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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Multi-State Licensure and Business Registration 4
- Thread starter IlliniPE
- Start date
jerseyshore
Structural
I didn't see this posted yet, but this website is a pretty good reference:
A lot of states require registering as a foreign business and/or getting licensed to practice professional services as a foreign business in their state. Check the list.
Personally, I wouldn't take the risk to sign anything in a state I'm licensed in, but not business licensed in unless I was sure it's not required (like PA for example).
A lot of states require registering as a foreign business and/or getting licensed to practice professional services as a foreign business in their state. Check the list.
Personally, I wouldn't take the risk to sign anything in a state I'm licensed in, but not business licensed in unless I was sure it's not required (like PA for example).
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- Thread starter
- #23
Okay so after hearing back from a couple different attorneys, the consensus is that you are NOT required as a foreign LLC to file for COA with the secretary of state in a state if you do not have a physical office there, and you are not physically performing the work there. You would just get your individual and firm engineering licenses with the engineering board. HOWEVER, some state engineering boards DO require a COA for firm licensure, in which case you WOULD NEED a COA. Sole proprietors are another story, but I wouldn't recommend anyone do engineering work as a sole proprietor.
I dug more into this.
I called the WV board and talked this over with their attorney. He was willing to educate me on the subject. There are two distinct issues.
1. He said my attorney's two of three criterion has to do with tax filing. If I design a project in WV and have an office there, then I would probably need to pay taxes on that income to WV. He wouldn't give definitive answers on that because he's not with the SoS.
2. He was definitive on the COA. If the project is in WV, then a COA is required regardless of where the firm is located. He said his word is only definitive in WV, but his understanding is that other states are probably similar.
I called the WV board and talked this over with their attorney. He was willing to educate me on the subject. There are two distinct issues.
1. He said my attorney's two of three criterion has to do with tax filing. If I design a project in WV and have an office there, then I would probably need to pay taxes on that income to WV. He wouldn't give definitive answers on that because he's not with the SoS.
2. He was definitive on the COA. If the project is in WV, then a COA is required regardless of where the firm is located. He said his word is only definitive in WV, but his understanding is that other states are probably similar.
I've dug more into this over the last couple of days. Best I can tell, my attorney's advice was utterly incorrect, or I'm the worst listener to ever live.
In WV, the process goes like this:
1. Get with the engineering board to get a Certificate of Authorization. The person on the phone was very clear that this needs to be done if the project is in WV, regardless of where my office is, or where I am.
2. Get with the SoS to get a Certificate of Authority. Same as above -- this must be done if any project is in WV, period.
3. Get with the tax department and complete their form. Same as above -- this must be done if any project is in WV. Default is "services" are subject to sales tax, so there's a return every year -- at the end of the year, they'll send that to be filled out. Engineering services are "professional services" so are exempt from sales tax, so there's no need to collect sales taxes, but the form still needs to fill out every year.
I obviously have a lot to learn. A little less than before. LOL
In WV, the process goes like this:
1. Get with the engineering board to get a Certificate of Authorization. The person on the phone was very clear that this needs to be done if the project is in WV, regardless of where my office is, or where I am.
2. Get with the SoS to get a Certificate of Authority. Same as above -- this must be done if any project is in WV, period.
3. Get with the tax department and complete their form. Same as above -- this must be done if any project is in WV. Default is "services" are subject to sales tax, so there's a return every year -- at the end of the year, they'll send that to be filled out. Engineering services are "professional services" so are exempt from sales tax, so there's no need to collect sales taxes, but the form still needs to fill out every year.
I obviously have a lot to learn. A little less than before. LOL
271828 - The advice I got from my CPA for #3 was to avoid filing with any outside state's tax department. Since professional services are except, and you are not required to establish NEXUS until typically you reach $100,000/year in that state, there is no need to file with the tax department. The government employees will tell you otherwise since they want transparency to see if they can collect income tax, but they have no legal disciplinary action they can take until you hit that $100,000/yr in their state. And even then, the only thing they can do is levy interest and late fees on taxes owed, which for professional services would be $0...
271828, this has been my experience for #1 and #2 with the states I am in (WV is not one of them) that require a CoA. The SoS Certificate of Authority comes first (along with registered agent service), then engineering board CoA.
I am little fuzzy on Minnesota, Iowa, and Indiana. They do not require a CoA with the engineering board, but I am unsure if registering with the SoS is required (I have not done this in these states...)
I am little fuzzy on Minnesota, Iowa, and Indiana. They do not require a CoA with the engineering board, but I am unsure if registering with the SoS is required (I have not done this in these states...)
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jerseyshore
Structural
271828, look at my link above, some states don't require CoA's specifically for out of state engineering firms, but it seems like pretty much every state requires some sort of documentation.
Take PA for example:
"Engineering Firm licensure is not required on the State level in Pennsylvania. Pennsylvania does not license firms, but requires that engineering companies have at least one licensed engineer on staff. Name registration is required for firms with some form of "Engineer" in the name. You must receive board approval prior to foreign qualification."
Take PA for example:
"Engineering Firm licensure is not required on the State level in Pennsylvania. Pennsylvania does not license firms, but requires that engineering companies have at least one licensed engineer on staff. Name registration is required for firms with some form of "Engineer" in the name. You must receive board approval prior to foreign qualification."
I can confirm that Tennessee engineering board will issue a "firm disclosure" without requiring registration with the SoS. I do not know yet the legal implications if my company was sued for a project in Tennessee without registering with the SoS.
jerseyshore
Structural
States want their taxes so most will require a business doing business in their state to file with their SoS/ Treasury department, even if they don't have a physical location in that state. Most of us engineers are not collecting tax, but we still have to file to keep them happy.
It varies a lot from state to state however so the best thing is just to call/email the engineering boards and find out what is or isn't required. Any state board I've ever called has been very helpful recently. Engineering & architectural boards are unpredictable. There's people who work for years without the proper documents in a state and then you hear about someone doing 1 job and getting a board notice against them. No reason to get nailed for something stupid like not filling out an application. After the initial filing it's just some yearly fees at most.
It varies a lot from state to state however so the best thing is just to call/email the engineering boards and find out what is or isn't required. Any state board I've ever called has been very helpful recently. Engineering & architectural boards are unpredictable. There's people who work for years without the proper documents in a state and then you hear about someone doing 1 job and getting a board notice against them. No reason to get nailed for something stupid like not filling out an application. After the initial filing it's just some yearly fees at most.
JasonMcCool
Structural
This has been a very helpful thread - more so than the last 3 days of trying to get answers from the PE boards and SoS offices in several states I'm dealing with. I'm in the same boat of several on this thread of doing a lot of smallish delegated design jobs in multiple states for fabricators such that the overhead would get hefty to maintain all those multiple filings in each state. My old boss retired and dissolved his firm, so I've started my own firm and am trying to get set up, but the all the COA + SoS registration fees and the potential of additional taxes are killing me when I haven't even been able to pay myself a paycheck yet!
I've tried getting responses from different SoS offices, but the consensus has been: it's up to you to decide if you meet the exemptions in our statutes for "transacting business" in our state and not having to register with us, and we can't tell you anything one way or the other about the interpretation of our own laws other than that you should make the check out to us if you decide you need to pay us, and we'll come after you if you don't correctly interpret our rules that we can't explain. This is all just blowing my mind. And don't get me started on what I would have to do to practice in the People's Republic of California where my original PE license is from (minimum of $800 per year to their Tax Franchise Board! plus the registered agent, etc).
I'm finding that a lot of states base their provisions on the Revised Model Business Corporation Act (kind of like the IBC model code that states then adopt/ammend as desired). I'm applying for a CA with the Oklahoma PE Board for my out-of-state single-member LLC right now. But the Secretary of State's confusing nondefining definition of "transacting business" seems to have 2 exemptions that might apply to me. One is "Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts." The other is "Conducting an isolated transaction that is completed within thirty (30) days and that is not one in the course of repeated transactions of a like nature." My contracts for projects in Oklahoma are typically between me (in Arkansas) and a steel fabricator I've worked with for years that is in Kansas. So they would seem to fall under that category of "orders requiring acceptance outside this state before they become contracts." Or possibly "isolated transaction" exemption since I might only get one project there once in a while. By that first exemption, though, I would not qualify for an exemption in Kansas since I would be transacting business in that state (if I'm understanding all the lawyer gobbledygook).
The RMBCA does have another exemption for "doing business in interstate commerce" that Oklahoma didn't adopt verbatim in their statutes. But for states that include that directly, the RMBCA does explain that "A foreign corporation is not doing business within the meaning of this chapter if it is transacting business in interstate commerce (section 15.05(a)(11)) or soliciting or obtaining orders that must be accepted outside this state before they become contracts (section§15.05(a)(6)). These limitations reflect the provisions of the United States Constitution that grant to the United States Congress exclusive power over interstate commerce, and preclude states from imposing restrictions or conditions upon this commerce."
I've tried getting responses from different SoS offices, but the consensus has been: it's up to you to decide if you meet the exemptions in our statutes for "transacting business" in our state and not having to register with us, and we can't tell you anything one way or the other about the interpretation of our own laws other than that you should make the check out to us if you decide you need to pay us, and we'll come after you if you don't correctly interpret our rules that we can't explain. This is all just blowing my mind. And don't get me started on what I would have to do to practice in the People's Republic of California where my original PE license is from (minimum of $800 per year to their Tax Franchise Board! plus the registered agent, etc).
I'm finding that a lot of states base their provisions on the Revised Model Business Corporation Act (kind of like the IBC model code that states then adopt/ammend as desired). I'm applying for a CA with the Oklahoma PE Board for my out-of-state single-member LLC right now. But the Secretary of State's confusing nondefining definition of "transacting business" seems to have 2 exemptions that might apply to me. One is "Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts." The other is "Conducting an isolated transaction that is completed within thirty (30) days and that is not one in the course of repeated transactions of a like nature." My contracts for projects in Oklahoma are typically between me (in Arkansas) and a steel fabricator I've worked with for years that is in Kansas. So they would seem to fall under that category of "orders requiring acceptance outside this state before they become contracts." Or possibly "isolated transaction" exemption since I might only get one project there once in a while. By that first exemption, though, I would not qualify for an exemption in Kansas since I would be transacting business in that state (if I'm understanding all the lawyer gobbledygook).
The RMBCA does have another exemption for "doing business in interstate commerce" that Oklahoma didn't adopt verbatim in their statutes. But for states that include that directly, the RMBCA does explain that "A foreign corporation is not doing business within the meaning of this chapter if it is transacting business in interstate commerce (section 15.05(a)(11)) or soliciting or obtaining orders that must be accepted outside this state before they become contracts (section§15.05(a)(6)). These limitations reflect the provisions of the United States Constitution that grant to the United States Congress exclusive power over interstate commerce, and preclude states from imposing restrictions or conditions upon this commerce."
Jason, I happen to be going through the same issue. I think I will go this route. Talk to my attorney and have him write an opinion letter. The opinion letter will be whether I am required to obtain COA+ SOS registrations for every state that I seal drawings and such. The opinion letter will say no based on the interstate commerce which is a federal control. Now as good and conservative engineers that we are, we need to have factors of safety for our actions. I will word my contracts with my clients that the contract is for less than 30 days, our firm is located in my state and the contract is being signed and conducted in my state, that this contract is for a single action and if any service is required that extends over 30 days or additional services are required than it will need to be a new contract and initiated and conducted in the state of (name your state.) And then if you ever get a knock on the door from a state asking where your COA and SOS registrations are at: you send them the opinion letter from your attorney and ask them to send you an opinion letter from their attorney. I believe most will simply not bother to pursue the matter. They simply reach for low hanging fruit. By the way, this has been a very informative thread. Good luck with your venture.
I was able to submit a NY criminal background check and it worked just fine, but it may be that PA was the second state I was applying for, so I only needed the check from the state I already had a license. It may be that you need one from each state you have a license, in which case the FBI one may be less paperwork
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