Glossary

Foreign qualification

Registering an entity formed in one state to do business in another.

"Foreign" here means out-of-state rather than out-of-country. A business formed in one state and operating in another must generally register in the second, which means a second filing fee, a second annual report, and a registered agent in each. That is the arithmetic behind out-of-state formation: the home state is carried either way, so the formation state's costs are added rather than substituted. It also does not move tax liability, which follows where the income is earned.

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