.

To register in Delaware, you file a Certificate of Registration of a Foreign Limited Liability Company with the Division of Corporations in Dover. The state's foreign LLC form is a template without a form number, and the Division accepts submissions by mail or through its online filing service for documents and certificate requests. The state filing fee is $200, listed in the Division's fee schedule. You can request a certified copy for an additional $50.

What you generally need to provide

• The name you will register under. Delaware lets a foreign LLC register under a name different from its home-state name, as long as it includes "Limited Liability Company," "L.L.C." or "LLC" and is distinguishable on the Division's records (or the other entity consents in writing). So a name conflict can be solved by picking a different Delaware name.
• The home state and date of formation, plus a statement that the LLC currently exists.
• The nature of the business you will carry on in Delaware. A broad statement of purpose is not accepted, so describe what the company does.
• The date you first did, or plan to start, business in Delaware.
• A Delaware registered agent and registered office.
• A Certificate of Existence from your home state. Delaware requires a certificate issued by an authorized officer of the jurisdiction where the LLC was formed, dated within six months before the Delaware filing date. If it is in a foreign language, a sworn translation signed by the translator is attached. Your home-state filing office sets the price and issues it.

An authorized person signs the filing, and Delaware does not ask for a principal office address.

The registered agent requirement

Delaware calls this role a registered agent, and the LLC must have a registered office in the state, which may but doesn't have to be a place of business. The agent can be an individual who lives in Delaware, a Delaware entity, or an out-of-state entity authorized to do business in Delaware. The foreign LLC cannot serve as its own agent. A company serving as agent needs a staffed Delaware office with regular hours, while a person serving as agent must be findable at a fixed spot frequently enough to receive papers. You also name a natural person as a communications contact for your agent. Most companies expanding into Delaware use a commercial agent, since few have a qualifying Delaware address at the start.

Once Delaware grants your foreign LLC authority to do business, you take on Delaware obligations in addition to those in your home state. You're now answering to two states.

Ongoing duties in Delaware

• The $400 annual tax. Delaware charges registered foreign LLCs a flat yearly tax, due June 1 after the close of the calendar year in which the registration was filed. There is no annual report to file, and no proration for a partial year. Late payment brings a $200 penalty plus 1.5% interest a month, and an LLC that does not pay can cease to be registered in Delaware until it pays what it owes. The state mails the statement in care of your registered agent, so make sure your agent's mail reaches you.
• Maintain the Delaware registered agent. The agent must stay in place, and the statement and any service of process go to its address.
• Keep home-state compliance current. Qualifying in Delaware doesn't relieve you of your obligations back home: annual reports, franchise taxes, and registered agent duties in your formation state continue.

Taxes

Registering as a foreign LLC establishes that you're doing business in Delaware, and the annual tax is only one piece of the picture. Other Delaware tax registrations may apply to your business, and because you now operate across state lines, the allocation of income between states matters. This is a good point to involve a CPA who handles multi-state taxation.

Consequences of operating without registering

A foreign LLC that does business in Delaware without registering cannot bring a lawsuit in Delaware courts until it registers and pays the fees and penalties for each year it went unregistered. The penalty is a $200 fine for every year or part of a year. Your contracts stay valid, the other side can still sue on them, and the LLC can defend itself if sued. Members and managers are not personally liable only because the company did business without registering. The Court of Chancery can also be asked to bar an unregistered foreign LLC from operating in Delaware at all.

If you leave Delaware

Ending the registration means filing a certificate of cancellation, which costs $200, and Delaware wants that year's full annual tax paid before it accepts the cancellation.

Expanding an existing LLC into Delaware involves a few moving parts (the certificate of existence from home, the registration itself, and a Delaware registered agent), and it's easy to stall on any one of them. Mainstay Filing is a filing service, not a law firm, and our Foreign Qualification service covers the filing and the agent.

You give us your LLC's home-state details and the Certificate of Existence. We prepare the Certificate of Registration and file it with the Division of Corporations. The service is $199 plus the state's fee, and a Delaware registered agent for your LLC is included free for the first year, then $149 a year. If a lawsuit or other service of process is delivered to us for your company, we scan it and upload it the same business day, at no fee.

A few things are not part of the service. We do not order the certificate of existence from your home state, and we do not prepare the yearly Delaware tax payment or any other tax filings, so the June 1 date is yours to track. You can see the state fee and today's total on our Delaware foreign qualification page.