Do you own a limited liability company (LLC) created in a state other than Illinois, but you want to expand your business to the The Prairie State? If so, you’ll need to qualify your foreign LLC in order to transact business in Illinois.
What is a foreign qualification and how do foreign LLCs function within the state of Illinois? In this guide, we’ll answer these questions and more.
Rocket Tip: If you’d rather hire an online service to handle this process for you, many of the best LLC services can handle it for you.
What Is a Foreign Qualification?
A foreign qualification enables your limited liability company to do business in the state of Illinois. It doesn’t matter which state you originally formed your business in ― or in other words, the state your domestic LLC is located in ― as the qualification process to register a foreign LLC in Illinois is the same regardless of where your domestic LLC is based.
The confusion surrounding foreign qualification usually centers on what it means to “do business” in a state outside of your primary state. This gets especially problematic considering some states don’t strictly define what it means to transact business in that state. However, Illinois state law does not define exactly what does and does not qualify as “doing business in the state”.
What Qualifies as ‘Doing Business’ in Illinois
In general, you’ll need to form a foreign LLC in Illinois if your business pursues any of the following activities in this state:
What Does NOT Qualify as ‘Doing Business’ in Illinois
According to Illinois state law, the following activities are not considered to be “doing business” in the state, and you do not need to qualify a foreign LLC to pursue them:
The above stipulations exclude a large number of businesses from the definition of “doing business” in the state ― which makes Illinois’s laws in this manner more lax than many other states.
How to Get Foreign Qualification in Illinois
If you want to foreign qualify your LLC in Illinois, you’ll need to file an “Application for Authority to Transact Business in Illinois” with the Secretary of State. This form will require the following information:
Filing Fee: $175, with the check made payable to the “Secretary of State.” In addition to the basic application form, you will also need to provide a copy of the articles of incorporation for your business, certified by the proper officer in your state of incorporation. This certification must have taken place no more than 90 days prior to the filing date.
What Is the Penalty for Not Getting Foreign Qualification in Illinois?
There is only one major penalty for failing to qualify a foreign LLC in Illinois. Your business will not be able to bring a civil lawsuit in the state. However, lacking foreign qualification will not invalidate your contracts, nor will it prevent your business from defending itself against lawsuits.
Should I Hire a Business Service Provider to File My Illinois Foreign Qualification?
If you don’t want to handle your foreign qualification on your own, you have options. Some entrepreneurs choose to hire a lawyer to prepare and file their Certificate of Authority, which can be a good option if you’re concerned about getting the job done right. However, attorney’s fees can be quite expensive.
The other option is to hire a business service provider like Incfile or ZenBusiness to register your foreign LLC with the state of Illinois.
These companies can typically get your foreign qualification done for a fraction of the price of an attorney. This is our preferred route if you don’t want to go with the DIY option.
The process for getting a foreign qualification in the state of Illinois is relatively straightforward, though it will require you to get certified paperwork from the state in which your business is incorporated, which could involve extra time, paperwork, and fees. However, Illinois’s rules and regulations regarding which LLCs need to foreign qualify are relatively lax compared with some other states. Many companies that transact interstate business will not need to apply for foreign qualification at all. Still, the definition for “doing business” in Illinois is vague and the consequences for being unregistered can be severe, so this isn’t a process that should be overlooked or taken lightly.
We hope this article managed to answer your questions about obtaining an Illinois foreign qualification, and we wish you a prosperous business future!