By Rieva Lesonsky
If part of your new small business loan is set aside for expanding your business beyond the borders of your state, you have quite a bit of research to do before you can get started. If you’re selling online, you most likely already have customers in other states, but if you want to establish a physical presence in another state you need to know what other states are doing to attract businesses and also whether their demographics support a business like yours. Here’s some of the red tape you should be aware of:
1. You need to register your business in the state where you have most of your business activity. However, if you are doing business in another state you will most likely need a certificate of authority or a certificate of foreign business. Business activity may include having employees in another state, advertising, or a physical presence. States vary as to their regulations, so you’ll need to check with each state’s registration office or Secretary of State’s office for their requirements.
2. If you don’t necessarily need to register, but need a certificate of authority, you will need to provide business documentation and pay a filing fee. You will also need a registered agent, which is an employee, business partner or a third party who is authorized to serve as your business agent and also resides in that state.
3. If your business dealings are not regular or if you are only doing business through your website, your business activity may be eligible for an exemption. However, you need to confirm this with the state’s registration office. If you fail to file the correct paperwork and pay the fees, your business may face corrective action by the state including penalty fees.
4. You pay taxes on your business income in the state where your business is registered and where most of that income is generated. In most cases, this is your home state. Other states where you do business will tax the income you earned in that state. In some cases, your home state may tax all your income and offer a credit for the taxes that you pay to other states. Getting advice from experts like attorneys or tax professionals is a must to make sure you’re following all the regulations. You can usually find the information online or use a service that can help you get registered by gathering the paperwork for you, researching the state’s registration costs, submitting your payment and paperwork and handing you the final evidence of registration.
Rieva Lesonsky is CEO of GrowBiz Media, a media and custom content company focusing on small business and entrepreneurship. Email Rieva at email@example.com, follow her on Google+ and Twitter.com/Rieva and visit her website, SmallBizDaily.com, to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.