Expanding your business into another state signals growth, but it also comes with legal responsibilities. Each state has its own regulations, so compliance matters before launching operations beyond your home state. Taking the proper legal steps now helps you avoid fines, lawsuits, or delays later.
Register as a foreign entity
When you operate in a new state, you’re considered a “foreign entity” there. You need to register with that state’s Secretary of State before doing business. Activities that trigger this requirement can include opening a physical office, hiring local employees, or signing contracts in that state. Registration typically involves submitting a certificate of good standing from your home state and appointing a registered agent in the new state.
Understand tax obligations and reporting
State taxes vary widely. You may owe income, franchise, sales, or employment taxes in the new state, even if your main office stays elsewhere. Some states require you to file annual reports or maintain specific business licenses. To stay compliant, review the state’s tax code and confirm deadlines for filings and payments. Noncompliance could result in penalties or revoked registration.
Review employment and labor laws
Employment rules often differ by state. Wage laws, anti-discrimination statutes, and required benefits may be stricter than what you follow currently. If you plan to transfer employees or hire new ones in the new state, you need to follow that state’s labor code. Make sure your company handbook and HR practices align with local law.
Protect your intellectual property
If your business owns trademarks or patents, check whether they’re protected in the new state. Federal trademarks cover all states, but state-level protections might apply too. You may want to update or expand your IP filings, especially if your brand presence will grow significantly in the new market.
Take action before operating
Before signing leases or offering services in another state, complete all legal filings and confirm your compliance. A rushed move can lead to unexpected liabilities. Treat expansion as a strategic move, not just a logistical one.