Was Constitutes A Business Nexus In California For Having To Register As A Foreign Entity?

Foreign or Out-of-State Entities

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Notice: Businesses performing disaster- or emergency-related piece of work: Certain out-of-state businesses who enter the state to perform disaster- or emergency-related piece of work in this land during a disaster response period are exempt from the requirement to register every bit a foreign entity pursuant to Affiliate 112 of the Business & Commerce Code. If your out-of-state business organisation is exempt, yous may choose to file a notification statement with the secretarial assistant of state. Please meet Grade 3901 (PDF) for out-of-state businesses and Form 3902 (PDF) for affiliates of in-state businesses. All exemptions nether Affiliate 112 of the Business organisation & Commerce Code finish at the end of the disaster response catamenia. The secretary of country cannot suggest you regarding whether your business qualifies for an exemption nether Chapter 112.

For information regarding state revenue enhancement issues for out-of-state businesses profitable with recovery, please see the Texas Comptroller of Public Accounts website.

Whether an entity is domestic or foreign does non depend on the location of the master business office. Instead, it depends on where the entity was formed and what law governs its internal affairs. If an organization was formed under, and the internal diplomacy are governed past, the laws of a jurisdiction other than Texas, the organization is a "strange entity." Nosotros sometimes refer to foreign entities as out-of-state entities to reinforce the concept that entities formed in other U.S. states are strange entities, also as entities formed outside of the The states.

Registration Requirements

Section 9.001 of the Texas Business organization Organizations Code ("BOC") requires the following types of strange entities to file an application for registration with the Texas secretarial assistant of state if the entity is "transacting business" in Texas:

corporations;
limited partnerships;
limited liability partnerships;
express liability companies;
business concern trusts;
real estate investment trusts;
cooperatives;
public or private express companies;
whatsoever other foreign entity that, if formed in Texas, would be formed every bit a corporation, limited partnership, limited liability company, professional association, cooperative, or real estate investment trust; and
whatsoever other foreign entity that affords limited liability nether the law of its jurisdiction of formation for any owner or member.

Other laws or circumstances may as well be reasons for registration.

Department 201.102 of the Texas Finance Code requires an out-of-land financial institution to register with the secretary of state before opening a branch or other office in Texas.
Information technology has been the practice of the Texas Department of Insurance to refuse a non-resident bureau license for a foreign entity unless the entity has registered with the secretary of state. HB 2503, passed in the 2011 Legislative Session, removes this requirement effective 09/01/2011.
Some banks will not do business with an unregistered foreign entity, despite that BOC § 9.251 states that maintaining a bank business relationship in this country is not, in and of itself, transacting concern in Texas.

Annals Online

Name Requirements

A foreign entity registering to transact business organization in Texas must register under a name that:

contains a recognized term of system for the entity type as listed in sections five.054 to v.059 of the BOC;
does not incorporate any discussion or phrase that indicates or implies that the entity is engaged in a business organization that the entity is not authorized to pursue; and
is available in Texas, that is, is distinguishable in the records of the secretary of land from the name of any existing domestic or strange filing entity, or any name reservation or registration filed with the secretary of land.

View our name availability rules.

You may request a preliminary name availability determination by calling (512) 463-5555 or by email.

Registration Under a Fictitious Name

If the entity'south legal name does not run across the above requirements the entity must annals in Texas nether an assumed name (d/b/a). This special type of assumed name is often referred to as a fictitious name.

A fictitious name is a special type of causeless name because, unlike other assumed names, a fictitious proper noun must meet the higher up requirements.
A strange entity that registers to transact business under a fictitious name is stating that the entity volition transact business in Texas nether that proper noun. BOC § 9.004.
A foreign entity registering under a fictitious name must file causeless proper noun certificates with the secretary of state (Form 503 (Word 125kb, PDF 74kb)).

Where to file assumed name certificates.

The proper noun requirements for registration to transact business in Texas practice not impact trademark or other intellectual holding rights. A certificate of registration or assumed name certificate does not authorize use of the proper noun in violation of another person'south legal rights and does non, in and of itself, offering any trademark protection. See Trademark FAQs for more information.

Determining Whether to Register

Texas statutes do non define "transacting business." Helpful resource to determine whether an entity'southward activities in Texas require registration include:

BOC § 9.251, which lists activities that are non considered transacting business;
Case law from Texas and other U.S. jurisdictions regarding foreign qualification;
Texas Attorney General Opinions; and
Individual attorneys familiar with corporate police.

Another helpful resource may be the comptroller's Texas Nexus Questionnaire (PDF), used by the comptroller to make up one's mind if a foreign entity is "doing business organization" in Texas for tax purposes.

The threshold level of action required for a tax nexus is generally lower than the threshold level of activity that requires registration with the secretarial assistant of state.
Therefore, if the Texas Nexus Questionnaire results in a decision of "no nexus," the entity is probably not transacting business in Texas either.
On the other hand, if the Texas Nexus Questionnaire results in a determination of "nexus," the entity should consider registration.
Remember that, for registration with the secretary of state, the Texas Nexus Questionnaire can exist a useful tool, simply does not give a definitive answer.

Don't forget that even if yous determine that your entity is not transacting business concern in Texas under the BOC, you may need to register nether other law, such as the Insurance or Finance Codes.

No member of the secretary of land staff can make up one's mind whether an entity is transacting business in Texas or needs to file an awarding for registration. Determining whether to register is a business determination that may have tax consequences, raise legal bug, or bear on licensing from some other agency or country lath.

Penalties for Non Registering

Failure to register can result in penalties, including:

Inability to maintain an activity, adapt, or proceeding in a Texas court until registration;
Injunction from transacting business organisation in Texas;
Civil penalty equal to all fees and taxes that would accept been imposed if the entity had registered when first required; and
Late filing fees owed to the secretarial assistant of land by an entity registering more 90 days afterwards first transacting business in Texas.

How Do I Calculate My Late Filing Fees?

Late filing fees are determined by multiplying the number of whole or fractional calendar years that have passed since the date the entity initially transacted concern in Texas times the registration fee.

For nonprofit corporations and cooperative associations, the registration fee is $25.
For all other entities, the registration fee is $750.
Case: A for-turn a profit corporation that has been transacting business concern in Texas since June 1, 2007 would owe $3,000 in late filing fees if registering on December one, 2010. The total fees due with the application for registration would therefore be $3,750.

(The post-obit entity types are not charged belatedly fees for years prior to 2006: professional corporations, professional associations, concern trusts, existent estate investment trusts, and other foreign entities not required to annals nether prior police force.)

Endeavor Our Late Fees Calculator! (XLS, 63kb)

Limitation of Late Fees

If your entity volition be assessed more than five years of late penalties, and you lot run into sure criteria, you may request that the secretary of state limit the fees you owe. The secretarial assistant of state will cap the late fees at five years for an entity that (i) submits evidence of an active right to transact business organisation with the comptroller's office; and (ii) certifies to the truth of the following statements:

The entity has satisfied all of its franchise, sales, and other taxation obligations with the Texas Comptroller of Public Accounts. Adhere a screen print from the comptroller's function showing the entity has a condition of "active right to transact business organization".
The entity does not owe whatever other taxes, fees, or assessments that are administered by whatever other Texas state agency.
The entity has not received a letter of the alphabet from the Role of the Secretary of Land regarding the need to submit an awarding for registration, or if information technology has received such a letter of the alphabet, information technology has responded to the secretary of land within 45 days.

The general policy of the secretarial assistant of state is that nosotros practise non waive belatedly fees for foreign entities, aside from the 5 year fee cap, if applicative. If an entity believes it has unique circumstances and wishes to entreatment the cess of late fees, the entreatment shall exist in writing and may be sent past email, fax to 512-475-2781 or mail to P.O. Box 13697, Austin, TX 78711-3697, Attn: Corporations Attorneys.

Special Bug for Limited Liability Limited Partnerships (LLLPs)

A foreign limited liability limited partnership transacting business in Texas must apply for two certificates of registration. An LLLP transacting business in Texas must register every bit both a limited partnership and equally a express liability partnership.

Course 306 (Word 167kb, PDF 126kb) – Limited Partnership Application for Registration
Form 307 (Word 115kb, PDF 67kb) – Limited Liability Partnership Application for Registration

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