How to Qualify to Do Business in Another State
Qualification is simply a registration process that involves filing paperwork and paying fees — similar to the procedures and fees required for incorporating your business or forming your LLC. As part of the process, you must also designate a registered agent — a person or company who resides in the state who agrees to accept legal papers on your behalf in the state. Qualification fees range from $100 to $300 (depending on the state).
Once you are registered in Alabama, you must report and pay state income and sales taxes, as well as abide by state employment tax filings if you have sufficient payroll, property, and sales in the state.
If You Don’t Register Where You Should
If you don’t qualify in Alabama, where you meet the requirements for qualifying, there may be consequences.
Penalties. You may be subject to financial penalties known as late-qualification penalties.
Disallowed from bringing lawsuits. Most states prevent companies that have not qualified in that state from bringing a lawsuit in that state’s courts. Under these laws (known as closed-door statutes), a court will delay or dismiss your lawsuit if the defendant objects because you did not qualify your business in Alabama.
