Foreign LLC Fee for a non-US entity?


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I'm thinking of working (as a contractor) for a Texas based business; I am interested in forming an LLC/LLP, and looking to do so in the most cost effective way.

I read that A LLC must register as a “foreign” LLC in each jurisdiction in which it is “doing business” other than the jurisdiction in which it was formed. Meaning, if I form my LLC/LLP in the state of CT, I will still (presumably) need to be registered as a “foreign” LLC in TX.

My question is, does the above apply to foreign (non-US) businesses? For instance, do I still have to register as a “foreign” LLC/LLP in TX if my business is registered, say, in France?

LLC Startup Costs

asked May 14 '12 at 04:33
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User3262424
107 points
Get up to $750K in working capital to finance your business: Clarify Capital Business Loans

1 Answer


2

That is correct, you do need to register as a foreign entity if the company is registered abroad.

http://www.sos.state.tx.us/corp/foreign_outofstate.shtml

Whether an entity is domestic or foreign does not depend on the location of the principal business office. Instead, it depends on where the entity was formed and what law governs its internal affairs. If an organization was formed under, and the internal affairs are governed by, the laws of a jurisdiction other than Texas, the organization is a “foreign entity.” We sometimes refer to foreign entities as out-of-state entities to reinforce the concept that entities formed in other U.S. states are foreign entities, as well as entities formed outside of the United States.

The fee is $750:
https://direct.sos.state.tx.us/help/help-corp.asp?pg=fee This is the penalty if you don't:

A foreign entity that has transacted business in Texas for more than ninety days without registering is subject to a late filing fee. The
late filing fee is equal to the registration fee for each full or
partial calendar year that the foreign entity transacted business in
Texas without being registered.

Have you considered forming a separate entity in Texas from scratch or does it need to be associated with the company formed abroad?

UPDATE:
For the exemptions specified in the law, see: http://www.statutes.legis.state.tx.us/Docs/BO/htm/BO.9.htm

SUBCHAPTER F. DETERMINATION OF TRANSACTING BUSINESS IN THIS STATE

Sec. 9.251. ACTIVITIES NOT CONSTITUTING TRANSACTING BUSINESS IN THIS STATE. For purposes of this chapter, activities that do not constitute transaction of business in this state include:
(1) maintaining or defending an action or suit or an administrative or arbitration proceeding, or effecting the settlement of:
(A) such an action, suit, or proceeding; or
(B) a claim or dispute to which the entity is a party;
(2) holding a meeting of the entity's managerial officials, owners, or members or carrying on another activity concerning the entity's internal affairs;
(3) maintaining a bank account;
(4) maintaining an office or agency for:
(A) transferring, exchanging, or registering securities the entity issues; or
(B) appointing or maintaining a trustee or depositary related to the entity's securities;
(5) voting the interest of an entity the foreign entity has acquired;
(6) effecting a sale through an independent contractor; (7) creating, as borrower or lender, or acquiring indebtedness or a mortgage or other security interest in real or personal property;
(8) securing or collecting a debt due the entity or enforcing a right in property that secures a debt due the entity;
(9) transacting business in interstate commerce;
(10) conducting an isolated transaction that:
(A) is completed within a period of 30 days; and
(B) is not in the course of a number of repeated, similar transactions;
(11) in a case that does not involve an activity that would constitute the transaction of business in this state if the activity were one of a foreign entity acting in its own right:
(A) exercising a power of executor or administrator of the estate of a nonresident decedent under ancillary letters issued by a court of this state; or
(B) exercising a power of a trustee under the will of a nonresident decedent, or under a trust created by one or more nonresidents of this state, or by one or more foreign entities;
(12) regarding a debt secured by a mortgage or lien on real or personal property in this state:
(A) acquiring the debt in a transaction outside this state or in interstate commerce;
(B) collecting or adjusting a principal or interest payment on the debt;
(C) enforcing or adjusting a right or property securing the debt;
(D) taking an action necessary to preserve and protect the interest of the mortgagee in the security; or
(E) engaging in any combination of transactions described by this subdivision;
(13) investing in or acquiring, in a transaction outside of this state, a royalty or other nonoperating mineral interest;
(14) executing a division order, contract of sale, or other instrument incidental to ownership of a nonoperating mineral interest; or
(15) owning, without more, real or personal property in this state.
answered May 15 '12 at 03:55
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Henry The Hengineer
4,316 points
  • Thank you Henry. What if the entity from France hires someone here in the US (a CT resident) as a contractor, and he does the work in TX as a contractor -- does the above at all apply? – User3262424 12 years ago
  • So that means I shouldn't have a problem to work in TX as a consultant for the French entity -- did I get it right? – User3262424 12 years ago
  • I am not a lawyer and cannot engage in an attorney-client relationship here, so I cannot make that specific interpretation of the statute for you. I can only provide what I've read on the SecState's site and in Texas statutes to help your research. An observation you might find useful is that the SecState does not enforce state tax law. Rather, foreign qualification enforcement occurs mainly through tax penalties enforced by the Texas Comptroller of Public Accounts. Think about whether any government agency has the resources or time to go after an independent contractor given the above. – Henry The Hengineer 12 years ago
  • Thank you Henry – User3262424 12 years ago

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