What does “doing business” mean, and when do I have to “qualify” to do business?

Every state in the country requires a foreign LLC or corporation to “qualify” to do business in a state where it is “doing business”.

So what constitutes “doing business”, and when do you have to qualify your corporation to do business?

It’s defined differently from state to state, but states tend to define it broadly and ambiguously. In California, for example, doing business is defined as “entering into repeated and successive transactions”. What does that mean?

Most states, including California and New York, provide lists of “safe harbors” that do not constitute doing business (e.g., holding a board meeting, soliciting orders).  In other words, we know much more about what is NOT doing business than what IS doing business. To see the full list of what does not constitute doing business in California (Cal. Corp. Code Sec. 191), click here.

Although both California and New York include simply maintaining a bank account on their list of safe harbors, as a practical matter, opening a bank account still tends to require a qualification.Thanks to the Patriot Act, most banks will require a qualification before they will open a bank account for a foreign corporation.