Do I need to register as a foreign business operating in Florida?

QUESTION:

I am forming a business wherein I will do freelance software development. All I need is myself and a computer, so I can be location independent. My hometown (in Florida) is expensive when it comes to starting a business so I was going to form a LLC in Delaware instead.  Do I need to register as a foreign business operating in Florida?

Florida statute 608.501 §1 states that a foreign LLC cannot conduct business within Florida until it files all the necessary paperwork, but 608.501 §2i states that conducting interstate business is not considered conducting business within Florida. Furthermore, 608.501 §2c states that foreign LLCs maintaining bank accounts in Florida does not constitute conducting business either.

Source:
http://www.leg.state.fl.us/Statutes/ind … 1#0608.501

So in a nutshell, I guess it means if I incorporate in Delaware, as long as I do not have an office in Florida, then I do not have to register in the state as a foreign business?

ANSWER:

Antone Johnson

Antone Johnson

by Antone Johnson at Bottom Line Law Group

I’m not licensed to practice law in Florida, but I can tell you that in general, the rule in most states is that if a company has any employees, assets, or facilities located there, it must qualify to do business in that state as a “foreign” (out-of-state) corporation.

In my view, if you as a software developer are physically located in Florida, regardless of where your clients reside, you’d be taking quite a bit of risk if you formed a Delaware LLC and didn’t qualify it as a foreign LLC in Florida.  There are important rights and privileges that can be lost if state officials determine that a company should be registered but is not.  For example, in addition to being liable for back taxes, interest and penalties, a company can forfeit the right to sue in state court to collect debts or enforce its rights in other significant ways.  Unless you have a compelling reason to form your business entity in Delaware, assuming you are physically located in Florida, the simplest and safest approach is likely to form a Florida LLC.

Comments & Advice:
  1. I'm not licensed to practice law in Florida, but I can tell you that in general, the rule in most states is that if a company has any employees, assets, or facilities located there, it must qualify to do business in that state as a “foreign” (out-of-state) corporation.

    In my view, if you as a software developer are physically located in Florida, regardless of where your clients reside, you'd be taking quite a bit of risk if you formed a Delaware LLC and didn't qualify it as a foreign LLC in Florida. There are important rights and privileges that can be lost if state officials determine that a company should be registered but is not. For example, in addition to being liable for back taxes, interest and penalties, a company can forfeit the right to sue in state court to collect debts or enforce its rights in other significant ways.

    Unless you have a compelling reason to form your business entity in Delaware, assuming you are physically located in Florida, the simplest and safest approach is likely to form a Florida LLC.

  2. Swadeep says:

    Hi Dear,
    I incorporated a C corporation in MA.
    Now I have to provide software services to a client in Florida.
    Now I am in dilemma that which category I have register my business in Florida.
    So I know I have to pay Unemployment insurance, but that needs a state tax ID.
    So please help me, do I have to register my business as a Corporation or Foreign business operating in Florida.
    Many thanks for the help.
    -Swadeep

  3. Agnes Zielinska says:

    Hi,
    I need to set up a LLC company in Florida just to cooperate with US companies. I am a Polish Citizen and my main business is in Poland. I am going to import some goods to the client with business located in the US – Florida.
    Shall I register my US company as a foreign LLC?
    Thank you.

  4. K.C. says:

    I’m not licensed to practice law! But, from what it sounds like to me is that you do not have to file anything in FL, because your REG Agent/Company is in another state and your point of sale is in the state you are currently in. Look at it like an internet company, or Microsoft paid tech support. Although goods are ship, and services are renderd to other states, the point of sales remain wherever you are.

  5. Startup Hedge Fund says:

    I am starting a new hedge fund in Florida. A hedge fund has two parts, a management company and a investor company. I registered both at Delaware, eg. ABC management LLC and ABC LP. ABC management LLC will have employee in FL, so I need file foreign agent in FL. But ABC LP only has assets, do I need to file foreign agent in FL?

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