foreign or out-of-state entity (2023)

Points of Interest

  • registration form
  • Sign Up Online
  • Frequently Asked Questions for Foreign Entities
  • Convert to Texas Entity
  • registered agent
  • Late Fee Calculator(XLS)
  • foreign or out-of-state entity (1)

NOTE: Businesses performing disaster or emergency related work:Certain out-of-state businesses that enter the state during disaster response to perform disaster-related or emergency-related work in the state are exempt from the requirement to register as a foreign entity under the following provisions:Chapter 112Code of Commerce and Trade. If your out-of-state business is exempt, you have the option to file a notification statement with the Secretary of State. SeeForm 3901 (PDF)For out-of-state businesses andForm 3902 (PDF)For In-State Subsidiaries. All exemptions under Chapter 112 of the Commerce Code expire at the end of the disaster relief period. The Secretary of State cannot advise you as to whether your business qualifies for an exemption under Chapter 112.

(Video) Foreign Filing Your Business Entity Different States

For information on state tax issues for assisting recovered out-of-state businesses, seeTexas Comptroller of Public Accounts website.

Whether an entity is a domestic entity or a foreign entity does not depend on the location of the principal office of the business. Instead, it depends on where the entity is created and the laws governing its internal affairs.An organization is a "foreign entity" if it is created under the laws of a jurisdiction other than Texas and its internal affairs are governed by it.We sometimes refer to foreign entities as out-of-state entities to reinforce the idea that entities formed in other U.S. states are foreign entities, as are entities formed outside the United States.

registration requirements

Section 9.001The Texas Business Organization Code (“BOC”) requires the following types of foreign entities to file an application for registration with the Texas Secretary of State when “conducting business” in Texas:

  • company;
  • Limited Partnership;
  • limited liability company;
  • limited liability company?
  • business trust;
  • real estate investment trusts;
  • cooperative;
  • public or private limited liability company;
  • Any other foreign entity, if incorporated in Texas, as a corporation, limited partnership, limited liability company, professional association, partnership, or REIT. and
  • Any other foreign entity that provides any owner or member with limited liability under the laws of its jurisdiction of incorporation.

Other laws or circumstances may also be grounds for registration.

  • Section 201.102.Texas financial law requires aout-of-state financial institutionRegister with the Secretary of State before opening a branch or other office in Texas.
  • It is the practice of the Texas Department of Insurance to deny a nonresident agency license to a foreign entity unless the entity is registered with the Secretary of State.HB 2503, passed in the 2011 Legislative Session, repealed this requirement, effective September 1, 2011.
  • However, some banks will not deal with unregistered foreign entitiesBank of China § 9.251A statement to open a bank account in the state does not itself constitute a transaction in Texas.

Sign Up Online

name requirements

Foreign entities registered to do business in Texas must be registered under the following names:

(Video) How to Use Your Corp or LLC in ANOTHER STATE [Foreign Qualification]

  • Contains recognized organizational terms for the type of entity being referred toSections 5.054 through 5.059Bank of China;
  • does not contain any words or phrases that imply or imply that the entity is engaged in business that the entity is not authorized to do; and
  • Available in Texas, that is, distinguishable in the records of the Secretary of State from the name of any existing domestic or foreign filing entity or from any reservation or registration of a name on file with the Secretary of State.

View our Name Availability Policy.

You can call (512) 463-5555 or viae-mail.

register under a fictitious name

If the entity's legal name does not meet the above requirements, the entity must be registered in Texas under a pseudonym (d/b/a). This particular type of pseudonym is often called a fictional name.

  • A false name is a special kind of pseudonym because, unlike other pseudonyms, a false name must meet the above requirements.
  • A foreign entity registering to do business under a fictitious name indicates that the entity will do business in Texas under that name.Bank of China § 9.004.
  • Foreign entities registered under a false name must file with the Secretary of State a Certificate of Pseudonym (Form 503(word 125kb,PDF 74 KB)).

Where to Submit a Pseudonym Certificate.

The name requirements for registering to do business in Texas do not affect trademarks or other intellectual property rights. A Certificate of Registration or Pseudonym does not authorize the use of the name to infringe the legal rights of others, and does not by itself provide any trademark protection. I understandTrademark FAQsto know more information.

Determine whether to subscribe

Texas statutes do not define a "transaction." Useful resources for determining whether an entity's activities in Texas require registration include:

(Video) Foreign LLC Explained by BetterLegal

  • Bank of China § 9.251, which lists the activitiesnoconsidered a transaction
  • Case law in Texas and other U.S. jurisdictions regarding foreign qualifications.
  • TexasAttorney General's opinion;and
  • Private lawyers familiar with corporate law.

Another useful resource can be testersTexas Nexus Questionnaire (PDF), used by auditors to determine whether a foreign entity is "doing business" in Texas for tax purposes.

  • The minimum activity level required for a tax relationship is generally lower than the activity threshold level required to register with the Secretary of State.
  • Therefore, if the Texas Nexus questionnaire results in a "Not Affiliated," the entity may also not be doing business in Texas.
  • On the other hand, if the Texas Nexus questionnaire results in an "associated" determination, the entity should consider registration.
  • Keep in mind that for Secretary of State registration, the Texas Nexus Questionnaire can be a useful tool, but it does not provide definitive answers.

Keep in mind that even if you discover that your entity is not doing business in Texas under the BOC, you may still need to register under other laws, such as insurance or finance laws.

There is no way for any Secretary of State staff to determine whether an entity is doing business in Texas or needs to apply for registration. Deciding whether to register is a business decision that may have tax consequences, raise legal issues, or affect licensing by other agencies or state boards.

Penalty for not registering

Failure to register may result in penalties such as:

  • Failure to maintain a suit, suit or proceeding pending registration in a Texas court.
  • Order from Texas Trades.
  • A civil penalty equivalent to all fees and taxes if the entity is registered upon first request; and
  • Entities registered more than 90 days after their first transaction in Texas owe late fees to the Secretary of State.

How do I calculate my late filing fee?

The late filing fee is calculated by multiplying the registration fee by the number of full or partial calendar years that have elapsed since the date the entity first did business in Texas.

  • For nonprofit corporations and cooperatives, the registration fee is $25.
  • For all other entities, the registration fee is $750.
  • Example: A for-profit corporation that has done business in Texas since June 1, 2007 will owe a $3,000 late fee if incorporated on December 1, 2010. Therefore, the total cost of filing an application for registration is $3,750.

(The following types of entities do not charge late fees for years prior to 2006: professional corporations, professional associations, business trusts, real estate investment trusts, and other foreign entities that were not required to register under prior law.)

(Video) California Foreign Entity Withholding

Try the Late Fee Calculator!(XLS, 63 KB)

Limitation on Late Fees

If your entity will be assessed late fees for more than five years, and you meet certain criteria, you can ask the Secretary of State to limit the fees you owe. The Secretary of State limits the late fee to five years for an entity that: (1) submits to the Office of the Auditor General evidence of active trading rights; and (2) certifies the truth of the following statements:

  • The entity has satisfied all of its franchise, sales and other tax obligations to the Texas Comptroller. attached screen printController's OfficeIndicates that the entity has an "active business transaction" status.
  • This entity owes no other taxes, fees or assessments administered by any other Texas agency.
  • The entity has not received a letter from the Secretary of State's office about the need to apply for registration, or if it has received such a letter, it has responded to the Secretary of State within 45 days.

It is the general policy of the Secretary of State that we do not waive late fees for foreign entities, except for the applicable five-year fee cap. If an entity believes that it has exceptional circumstances and wishes to appeal the assessment of the late fee, the appeal shall be in writing and may be made bye-mail, by fax at 512-475-2781 or by mail to P.O. Box 13697, Austin, TX 78711-3697, Attn: Corporations Attorneys.

Special Issues for Limited Liability Companies (LLLPs)

Foreign LLCs conducting business as a limited partnership in Texas must apply for two certificates of incorporation. A Texas LLLP trading company must be registered as a limited partnership and limited liability company.

  • Form 306 (word 167kb,PDF 126 KB) – application for limited partnership registration
  • Form 307 (word 115kb,PDF 67 KB) – Application for Registration of a Limited Liability Company

Other Texas Foreign Entity Matters

texas tax

Licenses and Permits

There are no general occupational licenses in Texas. However, depending on the type of business the entity is conducting, additional licensing requirements from other Texas agencies may apply.

employer problem

  • Texas Workforce Council: Information about your requirements when hiring employees in Texas.
  • Texas Department of Insurance: Information about the Texas workers' compensation system.
  • Texas Attorney General Employer Information Center: Information about reporting requirements for new employer hiring and firing.

Ready to sign up?

  • Sign Up Online
  • registration form(Submit by fax, post or hand delivery)

back to the top

(Video) Do I need a foreign LLC for selling out of state? | TRUiC FAQ


What is considered a foreign entity? ›

A foreign entity is any corporation, business association, partnership, trust, society or any other entity or group that is not incorporated or organized to do business in the United States, as well as international organizations, foreign governments and any agency or subdivision of foreign governments.

What is the difference between a US entity and a foreign entity? ›

A domestic LLC or corporation is a business that is formed within its home (domestic) state. Foreign qualification is when a legal entity conducts business in a state or jurisdiction other than the one in which it was originally formed. (It is not to be confused with being a business in a foreign country.)

What is the purpose of a foreign entity? ›

Foreign entity registration is required anytime you wish to legally conduct business in another state. For example, if you formed your business in Nevada but you live and intend to operate in California, then your business will be considered foreign in California and require registration.

How do I qualify or register a foreign out of state or out of country business entity in California? ›

You can register a foreign (out-of-state) corporation in California by filing a Statement and Designation by Foreign Corporation (Form S&DC-S/N), along with a Certificate of Good Standing, to the Secretary of State's office.

Does a foreign entity need an EIN? ›

Every foreign owned company needs an EIN. Banks require it and the IRS requires for filing form 5472.

What are eligible foreign entities? ›

EFEs are the 'Person resident outside India' as defined in Foreign Exchange Management Act, 1999 and are having actual exposure to Indian Physical commodity markets.

How do I determine if I'm a US resident entity? ›

If you are not a U.S. citizen, you are considered a nonresident of the United States for U.S. tax purposes unless you meet one of two tests. You are a resident of the United States for tax purposes if you meet either the green card test or the substantial presence test for the calendar year (January 1 – December 31).

Is an LLC a US entity? ›

A Limited Liability Company (LLC) is an entity created by state statute. Depending on elections made by the LLC and the number of members, the IRS will treat an LLC either as a corporation, partnership, or as part of the owner's tax return (a disregarded entity).

Am I a US resident entity? ›

If you are not a U.S. citizen, you are considered a U.S. resident, if you meet one of two tests for the calendar year (January 1 – December 31). You meet the Substantial Presence Test (which is a numerical formula which measures days of presence in the United States).

How are foreign entities taxed in the US? ›

When a foreign corporation has sufficient nexus or connection with the United States it may be determined to have a U.S. trade or business for U.S. income tax purposes. A foreign corporation's U.S. trade or business is subject to tax in the United States on a net basis at normal graduated corporate tax rates.

What is a foreign branch of a US entity? ›

In general, a foreign branch for U.S. tax purposes is a division which operates a trade or business in a foreign country and maintains a separate set of books and records. The foreign branch generally is subject to the income tax laws in the foreign country in which it operates.

What is a foreign entity of concern USA? ›

Under Commerce's proposed definition, any entity—including a U.S. based or incorporated entity—of which a Chinese person/company directly or indirectly holds at least a 25% voting interest would be deemed a foreign entity of concern.

Can I run a business in the US as a foreigner? ›

Neither citizenship nor residency is required to start a small business in the United States and the formation process is a lot easier than one might expect. Let's walk through the formation process and provide a checklist to get you started.

Can a US citizen own a foreign company? ›

U.S. persons are generally required to file Form 5471 related to their ownership in a foreign corporation when their ownership exceeds 10%. To determine your ownership interest percentage in a foreign corporation, you need to consider your direct, indirect, and constructive ownership in the entity.

Can I start my own business USA as a foreigner? ›

You can technically start and own a business in the United States without being a citizen. It is legal to manage an LLC or corporation from outside the United States, but you will not be allowed to enter the country without a valid work visa.

Does a foreign entity need a w9? ›

Foreign vendors do not complete the Substitute Form W-9; foreign persons or entities must submit one of five available forms. The vendor must determine the one most appropriate to their United States tax status for reportable transactions.

Do I need to register as a foreign LLC in CA? ›

California's LLC Act requires foreign LLCs to register with the state of California if they are transacting business within the state.

Can a foreign entity get an EIN online? ›

If you were incorporated outside of the United States or the U.S. territories, you cannot apply for an EIN online. Please call us at 267-941-1099 (this is not a toll-free number) between the hours of 6 a.m. to 11 p.m. Eastern Time.

What is a non qualified foreign corporation? ›

Nonqualified foreign entity means a foreign entity that is not authorized to transact business in this state pursuant to a filing with the secretary of state.

What is considered a foreign investor? ›

Foreign investment is when a domestic investor decides to purchase ownership of an asset in a foreign country. It involves cash flows moving from one country to another to execute the transaction. If the ownership stake is large enough, the foreign investor may be able to influence the entity's business strategy.

What are the four foreign tax credit limitation categories? ›

There are generally four foreign tax credit limitation categories or baskets—a passive category basket passive category income ; a general category basket general category income ; a global intangible low-taxed income basket section 951A category income ; and a foreign branch income basket foreign branch category ...

Who is a US resident entity? ›

As a general matter, under the U.S. Internal Revenue Code (Code), all U.S. citizens and U.S. residents are treated as U.S. tax residents. In order for a non-U.S. citizen (alien individual) to be treated as a resident alien, he or she must satisfy either the “green card test” or the substantial presence test.

What is a non-resident entity? ›

Nonresident entity means an entity that is not formed under the laws of the State and is not qualified by or registered with the Department of Assessments and Taxation to do business in the State.

What does a US resident entity mean? ›

Based on 20 documents. 20. Resident Entity means an Entity that is resident in the other Party for the purposes of this Agreement and includes an Entity that is resident in both Parties under the respective domestic law of each Party.

What are the different types of entities in the US? ›

The most common forms of business are the sole proprietorship, partnership, corporation, and S corporation. A Limited Liability Company (LLC) is a business structure allowed by state statute.

Are LLCs legal in all states in the US? ›

When you decide to start a limited liability company (LLC), you can choose to form your company in any state, regardless of where you are based. But in most circumstances, your home state is going to be your most-effective option.

Can a foreigner open LLC in USA? ›

There's no requirement for citizenship to operate a business in the U.S., so long as it's the right form of business. This means that a noncitizen can operate a limited liability company (LLC) or a C corporation, but not an S corporation.

What is a foreign resident? ›

Individuals, governments, business enterprises, trusts, associations, and nonprofit organizations that fulfill two criteria: (1) They have their center of economic interest outside the United States, and (2) they reside, or expect to reside, outside the United States for one year or more.

What are the different types of residency status? ›

When immigrating to the US, there are four different types of immigration status categories that individuals may fall into: citizens, residents, non-immigrants, and undocumented immigrants.

What is US legal resident status? ›

Lawful permanent residents (LPRs), also known as “green card” holders, are non-citizens who are lawfully authorized to live permanently within the United States.

How do I report income from a foreign entity? ›

Form 2555. You must attach Form 2555, Foreign Earned Income, to your Form 1040 or 1040X to claim the foreign earned income exclusion, the foreign housing exclusion or the foreign housing deduction.

How is a foreign owned LLC taxed in the US? ›

The foreign partner will be considered as being engaged in U.S. business or trade, and as such, the LLC must withhold 35 percent of its profit as tax. This tax must be paid and filed with the IRS on a quarterly basis. U.S. tax laws stipulate that foreigners must pay tax on any earnings received in the U.S.

Do foreign entities receive 1099? ›

1099-MISC Minimums

The IRS requires businesses to issue Form 1099-MISCs to most non-corporate independent contractors or service providers – foreign or domestic – to whom they paid a minimum of ​$600​ during the prior calendar year.

What is the difference between a foreign entity and a subsidiary? ›

A foreign branch is another location of your company operating in another country, while a subsidiary is a new business in a foreign country. You don't have to decide on the best global expansion option alone.

What does LLC foreign mean? ›

An LLC is a domestic company in one state — its state of organization. It is considered a foreign company in every other jurisdiction. If an LLC wants to transact business in a state other than its state of organization, it will have to register as a foreign LLC with that other state's business entity filing office.

What is an example of a foreign branch? ›

The term “foreign branch” means any office or place of business located outside the United States, its territories, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, or the Virgin Islands, at which banking operations are conducted.

What countries are foreign entities of concern? ›

There are certain countries that are sometimes referred to as “Countries of Concern” due to their presence on one or more U.S. or international sanctions or embargo lists. Republic of the Congo, Iran, Iraq, Lebanon, Former Liberian Regime of Charles Taylor, Libya, North Korea, Somalia, Sudan, Syria, and Zimbabwe.

What is a foreign entity in Florida? ›

A domestic entity is one formed and operated within the same state. By contrast, a foreign corporation is one formed in a different state. Florida law requires corporations to apply for qualification as a foreign business before “transacting business” within the state.

How do I report ownership of a foreign corporation? ›

A US citizen who is the single owner of a “disregarded entity” foreign limited liability company generally is required to file Form 8858, “Information Return of U.S. Persons With Respect to Foreign Disregarded Entities (FDEs) and Foreign Branches (FBs)“. Form 8858 is filed with the US citizen's income tax return.

Which state is best for LLC for non resident? ›

Which state is best for non-resident LLCs? Wyoming, New Mexico, and Delaware are the best states for non-citizens to register LLCs in the US in terms of popularity. The factors driving their popularity with foreign founders are privacy, low costs, and funding-friendly local regulations.

Can I start a business in the US without a visa? ›

A foreign national traveling to the United States to conduct temporary business needs a visitor visa (B-1) unless qualifying for entry under the Visa Waiver Program.

Can you get a green card if you open a business in USA? ›

USCIS administers the EB-5 Program. Under this program, investors (and their spouses and unmarried children under 21) are eligible to apply for lawful permanent residence (become a Green Card holder) if they: Make the necessary investment in a commercial enterprise in the United States; and.

Is foreign business income taxable in US? ›

In general, yes — Americans must pay U.S. taxes on foreign income. The U.S. is one of only two countries in the world where taxes are based on citizenship, not place of residency. If you're considered a U.S. citizen or U.S. permanent resident, you pay income tax regardless where the income was earned.

Do US citizens have to pay taxes on foreign investment income? ›

If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income.

Can a foreign owned company be a small business? ›

Foreign Owned Subsidiary May Qualify as Small Business

The SBA's small business regulations confirm this to be true. Indeed, to qualify as a small business for most federal contracting purposes, a company can be a subsidiary of a foreign firm—so long as certain criteria are met.

How do I register a foreign business in the US? ›

How to Register as a Foreign Entity in Every State
  1. Conduct a name availability search. ...
  2. Select a registered agent to represent your business in the state. ...
  3. Many states will require that you provide a certificate of good standing from your business formation state. ...
  4. Provide a copy of your formation documents.

Can I go to USA to start a business? ›

In U.S. every state has its own laws and regulations for registration of a business. You can register anywhere. However, the state of Delaware and Nevada are considered to be the most foreign friendly. The laws are pretty relaxing for non-residents who want to start their business in U.S.

Can I move to US and start a business? ›

Anyone can incorporate most types of companies in the US. The US does not restrict who can own most types of US-based companies, so if you are a non-resident alien or a resident of a foreign country, you can own parts of or entire companies in the US.

What is a foreign entity IRS? ›

A foreign corporation is one that does not fit the definition of a domestic corporation. A domestic corporation is one that was created or organized in the United States or under the laws of the United States, any of its states, or the District of Columbia.

What is considered a foreign disregarded entity? ›

What Is a Foreign Disregarded Entity? A foreign disregarded entity is any non-US business entity that is disregarded for tax purposes. In this case, “disregarded” means the business is not taxed, but, instead, any income the business receives is treated as the personal income of the owner.

What are the 4 types of tax entities recognized by the IRS? ›

Your form of business determines which income tax return form you have to file. The most common forms of business are the sole proprietorship, partnership, corporation, and S corporation.

How does IRS know about foreign accounts? ›

The Foreign Account Tax Compliance Act (FATCA) requires foreign banks to report account numbers, balances, names, addresses, and identification numbers of account holders to the IRS.

What is the US entity list? ›

The Entity List is a trade restriction list published by the United States Department of Commerce's Bureau of Industry and Security (BIS), consisting of certain foreign persons, entities, or governments.

What are examples of foreign branch? ›

The term “foreign branch” means any office or place of business located outside the United States, its territories, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, or the Virgin Islands, at which banking operations are conducted.

What is the difference between independent branch and foreign branch? ›

 TYPES OF BRANCHES • Branch selling goods for cash only is DEPENDENT branch. Branch selling goods for cash and credit both is INDEPENDENT branch. Branch supplying goods at invoice price is FOREIGN branch.

What is the difference between a foreign branch and a foreign disregarded entity? ›

Foreign Branch Definition

The term foreign branch refers to the business operations of a US company in a foreign country. If a US company conducts business through a foreign legal entity that's disregarded for US tax purposes, that foreign disregarded entity is also considered a foreign branch.

What does the IRS consider a disregarded entity? ›

An LLC that is not automatically classified as a corporation and does not file Form 8832 will be classified, for federal tax purposes under the default rules. An LLC that has one member will be classified as a “disregarded entity.” A disregarded entity is one that is disregarded as an entity separate from its owner.

What is the difference between a controlled foreign corporation and a disregarded entity? ›

Classification Overview

A CFC is a separate non-US legal entity that operates in a foreign country with owners who reside in, or are citizens of, the United States. A DRE is a separate legal entity operating in a foreign jurisdiction that has made an election to be disregarded for US tax purposes.


1. 6 Reasons Why You Shouldn’t Form an LLC in Delaware (for U.S. residents)
(LLC University)
2. 🇺🇸 How To File a Foreign Entity
(My USA | Мої США)
3. Can a Foreign Owner of a US LLC pay ZERO US Tax?
(Offshore Citizen)
4. How To Register A Foreign LLC: Step-by-Step Guide 2022
5. Do You Need to Register as a Foreign LLC? | When to Register as a Foreign Limited Liability Company
(Elizabeth Potts Weinstein)
6. How to Move an LLC from One State to Another | Foreign Entity & Domestication


Top Articles
Latest Posts
Article information

Author: Msgr. Benton Quitzon

Last Updated: 10/28/2023

Views: 6048

Rating: 4.2 / 5 (43 voted)

Reviews: 82% of readers found this page helpful

Author information

Name: Msgr. Benton Quitzon

Birthday: 2001-08-13

Address: 96487 Kris Cliff, Teresiafurt, WI 95201

Phone: +9418513585781

Job: Senior Designer

Hobby: Calligraphy, Rowing, Vacation, Geocaching, Web surfing, Electronics, Electronics

Introduction: My name is Msgr. Benton Quitzon, I am a comfortable, charming, thankful, happy, adventurous, handsome, precious person who loves writing and wants to share my knowledge and understanding with you.