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When it comes to incorporating a business, Delaware is often the popular choice because it is known for having the strongest corporate law structure.
Delaware’s corporate law puts the biggest wall up, from a liability standpoint, between a company and the members/directors behind the company.
People from all over the world form LLCs and corporations in Delaware for this unparalleled liability protection. When incorporating in Delaware, your business is domestic to Delaware and foreign to every other state.
The process in which another state gives a business owner the authority to operate a Delaware company in that state is called Foreign Qualification. This is an important step that can sometimes be overlooked.
If your business will have a physical presence by operating, hiring employees, banking or even holding an asset in a state other than its state of Incorporation, business owners typically foreign qualify their business to operate in that state in order to stay in compliance.
South Dakota, like many other states, has an application process and a state fee, and will also require a Certificate of Good Standing from Delaware. This is the way in which South Dakota confirms that all Delaware fees have been paid.
This requirement applies to both a new company as well as a company that already exists. South Dakota also requires a Registered Agent within the state. Business owners often work with their Delaware Registered Agent in order to prepare the documents for Foreign Qualification.
We have helped many business owners register their Delaware LLC or corporation as a foreign entity in South Dakota. We prepare the documents, obtain the Certificate of Good Standing from Delaware and file the application with South Dakota. We can also offer Registered Agent Service in South Dakota for $99 per year.
Once your Delaware company is registered to do business in South Dakota, please keep in mind that you will still be required to file an annual report in South Dakota as well as keep up with the Delaware compliance regulations in order to remain in good standing.
Generally a business owner must do two things to remain in good standing in Delaware: maintain a Registered Agent and pay their annual Franchise Taxes.
If you would like assistance registering your Delaware LLC or corporation in South Dakota or have additional questions, please contact us at 1-800-345-2677, Ext. 6130 or email us.
*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.