When You Are Required to Qualify to Do Business in Alabama
Although every state has its own variations on when a business must qualify as a “foreign” (out-of-state) corporation or LLC, they all follow this same basic principle — companies must qualify in a state if they are engaged in intrastate business in that state. If the business in which they are engaged in a state is merely incidental to a larger interstate business operation, they may not have to qualify.
Intrastate — must qualify. Your LLC or corporation must qualify to do business in any state where it is engaged in intrastate business. This means that at least part of your business is conducted entirely within that state’s borders. For example, if your business has a warehouse in Alabama and you sell and ship from that warehouse to customers within Alabama, you are engaged in intrastate business in that state.
Interstate — do not have to qualify. On the other hand, a state can’t make you qualify or pay taxes in that state if you only engage in interstate business to other states — meaning that all of your business is conducted across state lines. For example, if you sell and ship merchandise from your Alabama to residents in other states, you are engaged in merely interstate business, which cannot be regulated by other states.
