In order for any business to operate within Maryland, it’s important that they take the time to foreign qualify in order to remain compliant with all local, state, and federal regulations. Foreign qualification involves several steps that you must take, and learning more about it is important.
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Foreign qualification is nothing more than the act of registering a business so that it may operate legally in a state outside of the one it was formed in and exists in. If you want your business to have any kind of physical presence in Maryland, you’ll have to take the steps to foreign qualify.
Why You Need To Do It – You must foreign qualify in order to stay compliant and legally operate in any capacity within a state outside your own home state. This includes any kind of physical presence, from stores to offices to just having some representatives working within the state.
When Should You Do It? – As soon as you finalize your plans to operate a business in Maryland, it’s time to start the process of foreign qualification. Starting early ensures that you don’t end up facing delays related to your business opening in a new state. Generally, you will need to receive Maryland foreign qualification if your company falls under any of the following criteria:
Failure to qualify will actually bring forth criminal charges in Maryland. You’ll face a fine of as much as $1000 fined directly to each member and agent of a foreign LLC if you’re not properly registered. Corporations can face fines of up to $200 for failure to register before operating in the state. Additionally, the business will be unable to bring a lawsuit into the state court system. You may also face additional tax related penalties.
There are a few basic steps that you must follow in order to obtain Maryland foreign qualification for your business. These include the following.
1. Obtain Certificates – Before starting with the application process, you should obtain a Certificate of Good Standing from the home state of your business. Then, you can file either a Foreign Limited Liability Company Registration or a Foreign Corporation Qualification form. These forms are available from the Maryland Department of Assessments and Taxation website for free.
2. Collect And Submit Information – You’ll provide essentially the same information that you used to form your business.
LLC
Corporation
3. Appoint Registered Agent – Your registered agent is responsible for handling all of the paperwork and management of your foreign qualification. Most businesses turn to third party providers like DoMyLLC and allow them to handle the registration process for them to streamline their daily activities.
4. File The Application – Once you have the appropriate information filled out on the form, the next step is to file it with the Maryland Department of Assessments and Taxation. You’ll also have to include the filing fee of $100 for both corporations and LLCs – and if you’ve already done businesses the state without registering, there will also be an additional $200 penalty.
5. Ongoing Maintenance – Maryland requires that any business file an annual report each year by April 15 of each year. This process is essentially updating your registered agent information and letting the state know the business is still operating. The filing fee is $300.
