When it comes to the law, there is no such thing as “generally”. Each state has its own interpretation of what constitutes doing business in that state. However, most states do not find that a company’s mere existence in a state or the sale of a single product to a resident or nonresident is sufficient to trigger doing business in that state. Instead, companies that do business in a state are typically required to foreign qualify to establish their right to operate in that state and pay any applicable fees.
In Massachusetts, a “foreign” corporation or LLC that wishes to operate in the state must file a Certificate of Registration with the Secretary of State’s Corporation Division within 10 days of commencing its business operations in Massachusetts. The application requires the company’s name, registered agent (who must be a resident of the state), and business address. In addition, a brief description of the company’s activities and its fiscal year end is required.
Once a company registers with the state, it must file an annual report each year and pay any applicable fee. In addition, it must also obtain a sales tax license and identify its Massachusetts-based employees, if any. A registered DBA name, or fictitious business name, may be filed with the Secretary of State’s office, but this does not change the company’s tax status.
In summary, registering in Massachusetts is not difficult or expensive, especially when compared to the penalties for operating without proper authorization (see Mass. Gen. Law c. 156C, Sec. 54). And, while the prospect of paying a $500 foreign qualification fee might seem daunting, it is far less costlier than the potential for defending a lawsuit in Massachusetts or losing any ongoing business contracts.