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People from all over the world form Delaware LLCs and Delaware corporations even though they operate their companies from their home state or country. Delaware has been recognized as having the strongest corporate law structure, and the advantages of forming your business in Delaware are extensive.
But what do you do if you have a company doing business in Florida as a foreign corporation?
If you are operating a Delaware corporation in Florida, your corporation will be domestic to Delaware but considered a foreign corporation doing business in Florida. People initially form a Delaware corporation and then register as a foreign entity in Florida (as the same business).
This process is called Foreign Qualification. This is the manner in which Florida grants you permission to operate your Delaware corporation there. It is a very important step that is sometimes forgotten, but if you fail to comply with Florida's local compliance regulations, you may be putting yourself and your company at risk.
Florida, like most states, has a specific set of requirements for Foreign Qualification: a state fee, an application process and a Certificate of Good Standing from Delaware. The Certificate of Good Standing can be no more than 90 days old.
The state also requires that you have a Florida Registered Agent which will be required to sign the application. A Director or officer will also have to sign the application on behalf of the corporation. The document Florida returns to you is called a Certificate of Authority. This document is often used to obtain a business license, open a bank account or file a DBA in Florida.
Please keep in mind that applications and paperwork filed in Florida will be on the public record, unlike in Delaware. However, county filing and newspaper publication is not required, unless specifically mandated by the county of the Registered Agent.
Once your business is registered in Florida as a foreign corporation, you will be required to file an annual report. The cost of the annual report is $150, and is due by May 1 of the following year. Often, your Registered Agent will forward you the notice approximately 60 days before the due date. Please note that a Delaware corporation will still be responsible for Delaware Franchise Taxes as well, which are due by March 1.
We are specialists in Foreign Qualification, and we register companies in Florida, as well as other states, every day. We can help you prepare the application, obtain a Certificate of Good Standing from Delaware and file all the necessary documents in Florida.
Generally, we can obtain your Certificate of Authority in about two business days. We are also able to act as your Registered Agent in Florida. For more information, or to register your Delaware corporation in Florida and start doing business in Florida, please call 1-800-345-2677, Ext. 6130.
*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.
There are 12 comments left for Doing Business in Florida as a Foreign CorporationDavid said: Tuesday, October 6, 2020
I registered a corporation in Delaware which I will be taxed as an S-Corp. and will register as a foreign entity in Florida. What income tax rate can I expect to pay. Will I only pay Delaware's state tax?HBS Staff replied: Tuesday, October 6, 2020
Hi David, unfortunately we cannot provide tax advice related to your specific situation. If you are unsure what your tax liability would be, we recommend checking with your accountant or a tax professional.Christopher J Bryan said: Friday, April 17, 2020
Hi, I have a client with a DE LLC, has an office in FL, and tells me they are required to have a bank account opened in FL. Why and what am I missing here? What was this advice they received in the past? Best Regards, ChrisHBS Staff replied: Monday, April 20, 2020
We would recommend clarifying with your client who is making that requirement. Typically, Delaware companies can open a bank account wherever they choose. However, every bank and banker can have different requirements as there is no set standard.David Etherington said: Tuesday, May 21, 2019
My DE company partners with FL cities to receive data and make it available to their residents. We neither pay nor charge for this service, and agreements with cities are executed at our head office outside of FL and DE. Do we need to register as a foreign corporation in FL?HBS Staff replied: Thursday, May 30, 2019
By establishing the company in Delaware, you have taken a positive first step toward future success. In many cases, the next step is registering the company locally as a foreign entity. If your business will have a physical presence by operating, hiring employees, banking or even holding an asset in a State other than the State of Incorporation, clients will often qualify the business to operate in that State. The foreign qualification process enables a company to transact business in a jurisdiction other than where it was formed. Since each State has its own requirements, let HBS take care of this detail for you. For more information on the foreign qualification process https://www.delawareinc.com/blog/what-is-foreign-qualification/. While we cannot inform you that you have to or don’t have to Foreign Qualify the Delaware entity in another state, we do offer the service, if required.Frank Coladonato said: Thursday, September 6, 2018
We have a home based employee that will be moving to Florida, other than employer tax IDs for processing payroll does our company need to register to do business in FL and file a Corporate Tax return even if there is no business activities in the state of Florida?HBS Staff replied: Thursday, September 6, 2018
When having an employee operate from Florida, often clients will register as a Foreign Entity there in order to have Florida’s permission to do business. Income taxes would generally be paid there as well but clients will often discuss this strategy with a tax professional.P.K.Senapati said: Monday, August 20, 2018
I am thinking to have a small startup at Bangalore India and do business with Aerospace companies in Florida US. What is the procedure.HBS Staff replied: Monday, August 20, 2018
P.K., we are happy to assist. Often clients will first form the Delaware company and register it as a foreign entity in Florida. Would you like a phone call to proceed?