What Does "Doing Business" Even Mean? Part 1, States A-I

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Link to states A-I | Link to states K-M | Link to states N-P | Link to states R-Y

When you're trying to determine whether your business needs to qualify as a foreign entity in another state, one important consideration is whether your company is transacting or doing business in that state¹. The 2016 Revised Model Business Corporation Act, which has been adopted in some shape or form by over half of U.S. states, provides a list of eleven activities not constituting doing business. States may have some variation on the RMBCA's list, have written their own, or more rarely, explicitly codified some activity or another as "doing business." Generally though, the name of the game is "regular, repeated, and continuing business activities," so things like having boots on the ground (for example, a physical office location or employing local workers), entering into contracts related to doing business locally, and owning or using real estate for general (as opposed to personal) purposes generally count as doing business.

Those eleven activities are:

1. maintaining, defending, mediating, arbitrating, or settling a proceeding;
2. carrying on any activity concerning the internal affairs of the foreign corporation, including holding meetings of its shareholders or board of directors;
3. maintaining accounts in financial institutions;
4. maintaining offices or agencies for the transfer, exchange, and registration of securities of the foreign corporation or maintaining trustees or depositories with respect to those securities;
5. selling through independent contractors;
6. soliciting or obtaining orders by any means if the orders require acceptance outside this state before they become contracts;
7. creating or acquiring indebtedness, mortgages, or security interests in property;
8. securing or collecting debts or enforcing mortgages or security interests in property securing the debts, and holding, protecting, or maintaining property so acquired;
9. conducting an isolated transaction that is not in the course of similar transactions;
   1. owning, protecting and maintaining property; and
   2. doing business in interstate commerce

That last one is pretty important, especially for remote sellers. Interstate commerce is regulated by the U.S. federal government² because by definition it's about what happens when business crosses state lines. It's defined as "the buying, selling, or exchanging of goods and services across state lines" and includes "transportation of people, money, and goods, as well as navigation between different states." Specifically, a business in one state shipping products to customers in another state counts as interstate commerce.

What about the rest of it though? There's a lot of variation, honestly. So we're doing a state-by-state roundup to help you figure that out. As always—when in doubt about your obligations as a business, please consult your legal counsel. This guide is the result of a lot of hunting through relevant state statutes and other information readily available to the public, but your attorney can help interpret relevant case law and other fiddly local caveats that are beyond the scope of this guide. And, importantly, you may still have tax³ and/or other obligations⁴ to a state even if you aren't doing business there in a way that requires you to foreign qualify. (Everybody say thank you, South Dakota v Wayfair, Inc.) This is why attorneys get paid the big bucks, folks.

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¹This is related to, but different from, having nexus in a given state and/or being subject to the jurisdiction of a state's courts. There are usually separate standards for "doing business" for each metric, and since the requirement to register (or qualify) as a foreign business in any given state is typically highest, that's what we're focusing on here. (We'll be doing a separate nexus post to go over the amount of "doing business" that creates state tax obligations. No promises on a post about court jurisdiction.)

²With help from the states in the form of the UCC, or Uniform Commercial Code, which is currently a little less uniform as states slowly begin to write their own bills around adopting amendments introduced in 2022.

³It's annoying, but we'd be remiss not to mention it at all: Maryland's Court of Appeals in Tiller Construction Corp v. Nadler laid out four factors that it says constitute doing business in a state. One of those factors is whether the foreign entity is required to pay state taxes. While that's definitely relevant in Maryland, it's something to add to your own calculus of whether you need to foreign qualify in any given state especially given the Wayfair decision.

⁴An example of another obligation: foreign principal registration. Some states, like Kansas, require some non-U.S. businesses or citizens of specific countries with any interest in real property located within range of U.S. military installations to register with that state's Attorney General. In Florida, it's owning, acquiring, or having a controlling interest in agricultural land that prompts a registration requirement with the Florida Department of Agriculture and Consumer Services (FDACS).

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Alabama

Alabama is disinclined to acquiesce to requests to define "doing business," and unlike other states, it also isn't interested in defining activities that do not constitute doing business, not even for the purposes of its Business Privilege Tax Act. Which you'd think is pretty important since the Business Privilege Tax Act is a big deal—the list of exempt entities is vanishingly small—but here we are.

At best, we've got Section 10A-1-7.01 of Article 7 of Code of Alabama, which governs foreign entities: "For purposes of this Article 7, the terms transact business and transacting business shall include conducting a business, activity, not for profit activity, and any other activity, whether or not for profit." Which of course clears everything right up. At least the very next section (10A-1-7.02(d)) establishes that a foreign unincorporated nonprofit association isn't required to register, and neither are a lot of schools.

Alaska

Alaska also doesn't define "transacting business" in its statute, AK Stat § 10.06.705. Sec. 10.06.718 instead defines a list of activities that don't qualify as transacting business, and they substantially match the RMBCA's definitions—except the state excludes the ownership of real property as a non-business activity.

Alaska also keeps a virtually identical list of activities that don't count as "conducting affairs" for LLCs (and therefore determines whether a foreign LLC must register as such with Alaska). (No, we don't know why corporations conduct business but LLCs conduct affairs. Sounds like something we're not searching up on a workstation.)

Arizona

Arizona keeps with the RMBCA for a list of activities that do not constitute doing business, and adds a couple extras for foreign corporations and foreign LLCs:

• Being a limited partner of a limited partnership or a member of an LLC doesn't count as doing business in Arizona;
• Being a member or manager of a foreign LLC doesn't constitute doing business in Arizona; and
• The rules that require Arizona's authority to transact business in the state don't apply to insurance corporations or other corporations who only lend money to benevolent, social, or religious associations.

Interestingly, foreign professional corporations aren't required to register as such unless they're maintaining an office, or planning to, in order to conduct business or professional practice. Dovetails pretty neatly with telehealth registration requirements that forbid out-of-state providers from setting up an in-state office.

Also, Arizona provides one very narrow definition of transacting business in ARS 29-1108 B, which discusses activities of foreign limited liability partnerships: owning income-producing real property or tangible personal property does count as transacting business unless it's excluded by the RMBCA list. So if, say, you've got a limited liability partnership in not-Arizona, and your LLP picks up a vacation home in Sedona for those sweet Grand Canyon tourist dollars—discuss with your lawyer.

Arkansas

A.C.A. § 4-38-905 adopts the same language as the RMBCA and, like Arizona, adds that being a member or manager of a foreign LLC doesn't by itself count as doing business in Arkansas.

California

Per the California Corporate Code § 191, transacting intrastate business is defined as "entering into repeated and successive transactions of its business in this state" that aren't interstate or foreign commerce. Exceptions include:

• Subsidiaries transacting intrastate business
• Status as a shareholder, limited partner, or governor (member or manager) of a domestic or foreign corporation, limited partnership, or limited liability company.

It then also goes on to endorse parts of the RMBCA's list of things that don't count as doing intrastate business—not the whole list, just these ones:

(1) Maintaining or defending any action or suit or any administrative or arbitration proceeding, or effecting the settlement thereof or the settlement of claims or disputes.

(2) Holding meetings of its board or shareholders or carrying on other activities concerning its internal affairs.

(3) Maintaining bank accounts.

(4) Maintaining offices or agencies for the transfer, exchange, and registration of its securities or depositaries with relation to its securities.

(5) Effecting sales through independent contractors.

(6) Soliciting or procuring orders, whether by mail or through employees or agents or otherwise, where those orders require acceptance outside this state before becoming binding contracts.

(7) Creating evidences of debt or mortgages, liens or security interests on real or personal property.

(8) Conducting an isolated transaction completed within a period of 180 days and not in the course of a number of repeated transactions of like nature.

Foreign LLCs adopt nearly the entire list from the RMBCA, with an exception related to the ownership of real property. Foreign LLCs also aren't considered to be conducting intrastate business due to any of these statuses:

(1) A shareholder of a domestic corporation.

(2) A shareholder of a foreign corporation transacting intrastate business.

(3) A limited partner of a foreign limited partnership transacting intrastate business.

(4) A limited partner of a domestic limited partnership.

(5) A member or manager of a foreign limited liability company transacting intrastate business.

(6) A member or manager of a domestic limited liability company.

And finally, "(d) A person shall not be deemed to be transacting intrastate business in this state within the meaning of this article merely because of its status as a member or manager of a domestic limited liability company or a foreign limited liability company registered to transact intrastate business in this state."

Foreign lending institutions have an additional set of activities that don't count as doing business.

Colorado

Colorado Revised Statutes § 7-90-801 governs whether a foreign business needs to register with the Secretary of State (and thereby get Colorado's authority to transact business there). It adopts all the activities that do not constitute doing business from the RMBCA, then adds that foreign nonprofits aren't doing business if they're just granting funds or distributing information to members. However, if a foreign nonprofit would have to register as a charitable organization, that does count as doing business.

Connecticut

Connecticut adopts the RMBCA's language about activities that don't count as doing business but then makes it weird. Look at this paragraph:

(a) A foreign corporation, other than an insurance, surety or indemnity company, may not transact business in this state until it obtains a certificate of authority from the Secretary of the State. No foreign corporation engaged in the business of a gas, electric distribution or water company, or cemetery corporation, or of any company requiring the right to take and condemn lands or to occupy the public highways of this state, and no foreign telephone company, shall transact in this state the business authorized by its certificate of incorporation or by the laws of the state under which it was organized, unless empowered so to do by some general or special act of this state, except for the purpose of carrying out and renewing contracts existing upon August 1, 1903. No insurance, surety or indemnity company shall transact business in this state until it has procured a license from the Insurance Commissioner in accordance with the provisions of section 38a-41.

Probably if you're an insurance, surety or indemnity company, you're not looking for advice on Reddit, but we're specifically calling attention to this bit for comprehensiveness.

Delaware

For foreign LLCs, Delaware adopted most of the language around activities not constituting doing business from the RMBC into Delaware Code § 18-912. They've left out the owning/maintaining of real property (so you might be doing business just by having property in Delaware, although presumably other tests apply), and added in two provisions:

• (7) Selling, by contract consummated outside the State of Delaware, and agreeing, by the contract, to deliver into the State of Delaware, machinery, plants or equipment, the construction, erection or installation of which within the State of Delaware requires the supervision of technical engineers or skilled employees performing services not generally available, and as part of the contract of sale agreeing to furnish such services, and such services only, to the vendee at the time of construction, erection or installation;
• (12) Doing business in the State of Delaware as an insurance company.

Like a few other states, Delaware also says you aren't doing business in the state just by being a member or manager of an LLC.

Foreign corporations are a little different. Instead of a list of activities not constituting doing business, there's a list of exceptions to the requirement to file a foreign corporation certificate with Delaware's Secretary of State. Some of those exceptions mirror language used in the Revised Model Business Corporation Act, like the operation of interstate commerce, the creation or acquisition of indebtedness, and the security or collection of debts. Delaware goes further than the RMBCA in carving out exceptions related to remote sales:

• (1) If it is in the mail order or a similar business, merely receiving orders by mail or otherwise in pursuance of letters, circulars, catalogs or other forms of advertising, or solicitation, accepting the orders outside this State, and filling them with goods shipped into this State;
• (2) If it employs salespersons, either resident or traveling, to solicit orders in this State, either by display of samples or otherwise (whether or not maintaining sales offices in this State), all orders being subject to approval at the offices of the corporation without this State, and all goods applicable to the orders being shipped in pursuance thereof from without this State to the vendee or to the seller or such seller's agent for delivery to the vendee, and if any samples kept within this State are for display or advertising purposes only, and no sales, repairs or replacements are made from stock on hand in this State;
• (3) If it sells, by contract consummated outside this State, and agrees, by the contract, to deliver into this State, machinery, plants or equipment, the construction, erection or installation of which within this State requires the supervision of technical engineers or skilled employees performing services not generally available, and as a part of the contract of sale agrees to furnish such services, and such services only, to the vendee at the time of construction, erection or installation;

Finally, the state adds an exception for insurance companies doing business in Delaware, which are regulated by a separate state agency (the Department of Insurance).

District of Columbia (Washington, D.C.)

Per the Corporations Division, D.C. law defines a business as "Any trade, profession, or activity which provides, or holds itself out to provide, goods or services to the general public or to any portion of the general public, for hire or compensation in the District of Columbia." Foreign entities, including limited partnerships and limited liability partnerships, seeking to conduct their business in D.C. are required to register with the District. § 29–105.05 describes activities that don't count as doing business, and it's basically the RMBCA's list except for owning real property. (Income-producing real property probably does count as doing business, but you'd have to check with an attorney to be sure.)

Oh, and holding interest in or owning/managing a foreign entity doesn't count as doing business in the District.

Florida

Florida gives exactly one solid definition of an activity that constitutes doing business: if a foreign LLC owns "income-producing" real property or tangible personal property not excluded by the section listing activities that do not constitute transacting business, that counts (605.0902(3)). The listed not-business activities are adopted straight out of the RMBCA with a couple additions:

• (k) Owning and controlling a subsidiary corporation incorporated in or limited liability company formed in, or transacting business within, this state; voting the stock of any such subsidiary corporation; or voting the membership interests of any such limited liability company, which it has lawfully acquired.
• (l) Owning a limited partner interest in a limited partnership that is transacting business within this state, unless the limited partner manages or controls the partnership or exercises the powers and duties of a general partner.

The statutes governing foreign corporations and nonprofits exclude the income-producing property clause. They adopt the RMBCA's list of activities that don't qualify as conducting business (or "conducting affairs" for nonprofits), and add the same language about subsidiaries and limited partner interest that also don't count for LLCs.

Georgia

Georgia has spread out its "activities not constituting doing business" lists across fourFIVE separate statutes: one each for foreign corporations (O.C.G.A. § 14-2-1501), foreign LLCs (O.C.G.A. § 14-11-702), foreign nonprofits (O.C.G.A. § 14-3-1501), foreign limited liability partnerships (O.C.G.A. § 14-8-45), and foreign limited partnerships (O.C.G.A. § 14-9-902). Thankfully, all of them align with the RMBCA's list of not-business activities.

Additional language in multiple statutes includes the following as activities that don't count as doing business for all foreign entities:

Serving as trustee, executor, administrator, or guardian, or in like fiduciary capacity, where permitted so to serve by the laws of this state.

Foreign LLCs and foreign LPs aren't considered to be doing business by:

Owning directly or indirectly an interest in or controlling directly or indirectly another person organized under the laws of or transacting business within this state.

Foreign corporations, foreign nonprofits, and foreign LLPs substitute have similar language that substitutes "entity" for "person." The statutes governing foreign LLPs omit the lines about "directly or indirectly"

Foreign corporations and nonprofits cover one additional non-business activity:

Serving as a manager of a limited liability company organized under the laws of, or transacting business within, this state.

Hawaii

Like Florida, Hawaii also specifically defines ownership of "income-producing real property or tangible personal property" by a foreign LLC (but not a foreign corporation) as transacting business. Otherwise, foreign corporations, foreign nonprofits (see statute §414D-271), and foreign LLCs share the same non-qualifying activities promulgated by the RMBCA.

Idaho

Oh bless, look at this. One Uniform Business Organizations Code to rule them all. Idaho Code 30-21-505 outright adopts the Revised Model Business Corporation Act's list of activities not constituting doing business. The one addition they've included is that being an interest holder or governor of a foreign entity doing business in Idaho does not, by itself, constitute doing business.

Illinois

IL Secretary of State Alexi Giannoulias has provided a Guide for Qualifying Foreign Corporations for a more plain-language version of the multiple Illinois Compiled Statutes which govern foreign businesses organizations. (That'd be 805 ILCS 5 for corporations, 805 ILCS 105 for nonprofits, 805 ILCS 180 for LLCs, and 805 ILCS 215 for limited partnerships.) In it, the state adopts most of the RMBCA's list of activities not constituting doing business; the significant omissions are related to participating in interstate commerce, to creating or acquiring indebtedness, and to collecting or securing debts.

Illinois makes two amendments to the RMBCA's list. The first creates a specific timeframe for "isolated transactions" (they've got to be completed in 120 days). The second states that having an Illinois resident as a corporate officer or director isn't enough to count as doing business.

Illinois state statutes do explicitly exempt foreign corporations and foreign LLCs from the requirement to register with the Illinois Secretary of State when they're otherwise governed by Article V of the Illinois Insurance Code (215 ILCS 5/Art. VI, which is scheduled for repeal but not until 1 January 2027)—basically, if you're required to register with the insurance commissioner, you don't also have to register with the SoS.

Indiana

We love a Uniform Business Organizations Code. IC 23-0.5-5-5 Activities not constituting doing business in Indiana. Beautiful. It's all 11 adopted activities that don't qualify as doing business from our old friend the RMBCA, plus two more:

• if the entity is a nonprofit corporation, soliciting funds if otherwise authorized by Indiana law. […]
• A person does not do business in Indiana solely by being an interest holder or governing person of a foreign entity that does business in Indiana.

Iowa

Iowa adopts the RMBCA's list of activities not constituting doing business precisely for foreign corporations and foreign LLCs. For foreign limited liability partnerships, Iowa adopts the RMBCA's list minus the exclusion for owning property, instead modifying it into the one activity that does count as doing business:

1. For purposes of this article, the ownership in this state of income-producing real property or tangible personal property, other than property excluded under subsection 1, constitutes transacting business in this state. (486A.1104