Foreign qualification is a legal process that allows a business incorporated in another state to operate in Illinois. By registering with the Secretary of State in Illinois, the business gains the authority to conduct its activities and comply with state regulations, ensuring legal compliance and access to the local market.
There are 2 different ways to foreign qualify in Illinois depending on your legal entity type and tax classification. Follow the guide below to help you register with the Secretary of State in Illinois or use Mosey to do it.
Illinois Foreign Qualification for C Corporation
A foreign corporation that wishes to "transact business" in Illinois must file an Application for Authority to Transact Business in Illinois with the Secretary of State’s Department of Business Services. Though the Illinois Secretary of State doesn't define "transacting business," they do provide a non-exhaustive list of what is not "transacting business."
Establish a Registered Agent and Registered Office
Establish and maintain a registered agent and registered office in Illinois upon whom service of process on the corporation may be made and to whom official correspondence from the Secretary of State must be sent.
File an Application for Authority to Transact Business in Illinois
Complete the Application for Authority to Transact Business in Illinois (Form BCA 13.15). You'll need to attach a recent certified copy of your business's Articles of Incorporation and all amendments and mergers (from within the last 90 days). Note: The application must be mailed back to the state (or filed in person).
Pay Initial Franchise Tax
Pay the initial franchise tax that is included in the application process. The amount of the franchise tax varies based on the your paid-in capital and the proportion of property and business that will be located in Illinois. Accordingly, these taxes and fees cannot be computed before the Secretary reviews your business’s application. After submitting your Application for Authority to Transact Business, the Secretary will review your application and notify you of the amount due. Note: The minimum amount of the initial franchise tax for foreign corporations is $150.
Illinois Foreign Qualification for LLC
Foreign limited liability companies "doing business" in Illinois must register with the Illinois Secretary of State's Department of Business Services. Illinois, like most states, provides a list of activities considered not "doing business" instead of defining "doing business."
Obtain a Certificate of Good Standing
Illinois requires a Certificate of Good Standing or Existence from your home state duly authenticated within the last 60 days.
Establish a Registered Agent
You must maintain a registered agent in Illinois to accept service of process at your registered office. The registered agent must be an individual resident of this State or other person authorized to transact business in this State.
Apply for Admission to Transact Business
Complete the Application for Admission to Transact Business (Form LLC-45.5). Then mail the completed document, the Certificate of Good Standing, and the associated fees payment to the Secretary of State's Department of Business Services.
What else do I need to know?
Once you are registered with the Secretary of State, you may have additional requirements to maintain your "good standing" in the state. Failing to do so can result in fines, back taxes, and forfeiting certain priveleges within the state.
Maintaining a Registered Agent
Most states require that you have a registered agent that can receive important mail from the Secretary of State should they need to contact you. There are many commercial options available or you can use Mosey to be your registered agent and keep your information private in Illinois.
Annual Reports and Taxes
In addition to maintaining a registered agent, most states require you to file a report annually. Registration can also trigger state taxes such as a franchise tax or income tax. You can use Mosey to identify these additional requirements to maintain good standing in Illinois.