Out-of-State LLC: When to Register and What It Costs

Waiting to register an out-of-state LLC is the expensive choice, and it gets worse the longer you wait. The registration fee is a one-time cost you can look up in advance. The penalty for skipping it is charged per year, so the gap between filing on time and filing late grows annually.

You usually have to register once you open an office, hire an employee, or buy income-producing property in another state. Two things make that harder than it sounds. The line sits in a different place in every state, and the agency that watches your sales is not the one that handles your registration. Where several states are involved, foreign registration nexus rules maps the wider picture.

What an out-of-state LLC is

An out-of-state LLC is an LLC formed in one state that does business in another. State forms call it a foreign LLC, where "foreign" means out-of-state rather than overseas. Registering does not create a second company. It gives the LLC you already have permission to operate in the new state. States call that permission a certificate of authority, a certificate of registration, or a foreign registration statement.

An example. Northstar Analytics is a Delaware LLC with three employees, all in Denver. It hires a fourth person who lives in Washington, then six months later signs a small office lease in Austin. Northstar is still one company. But two new states now have an opinion about whether it should register with them, and they disagree.

When registration is required

An office, an employee, or income-producing property in a state will usually require you to register there. The catch is that most state laws never say that. They work backwards instead, listing the activities that do not count and leaving everything else unstated. The Texas Attorney General made the same point in Op. GA-0726, noting that the legislature wrote down only what is safe, not what is required.

Activities that usually don't require registration

Most states publish a list of things you can do without registering. The lists look similar because most were copied from one model law, but no two are identical. These appear on nearly all of them, including Nebraska's list and Washington's.

• Bringing, defending, or settling a lawsuit

• Holding owner or manager meetings and running internal affairs

• Keeping a bank account

• Selling through independent contractors rather than employees

• Taking orders that have to be approved outside the state before they become contracts

• Doing one isolated deal, finished inside the state's time limit and not part of a pattern (thirty days in Nebraska and Washington, six months in North Carolina)

• Selling across state lines without a local presence

That is a sample, not a full list, and lengths vary a lot. New York's LLC Law § 803 has four items, Nebraska ten, North Carolina eleven, and Washington thirteen. Read the one for the state you are actually in.

Activities that usually do require registration

The list of activities that do require registration is shorter and more consistent. Texas gives the plain version on its foreign entity FAQ, which names an office or an employee in the state, or otherwise doing there what the company exists to do. California adds one more, under Corp. Code § 17708.03, for a company that does business in the state repeatedly rather than once.

Property is where states genuinely disagree, and the three laws already cited go three different ways. Nebraska says owning income-producing property is itself doing business. North Carolina puts owning property on its safe list. Washington protects owning property "without more," meaning property on its own is not enough. So an LLC that owns a rental building may have to register in one state and be excused in the next.

Fund structures add a wrinkle. California treats doing business in California as running in both directions between a partnership or LLC and its owners, so one can pull the other into the state. Our guide to foreign registration for venture capital funds covers them.

That last row is the one people misread. Selling across state lines protects you from registering, not from being taxed.

Why the tax office notices you first

Owing tax in a state and having to register in a state are two separate questions, answered by two different agencies, and the tax one usually comes first. The safe harbor lists say so themselves. Nebraska's § 21-157(c) states that its list does not apply when deciding whether an LLC is subject to "taxation" under any law other than the state's own LLC act, and Washington says the same. Texas shows the gap. Registration there depends on whether you have an office or an employee. The franchise tax depends on how much you sell. A company with no Texas office and no Texas staff can owe the tax and still not need to register.

The dollar thresholds you will see quoted are not binding anywhere. The Multistate Tax Commission publishes them as a recommended standard that states are free to change, and states do change them. Treat the pattern as real and the numbers as illustrative.

• The model suggests a state can tax you at $50,000 of property or payroll there, $500,000 of sales, or 25% of your company total in any of those

• California's own figures are far higher, with a 2025 threshold of $757,070 in sales and $75,707 in property or payroll

• Sales tax works differently again. Since the Supreme Court's Wayfair decision in 2018, a state can require you to collect it with no physical presence

None of these tax obligations replaces registration, and none excuses it. They are an early warning, because a state notices your sales before it notices your paperwork.

One remote employee is usually enough

In most states, hiring one person who lives there means you have to register, and it rarely stops there. New Jersey has taken this furthest. In Telebright Corp. v. Director, Division of Taxation, 424 N.J. Super. 384 (App. Div. 2012), the appellate opinion held that one full-time employee working from her New Jersey home put her employer in the state for tax purposes. That company was a corporation and the tax was New Jersey's Corporation Business Tax, so the ruling does not carry over to an LLC. But the reasoning about what one remote worker does to a company's footprint is applied broadly now.

What a first hire brings with it

In most states a first hire creates five obligations, not one.

• Registering with the Secretary of State

• Appointing a registered agent with a real street address in that state

• Signing up for payroll tax withholding before the first paycheck

• Registering for unemployment insurance and carrying workers' compensation

• Reporting the new hire and following that state's employment laws

Four of those five apply even where registration doesn't.

Washington's remote-worker exception

Washington is the one state where employing a remote worker does not require registration. RCW 23.95.520 puts employing a Washington resident who works remotely on its list of activities that are not doing business, an item the legislature added in 2026. The exemption covers registration only. Subsection (4) says it does not reach tax or regulation, so Washington employer obligations for payroll, unemployment insurance, and workers' compensation still start with the first paycheck.

So Northstar's Washington hire needs payroll accounts but no registration. Austin is where the money starts.

Upfront fees range from $70 to $750

The filing fee is more than ten times higher in Texas than in California, and the cheapest state to enter is not the cheapest to stay in. The fee is also the easy part. Supporting documents and their deadlines are what turn a single payment into a project.

The certificate deadline is what most often gets a filing rejected. Every state here wants a current certificate of good standing from your home state, and it goes stale fast. Illinois's Form LLC-45.5 and Washington want one issued in the last 60 days, and Florida certificate rules allow 90. Order it just before you file. And none of these fees is what the tax office was measuring.

Annual costs vary far more than filing fees

Annual costs spread much wider than filing fees. Below its revenue threshold Texas charges an out-of-state LLC nothing, while California charges $800 a year simply for being registered, whether or not you earn anything there.

California is worth understanding before you register there. Every LLC registered or doing business in the state owes the $800 annual tax under Revenue and Taxation Code § 17941, with no reduced rate for a small operation. Above $250,000 a tiered fee is added on top. That $250,000 is total California income on Form 568, which is not the same as income sourced to California. Across several states, missed annual reports across states add up quietly. All of it is manageable once you're registered. The arithmetic changes when you're not.

Skipping registration costs more every year

The first thing you lose is the right to sue. In most states an unregistered LLC cannot bring a lawsuit there until it registers, a rule known as a door-closing statute. Florida's version is typical in pausing the case rather than throwing it out, so registering partway through fixes it. The risk is the delay, because a paused case plus a rushed registration can push a claim past its filing deadline for good. Under § 605.0904(4), the rule does not cancel your contracts or stop you defending a suit.

Penalties by state

Unlike the filing fee, these are charged for every year you were unregistered.

• Texas: after 90 days, a late fee equal to the $750 registration fee for every calendar year or part of a year you went unregistered, per the Form 304 instructions and Business Organizations Code § 9.054

• Delaware: $200 for every year or part of a year unregistered, and no lawsuits until the back fees and penalties are paid, per § 18-907

• Florida: $500 to $1,000 for every year or part of a year, under § 605.0904(7)

• California: the $20 per day figure you will see quoted comes from Corp. Code § 2203, which applies to corporations, not LLCs. An LLC instead owes back annual tax, interest, and Franchise Tax Board penalties

Put Northstar's Austin office through that. Its lease starts in November, nobody files, and the registration goes in fourteen months later. That period touches three calendar years, so Texas can charge three late fees of $750 each, on top of the $750 registration fee. A $750 bill has become $3,000, and the tax side has not weighed in, because the two agencies penalize you separately.

When individuals can be personally liable

Usually they cannot be, but not everywhere. California says at § 17708.07(c) that owners and managers are not personally liable for the LLC's debts just because it was unregistered, and Delaware § 18-907(c) says the same.

Virginia goes further. Under § 13.1-1057(D), any owner, manager, or employee who does business in Virginia while knowing the LLC should be registered and is not can be fined $500 to $5,000 personally. Section 13.1-1007 also makes it a Class 1 misdemeanor to do business there as an LLC that is neither formed in Virginia nor registered there. Where a state can reach individuals, settling the question with counsel early matters more.

Automate your out-of-state registrations with Discern

Deciding where an out-of-state LLC is required to register means checking your offices, employees, and property against each state's own list. Every state that says yes needs a different form, fee, and certificate package. The deciding is legal work. The filing is not, and it's the filing that sits idle while the penalty clock runs. Discern's foreign registration service completes most registrations in under an hour, certificate of good standing included, with Discern's registered agent coverage and automated annual report filing taking the rest.

At portfolio scale, entering a new state stops being a project. A seven-entity portfolio registered across thirty states needs no tracking spreadsheet, no per-state calendar, and no scramble over a stale certificate, because the renewals run on their own. Smaller teams get the same effect earlier, with multi-state registration for software companies handled as entry decisions get made.

Book a demo with Discern today to see how quickly you can register in a new state.

This article provides general compliance information and does not constitute legal advice. Consult qualified legal counsel for guidance specific to your situation.

Frequently asked questions about out-of-state LLC registration

These cover the practical questions the sections above leave open, including timing, paperwork, undoing a registration, and what to do about time you have already spent unregistered.

When exactly should you file?

Before the activity starts, not after. In practice that means before an employee's start date, before you sign a lease, and before a property closing. Texas starts counting late fees after 90 days of unregistered activity and other states count from day one, so filing early costs nothing and filing late costs more every year.

How long does registration take?

There is no single answer, and most states do not publish a guaranteed timeline, so check the state's portal for current estimates. Paying to speed it up is often an option, at $100 in Washington and $350 for 24-hour handling in California. Leave time for the certificate of good standing from your home state, which you have to order before you file.

What if you have already been operating without registering?

Registering now doesn't erase it. Most penalties are charged per year, or part of a year, that you were unregistered, so the amount you owe is already set and keeps growing until the filing lands. Registering does usually restore your right to bring a lawsuit in that state, which is often the more urgent problem.

How current does your certificate of good standing need to be?

Short windows are the norm, and the clock starts when your home state issues the document rather than when you file. Illinois and Washington both want 60 days or newer, and Florida allows 90. Order it just before you file, because a stale certificate gets the application rejected and you pay for a fresh one.

What if you owe tax in a state but don't have to register there?

Register with the tax agency and leave the Secretary of State alone until the registration test is met. The two are independent, and neither one substitutes for the other. Track them separately, because the tax threshold is usually the one you cross first.

Do you have to register in every state where you have customers?

Usually not. Selling into a state, especially across state lines or with orders approved elsewhere, normally falls on the safe list for registration purposes. Sales can still create a duty to collect sales tax, which is a different obligation owed to a different agency.

Does a foreign LLC need a registered agent in each state?

Yes, and the agent needs a real street address in that state, not a post office box. The agent receives lawsuits and official state mail on your behalf, and losing agent coverage is one of the quieter ways a registration falls out of good standing.

Can you undo a registration if you stop operating in the state?

Yes, and most states have a specific withdrawal or cancellation filing for it. This matters because an active registration keeps generating annual obligations whether or not you are still operating there. California's $800 annual tax, for example, follows the registration rather than the activity, so withdraw formally instead of going quiet.

Does registering create a second LLC?

No. Your existing LLC stays one company, governed by its home state's law, with its home state filings unchanged. Registering adds permission to operate somewhere else, along with that state's annual obligations.