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Multi-State Licensure and Business Registration
4

Multi-State Licensure and Business Registration

Multi-State Licensure and Business Registration

(OP)
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.

RE: Multi-State Licensure and Business Registration

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.

RE: Multi-State Licensure and Business Registration

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

RE: Multi-State Licensure and Business Registration

I know some states require any licensed PE to operate under a business license.

RE: Multi-State Licensure and Business Registration

(OP)

Quote (271828)

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!

Quote (phamENG)

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.

Quote (TigerGuy)

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.

RE: Multi-State Licensure and Business Registration

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.

RE: Multi-State Licensure and Business Registration

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.

RE: Multi-State Licensure and Business Registration

(OP)

Quote (phamENG)

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.

Quote (271828)

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.

RE: Multi-State Licensure and Business Registration

Quote (IlliniPE)

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.

RE: Multi-State Licensure and Business Registration

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?

RE: Multi-State Licensure and Business Registration

(OP)

Quote (LOTE)

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.

Quote (271828)

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.

RE: Multi-State Licensure and Business Registration

Quote (LOTE)

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.

RE: Multi-State Licensure and Business Registration

Quote (271828)

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.

RE: Multi-State Licensure and Business Registration

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.)

RE: Multi-State Licensure and Business Registration

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

RE: Multi-State Licensure and Business Registration

(OP)

Quote (phamENG)

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.

Quote (271828)

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.

RE: Multi-State Licensure and Business Registration

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.

RE: Multi-State Licensure and Business Registration

Correct. Several states require your firm license number to be displayed on your drawings.

RE: Multi-State Licensure and Business Registration

Quote (NC Admin Code Section 56.1103)

(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

RE: Multi-State Licensure and Business Registration

(OP)
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.

RE: Multi-State Licensure and Business Registration

RE: Multi-State Licensure and Business Registration

I didn't see this posted yet, but this website is a pretty good reference:

https://www.harborcompliance.com/engineering-firm-...

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).

RE: Multi-State Licensure and Business Registration

(OP)
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.

RE: Multi-State Licensure and Business Registration

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.

RE: Multi-State Licensure and Business Registration

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

RE: Multi-State Licensure and Business Registration

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...

RE: Multi-State Licensure and Business Registration

LOTE, thanks. That makes sense to me. I'll ask my CPA about this also before doing #3.

Is your understanding that #1 and #2 are correct?

RE: Multi-State Licensure and Business Registration

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...)

RE: Multi-State Licensure and Business Registration

LOTE, thanks again.

You said "that require a CoA." Have you found that some states do not require a COA from either the board or the state?

RE: Multi-State Licensure and Business Registration

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."

RE: Multi-State Licensure and Business Registration

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.

RE: Multi-State Licensure and Business Registration

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.

RE: Multi-State Licensure and Business Registration

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."

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