| The legal system comes in categories and layers that | | | | business does well and I decide to start a website |
| most people don't grasp at first. One of the layers has | | | | selling the cars. The site does well and I have |
| to do with how corporations are regulated and leads | | | | customers in California. Since my corporation was |
| to the odd situation where many corporations are | | | | formed in Nevada, California is going to view it as a |
| designated as "foreign" even if they are formed in a | | | | "foreign" corporation. |
| state. | | | | So, do I have to register in California and pay taxes? |
| "Legalese" is a term referring to various terms in the | | | | Well, the test is different for every single state! In most |
| law that don't really mean what they seem to suggest. | | | | states, it boils down to whether a corporation is "doing |
| A "foreign" corporation is just one of those terms. It | | | | business" in the state. With a few online customers in |
| can refer to corporations that were formed in another | | | | California, I am not going to be required to register. If I |
| country as the name suggest. More often than not, | | | | open a retail store in Los Angeles, however, I certainly |
| however, it refers to a corporation formed in one state | | | | am. |
| but doing business in another. | | | | There is no clear line or test for determining if you |
| When it comes to corporate law, it vital to understand | | | | have to file as a foreign corporation in most states. |
| that it is controlled by the states instead of the federal | | | | Instead, there is generally a sliding scale of factors |
| government. This means each state has separate | | | | related to things such as whether you have an office |
| regulations and requirements related to the creation, | | | | in the state, a bank account, derive a certain percent |
| running and closure of the entities. This can be a real | | | | of revenue and so on. |
| problem for corporations that do business in more than | | | | If you find yourself doing a lot of business in another |
| one state, a common occurrence with internet | | | | state, you would be wise to check into the issue of |
| businesses. Let's take a look. | | | | whether you need to register in that state. Failure to do |
| Assume I live in Las Vegas and start a business selling | | | | so can lead to penalties, fines and an absolute ton of |
| remote controlled cars. I incorporate in Nevada. The | | | | aggravation. |