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Multi-State Licensure and Business Registration 4

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IlliniPE

Civil/Environmental
Jun 19, 2023
35
US
I have a client that does work in multiple states, but I only work from my home office. I have been getting individual licensure, firm licensure, and registering my LLC with every state, but they are wanting to expand into a LOT more. I will still have to get individual and firm licensure, but my question is if I will need to be registered as a business in each state (along with paying for a registered agent in those states). This question initially came while I was researching Florida statutes, and it lists activities that are exempt from requiring registration, one being "Transacting business in interstate commerce." I interpret providing consulting services as interstate commerce. I was wondering if any of you have experience in being a foreign business and if you have gotten registered as a business in all of the states, or just licensure with the board.
 
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Edit: see follow-up below!

If you haven't done it already, I'd recommend discussing this with an attorney. I did this last year and the attorney said I would be "offering engineering services in a state" if at least two of the following apply:

1. Work on a project that's in that state.
2. Have employees on payroll in that state.
3. Have an office in that state.

In my case, #1 applies but #2 and #3 don't, so he said I shouldn't be getting COAs in those states. Maybe you can avoid some of this paperwork and associated fees.
 
As with anything, it varies by state. For instance, In North Carolina I have to have my personal license, my firm license, and a Certificate of Authority for a Foreign LLC to operate in the state issued by the NC Secretary of State's office. In Tennessee, they don't do firm licenses but you have to file a disclosure firm stating who is in responsible charge for your operations concerning Tennessee.

This document is a few years old now, but it's at least a good place to start: 50 State Survey of Design Firm Licensure
 
I know some states require any licensed PE to operate under a business license.
 
271828 said:
In my case, #1 applies but #2 and #3 don't, so he said I shouldn't be getting COAs in those states.
That is the mindset I have as well. I have not consulted an attorney, but it seems to me that the "interstate commerce" exclusion is pretty self-explanatory. I just wasn't sure if anyone had actually been providing services in other states without a COA. Now that I know it's possible, I can dig a little more and ask the states informed questions. I appreciate the input!

phamENG said:
This document is a few years old now, but it's at least a good place to start:
This is a great place to start. Unfortunately, it doesn't really differentiate between domestic and foreign business.

TigerGuy said:
I know some states require any licensed PE to operate under a business license.
The issue I'm having is the Board saying one thing and the Sec of State saying another.
 
For what it's worth, my examples for for states where I do not reside. I'm in Virginia, and have done work in NC and Maryland. I got a firm license and CoA in both of those states. I've also done work in Tennessee and Maine, but at the time they were both satisfied with me just having a PE license since I wasn't in state. Looking back at TN, I either misunderstood then or they changed the rules, not sure which. (That project was abandoned halfway through, so I'm not too worried about it.)

271828's 2 out of 3 rule is interesting. I'll have to check with my attorney and see how he feels about that. I'm in the same boat with only meeting #1 for everywhere but VA.
 
phamENG, please let me know what your attorney says. I find this to be a hair-raising subject.

The rules sound imposing, as if I need a coa if I do anything on a project in the state.

I might work on one delegated design project in each of ten states in a year. I was getting overwhelmed at the idea of needing COAs in all of them, so I asked the question.

I'm a single member LLC btw doing delegated design and projects that don't require a seal. Forensics, reports, etc.

I do not know if this is different for EORs.
 
phamENG said:
I'm in Virginia, and have done work in NC and Maryland. I got a firm license and CoA in both of those states
I reached out to NC to see if I fall under the interstate commerce exclusion, as I believe you would, too. I would ask your attorney to review Article 7 of the state statute, more specifically 57D-7-01 subsection (b)(8). I will return to this thread with what NC says.

271828 said:
The rules sound imposing, as if I need a coa if I do anything on a project in the state.
Would you agree that you're just providing services between states i.e. interstate commerce? If so, you're excluded from states that allow that. I'm not sure how any state wouldn't as that is a federal issue. I'm a single-member LLC as well and REALLY don't want to put up with the registered agents and annual reports and all that because I'm not even subject to taxation in those states.
 
IlliniPE said:
Would you agree that you're just providing services between states i.e. interstate commerce? If so, you're excluded from states that allow that. I'm not sure how any state wouldn't as that is a federal issue. I'm a single-member LLC as well and REALLY don't want to put up with the registered agents and annual reports and all that because I'm not even subject to taxation in those states.

I think that's right, but I am shaky enough in my understanding that I'm relying quite a bit on my attorney. The regulations use terms like "offer engineering services --> need a COA" which sounds like almost anything. At some point, I started wondering what "offer engineering services in the state" means, so I got on the phone.

I'd highly recommend investing in a conversation with your attorney to make sure you're covered.
 
Huh, I never thought there was a loop hole in needing to get a COA in each state your business provides engineering services in. I wish I had looked into this before dealing with my 8 SoS filings, registered agents, and COA's.

Is it possible that while the interstate commerce clause would exclude the business needing to register with the SoS to satisfy the state, but the engineering board requires every person operating within a firm to have a COA? It just seems like the wording in all the board documents make it clear that if you operate under a firm, you need a COA. And the first step of every COA application is to send the articles from that state's SoS.

I know some states like Tennessee and Indiana do not require a COA. Would the interstate commerce clause only apply to these states?
 
LOTE said:
It just seems like the wording in all the board documents make it clear that if you operate under a firm, you need a COA. And the first step of every COA application is to send the articles from that state's SoS.
The question that is unclear to me is if that pertains to ALL firms or only domestic firms. They fail to make a distinction between foreign and domestic. I have reached out to several SoS and boards for clarification. I agree with you though, I am looking at a ridiculous amount of SoS filings that I'd rather not spend the time doing if unnecessary.

271828 said:
I'd highly recommend investing in a conversation with your attorney to make sure you're covered.
I intend to. I am waiting for feedback from boards and states first though to have some talking points.
 
LOTE said:
Huh, I never thought there was a loop hole in needing to get a COA in each state your business provides engineering services in. I wish I had looked into this before dealing with my 8 SoS filings, registered agents, and COA's.

Most definitely don't take my word for it. I don't claim to have a definitive answer. It might depend on the details of the kind of project you work on.

I don't think I'm describing a loop hole. It's trying to define "providing engineering services."

For example, I'm a specialist in a very narrow area, so I get calls from engineers all over the country asking me to run some calcs, write a letter, etc. If I had a COA for every state I do that in, it would cover most of the US. Quite a few of those states only had one project each in 15 years.

As another, I do delegated design for fabricators in several states. In a given year, I might get 5-6 projects in one state, 2 in another, 1 in another, and zero in another 8-10 states. These projects are usually small, often with $1000 fees. There's no way I could justify keeping up a COA in all of those states, so I asked my attorney the question. He said a COA wouldn't be required because of the two-out-of-three interpretation mentioned above.

Moving up a notch: I don't do EOR work. I do not know if that rises another level such that the interpretation might change. I see Firm Numbers on Structural Drawings pretty often, so that makes me wonder.

 
271828 said:
I see Firm Numbers on Structural Drawings pretty often, so that makes me wonder.

It's been a few years since I set it up, but as I recall North Carolina wouldn't give me a firm number until I provided them with a copy of my CoA from the SoS. And the rules are pretty clear that I'm not allowed to provide engineering services in North Carolina unless I'm a Sole Proprietor or work for a registered firm. I'm not an SP, so I did the whole deal. I'm right on the border with NC, so it's worthwhile. I dropped Maryland this year because I've only done....3 projects? Something like that. Didn't make sense to maintain it anymore so I contacted the board and informed them that my firm is no longer doing business in their state and moved to an inactive status. I'm maintaining my personal license, but don't want to deal with the headache of keeping the firm up to date.

Regardless of what an attorney says, though, it's best to get a written opinion from the board, too. Even though boards are not always right and do overreach on occasion, you're unlikely to get them to change their mind unless you sue them. If it's worth suing them over it, it's probably worth just paying the $300/year to maintain everything and keep a cheap RA service. And they could give you some real headaches in the meantime if they don't like what you're doing.
 
phamENG, a written opinion sounds like a good idea. I made an attempt at doing this, but perhaps it wasn't strong enough.

I called the board and SoS for one of the states and asked them if my types of projects required a CoA and both just parroted "if your firm offers services in the state." I asked them if my types of projects qualify as "offering services in the state" and neither would say whether my projects qualify or not. That was part of led me to call an attorney.

It seems like this comes down to defining "offering engineering services in the state."

It sounds like you're interpreting this as "offering engineering services [from anywhere] for a project in the state." That was my default interpretation, and why I have several COAs*.

My attorney interprets it as a combination of "offering engineering services for a project in the state" and "offering engineering services while my firm is in the state." For example, if my firm HQ is in TN and I open an office in AL and have an AL resident on the payroll.

(*Just for clarity: I told the story in a weird order; wasn't planning to wade this far in. I established and have several COAs. Now I'm thinking I didn't need to. In recent years, I haven't bothered to get a couple, and I'm thinking about ending some current ones. I'm not sure, so that's why the loop is still open.)
 
BTW, to all in the thread, I appreciate the dialogue on this subject. I find it confusing and stressful, and it's good to not be all alone with my thoughts. LOL
 
phamENG said:
It's been a few years since I set it up, but as I recall North Carolina wouldn't give me a firm number until I provided them with a copy of my CoA from the SoS. And the rules are pretty clear that I'm not allowed to provide engineering services in North Carolina unless I'm a Sole Proprietor or work for a registered firm.
I reached out to both and hope to get some clarity.

271828 said:
my types of projects required a CoA and both just parroted "if your firm offers services in the state."
I believe the confusion stems from "Does your firm offer services IN the state?" vs. "Does your firm offer services TO the state?". I.E. are you physically located in the state and providing services, or are you states away selling your services to the state. It's my understanding from my CPA that I do not have to file state income taxes in those foreign states because I do not have a physical office there, nor was I physically on site performing the services. I don't see how this is any different.
 
IlliniPE: agreed on the source of confusion

phamENG: I think I recall you do EOR work. Is there a requirement that the Structural Drawings have a firm number? I'm trying to figure out why EORs have those when I know they don't have an office or employees in the state.
 
Correct. Several states require your firm license number to be displayed on your drawings.
 
NC Admin Code Section 56.1103 said:
(a) Certification of Final Drawings. Drawings or maps not subject to the exceptions in Paragraph (c) of this Rule shall conform to the following:
(1) Certification is required on reproducibles or original drawings;
(2) The seal may be a rubber stamp, embossed seal, computer-generated seal, or other facsimile that becomes a permanent addition to a plan sheet or map;
(3) The licensee's written signature must be placed over, or adjacent to, the seal on the original document. A facsimile signature is not acceptable;
(4) The date of signing must be annotated on the original document;
(5) All sheets of engineering and surveying drawings must be certified;
(6) The name, address and license number of the licensee's firm shall be included on each sheet of engineering drawings. For surveys, the name, address and license number of the licensee's firm shall be included on the first sheet of the survey or title sheet. The individual license number of the sole proprietor shall be used as the license number for an exempt sole proprietorship that meets the requirements of 21 NCAC 56 .0802(b)(1); and
 
Just to follow up, heard back from FL, TN, and NC Sec of State. They all said, "We cannot advise if you do or don't have to register a business. You will need to contact a legal advisor."
So much for that. It's odd that they can't comment on their own requirements.
 
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