In the United States, you must choose where you want to form your corporation. That state is known as your company’s home state or state of incorporation. After you’ve registered the company in your state of choice, any other states where your company conducts business will regard it as a “foreign” entity because it isn’t incorporated in that state. Your corporation must file foreign qualifications (also known as authorizations to transact business) in every state in which it conducts business (see Five Things to Consider When Choosing Where to Form Your Business). This article will not only help you determine whether or not your corporation would be required to file a foreign qualification in the State of Florida, but it will also walk you through the filing process, if necessary.
What is Transacting Business in Florida?
ThelawQ.com’s article How to Qualify as a Foreign Business in Florida discusses the factors used in determining whether or not a foreign limited liability company (an LLC) has to file a foreign qualification in Florida and also describes the filing process. The analysis and procedure for LLCs are similar to those for foreign corporations.
Neither the Florida Business Corporation Act (FBCA) (Fla. Stat. Ann. § 607.0101 et seq.) nor Florida Not For Profit Corporation Act (the FNFPCA) (Fla. Stat. Ann. § 607.01011 et seq.) specifies what actions are considered to be transacting business in Florida. However, state laws governing when foreign companies must collect state sales tax in their state have indicated that among the factors that Florida authorities may take into consideration are whether your corporation:
- has employees in Florida
- has a physical presence in Florida (for example, a leased office space)
- originates the shipping of a product from Florida, or
- holds a special license to conduct its business in Florida (for example, a license permitting your company to perform a professional service).
Note that the Florida Revised Limited Liability Company Act (Fla. Stat. Ann. § 605.0101 et seq.) provides that an LLC is considered to be doing business in Florida if it owns income-producing real property or tangible personal property there unless the statute provides a corresponding exception. (Fla. Stat. Ann. § 605.0905(3).) In contrast, the FBCA doesn’t expressly include the foregoing criteria for determining whether a corporation is transacting business in Florida.
The FBCA and the FNFPCA do specify certain business activities that are excluded from transacting business in Florida, including the following, without limitation:
- participating in litigation or similar proceeding
- handling corporate governance matters (for example, holding a board of director, partner, member, manager, or shareholder meetings)
- using independent contractors to sell goods or services
- soliciting or obtaining orders, whether by mail or through employees, agents, or otherwise, if the orders require acceptance outside Florida before they become contracts
- mere ownership of real or personal property, or creating or collecting debts on such property
- transacting business in interstate commerce
- maintaining bank accounts
- maintaining officers, trustees, agencies, or depositories in Florida for the purposes of handling transactions involving the corporation’s securities (note that this exception exists under the FBCA, but not the FNFPCA)
- closing a stand-alone transaction that took fewer than 30 days to complete (provided that there are no related follow-up transactions)
- owning, controlling, or voting the stock of a subsidiary corporation incorporated in or transacting business in Florida, or
- owning a limited partnership interest in a limited partnership (an LP) that transacts business in Florida, so long as the company (as a limited partner) does not manage or control the LP in any way similar to that of a general partner. (Fla. Stat. Ann. §§ 607.1501(2) and 617.1501(2).)
Checking Name Availability
Once you or your legal counsel has determined it necessary for your corporation to file a foreign qualification in Florida, the next step is to check the availability of your company’s name with the Florida Division of Corporations (the DOC). You can visit Sunbiz: Entity Name Search to search for your company’s name and verify that it’s distinct from the names of other Florida entities of record. You can also visit Sunbiz: Fictitious Name Search to see if there are any fictitious name filings comparable to your company name. Although fictitious names are allowed to be similar, or even identical, to each other, it’s always a good idea to know what else is out there in order to avoid any future conflicts over brand confusion.
Satisfying Statutory Name Requirements
The FBCA requires that your company name uses certain language to distinguish it from other Florida entities and clarify that it’s a corporation (and not some other entity type). If your company is a for-profit corporation, then you can find the name requirements under Sections 607.1506 and 607.0401 of the FBCA. If it’s a not-for-profit corporation, then see Sections 617.1506 and 617.0401 of the FNFPCA.
Using an Alternate Name on Your Application
If your corporation’s name is either indistinguishable from the name of an existing Florida entity or does not meet Florida’s statutory requirements, then it will have to file its foreign qualification using an alternate name. The alternate name must satisfy either the FBCA or the FNFPCA, as applicable, and be approved by the company’s board of directors, either at a meeting or by written consent. Note that the DOC provides sample resolutions (Resolutions to Adopt Alternate Name) at Sunbiz: Board of Directors Resolution to Adopt an Alternate Name.
Filing Your Company’s Foreign Qualification Application
The DOC provides forms for applying for a certificate of authority to transaction business in Florida. If your company is a for-profit corporation, see Sunbiz: Foreign Profit Corporation Qualification Application. If it’s a not-for-profit corporation, see Sunbiz: Foreign Not for Profit Corporation Qualification Application.
These forms will include the filing fees and instructions. You can also find a schedule of the filing fees at Sunbiz: Corporation Fees. Note that the company’s application requires you to include a certificate of existence (also known as a good standing certificate or a certificate of status) that is no more than 90 days old, a written acceptance from the company’s initial registered agent in Florida (a foreign company must maintain a registered agent in Florida in accordance with the FBCA or the FNFPCA, as applicable), and, if necessary, the Resolutions to Adopt Alternate Name. Once properly filed, the DOC will issue you a letter of acknowledgement of the foreign qualification filing at no charge. For an additional fee, the DOC can also send you a certificate of status confirming that your corporation is authorized to transact business in Florida, it owes no outstanding fees to the DOC, and, if applicable, all of its annual reports are current.
Depending on the nature of your business, you might also need to obtain local county, city, township, or borough permits, licenses, or certifications. You will also need to make sure that the company pays all applicable state taxes. See MyFlorida.com and the Florida Department of Revenue for more licensing and tax information, respectively.
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