Foreign Corporate Structures
A “foreign” corporation is incorporated or registered in one state and does business in another. Corporations are often initially formed in a single jurisdiction and later expanding into other jurisdictions. When a company like a corporation or limited liability company operates outside its home state, it’s considered foreign in the other states where it transacts business — even though it’s a domestic corporation in its place of origin.
Features
Foreign corporate structures prevent creditors from suing your stockholders to collect debts owed by the corporation. The C-Corporation’s stockholders’ personal assets are protected from attachment or seizure to pay the company’s debts. This feature creates a limited personal liability for business debts. There are also lower applicable tax rates for distributing corporate profits between stockholders. As well as no limit on how many people can become stockholders.
It’s important to follow the specific rules set by the state you register in for foreign corporations. If you don’t register your business correctly, for example, you can be fined and prevented from conducting further business in that state. We can help you register your business and conduct business legally in another state, including those states with no state income tax.
Typical Uses
Foreign Corporate Structures operate within a single jurisdiction or in multiple jurisdictions. You may fall into one of these categories:
- Offer stock publicly or privately
- Manufacture goods
- Offer commercial or retail business in many geographic locations
- Plan to compensate employees with stock
- Need to establish a clear separation between business ownership and management
- Incorporate as a non-profit in another state.