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Do I need to foreign qualify my LLC in multiple states?

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  • Do I need to foreign qualify my LLC in multiple states?

    I have a Medical Billing company (LLC) based in Texas and I want to start marketing in other States.

    Do I need to foreign qualify my LLC in these other States?

    If yes, should I do this before I start marketing or wait until I have secured clients?

  • #2
    As a general rule, if your LLC transacts business in multiple states, your LLC must be registered as a foreinn LLC in each of them.
    Barry S. Phillips, CPA

    IRS Circular 230 Disclosure: This response is intended to provide general information and written for educational purposes only. It does not establish a client relationship. This communication is not intended to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to any party any matters addressed herein.


    • #3
      BSPCPA is correct that if your LLC is doing business in other states, you generally need to qualify the LLC as a foreign LLC in those states. However, in this context "doing business" is a legal term, and what constitutes "doing business" varies considerably from state to state.

      For example, most marketing efforts alone, particularly if done through the mail, by telephone or by email, with no physical presence in the other state, would not constitute doing business in the state. Further, if all of the services are provided in Texas and your only contact with another state is by mail, telephone or email, that would not meet the "doing business" requirements in most cases, even though the marketing activities are now generating revenues. Obviously, factors like having a salesperson permanently located in the other state or having employees provide services in the other state tip the scales the other way.

      There is no single answer, however, and the correct answer at one point in time can be wrong at another point in time as your activities in the state change, so it is important to review your activities periodically.
      David K. Staub (
      Forum posts are not legal advice, are for informational and educational purposes only, and are not a substitute for proper consultation with legal counsel.