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September 30, 2015 at 2:02 pm #16562
We are incorporated within Michigan and our main operations are in that state. That being said, our customers have plants in various other states. While reading the document regarding registered agents, I’m curious of a few particulars that applies to our situation…
1. Would we require an RA for each state, each residing in their particular states? Or is it possible to just have an RA in Michigan?
2. Does it make a difference whether we have MI employees travelling to other states for work vs. hiring locally?
We would have to register in each state in order to process taxes, etc., so I assume each state will require an RA listed but I’m wondering if they allow for us to request to redirect to our MI RA.
Thanks.September 30, 2015 at 5:31 pm #16571
Good questions! FitSmallBusiness.com is not a lawyer or tax professional. We recommend contacting a business and tax attorney for these types of question, but here are some general things to keep in mind.
Although your home base is Michigan, if you transact business in other states, you will typically need what is called a “certificate of foreign qualification” from those states. This certificate authorizes a company that is based in one state to do business in another.
In order to get a certificate of foreign qualification, you will typically need to provide information about the business activities being performed in that state, pay a filing fee, and declare a registered agent who resides in that state. If you don’t know someone who resides in the state, that’s where third party registrant services mentioned in our article come in handy.
How do you know if you’re trasacting enough business in a state to require a “certificate of foreign qualification”? Again, every state’s laws differ (that’s why it is beneficial to hire an attorney). In general, accepting orders from a particular state, sending employees or representatives to solicit orders in the state, or hiring local employees all count as transacting business activity.
Once you get a certificate of foreign qualification, you will have to pay taxes on business income earned in the foreign state. The bulk of your business income, however, would be taxed by your home state of Michigan. We advise consulting a tax professional for further details.
Hope this helps!