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What Does It Take to Do Business in Multiple States?

March 23, 2015 / by Shelby Tutty

S-TuttyAs your corporation or LLC grows, you may begin to consider expanding outside of the state where you do business. This article will help you understand what's involved in getting up and running in a new state.

Once you've made the decision, the first thing you'll need to do is register as a new business with the state. This lets the state know:

  • Your intentions to do business there
  • What kind of business you're in
  • Your contact and governance information

The Process Varies by State

Each state has its own process that you'll need to follow to get registered, but most offer online business registration with one of the following state agencies: the Department of Revenue, Secretary of State or Department of Treasury. To find out how to register, start by doing a Google search for "new business registration [state name]." Click on the state's official page in the search results.

Depending on the nature of your business in the state, you may also have to set up an account with the following agencies:

  • Department of Revenue (for payroll withholdings and sales tax remittance)
  • Secretary of State (for annual reports and additional corporation/LLC filings)
  • Department of Labor (for employment taxes)

In addition, you may have to file license and permit applications as well as determine if you'll need to file a state tax return or pay business-specific taxes. I suggest calling the state agency with which you're required to register to determine what's involved based on your situation.

Strength of Nexus Is Important

When you call, the state will determine the strength of the nexus (i.e. connection between your business and the state). A stronger nexus, such as opening up a physical office in the state, usually entails more filing requirements than just hiring a home-based employee there. But it all depends on the state.

For example, suppose you hire a home-based employee, but are not opening up an actual office in State A. This state may determine that in addition to filing employment taxes, you have enough nexus to collect sales tax in that state. State B may require that you file annual reports, employment taxes and sales tax, while State C may only require that you file employment taxes.

Depending on your nexus, the Secretary of State may require your business to search the corporation database to make sure there isn't already an entity doing business with a similar business name as yours. If there is a duplicate name, you'll need to select another business name under which to operate in that state (a "doing business as," or DBA, name).

Do You Need a Registered Agent?

If it's determined that you must file annual reports, then you'll also need to designate someone to be the company's "registered agent" (a.k.a. "resident agent"). A registered agent is a person or business legally residing in that state. The registered agent's job is to accept mail and documents, usually legal documents or government communications, on the company's behalf and to communicate those notices to the business. The registered agent may or may not be responsible for filing the annual report. It's important to select a trustworthy registered agent, as that person serves as the corporate contact in that state.

If you're required to file annual reports, but do not know anyone who can serve as the registered agent, you can hire companies like Corporation Service Company ( to act as your registered agent and file the annual reports for your business. Law and accounting firms may also offer this service.

If you've incorporated in a state other than where you do business (e.g. Delaware), then you're already familiar with the job and importance of a registered agent.

Once you're registered, the state will give you a state identification number, similar to a federal identification number, to use on your communications and filings with the state. You may also be given additional identification numbers for sales tax and employment taxes.

Cover All Your Bases

Even if you're not opening an office in a new state, but simply hiring an employee in another state to work from her home office, you should take certain steps to be safe.

Start with your payroll services provider. Find out what they need to get the employee set up in the payroll system. This process might also require:

  • Contacting the state's Department of Revenue to register for filing state income taxes (as applicable)
  • Asking your workers compensation insurance carrier or insurance broker what you must do to make certain your new employee is appropriately insured
  • Determining the state's process for registering for any applicable unemployment insurance that should be paid in for the employee

Keep in mind: Your benefits plans may also have some state-specific restrictions, so also contact your benefits provider to learn more about your new employee's options for benefits.

If You Need Help …

This may seem like a lot to take on. As a Supporting Strategies client, you get the added benefit of having someone to manage these processes for you and ensure they're done efficiently and correctly. Besides assisting in the process, we can also file your annual reports and keep track of filing deadlines, which vary by state.

If you're thinking about expanding into new states, Supporting Strategies can help you to be in two or all 50 states. Contact us today to learn more.

Topics: Small Business Advice

Shelby Tutty

Written by Shelby Tutty

Shelby is a financial operations associate with Supporting Strategies.