Travel from state to state to provide training - need to register as foreign entity?

[mag1343]

Hi,

I currently run a sole proprietorship providing training services for a certain profession, and I plan to register as an LLC in the coming weeks.

Until now my business has been mostly within my home state, but I plan to offer training in other states as well, which would require me to travel to provide the training. Training typically takes place over a few hours over a single day.

I can't predict exactly how often I would have to travel to other states or exactly which states I would end up in, since it depends on who contacts me and I can provide the training anywhere. I don't have and don't expect to hire any employees and will not have any personal property in any other state.

I am wondering whether I will need to or should register as a foreign entity in the other states I travel to to provide training?

It seems like the costs and hassle could really add up as I could easily end up doing business in 10-15 states over the course of a year, though my revenue and profits are still quite small.

Is there any sort of line for how often I would have to do business in a certain state or how much I would need to earn in order to be required to register as a foreign entity?

Is my type of business one that would typically require me to register as a foreign entity if I did a substantial amount of business there, even considering that I don't employ anyone or own property in other states? What are the potential pitfalls if I don't register?

Thanks for your help! I've already learned a lot just browsing through the forum.

[Patrysha]

I'm not an accountant or lawyer, but I'm pretty sure that your training is much like speaking engagements...your home base is still your home base even when you're traveling so you don't have to register and pay taxes in the places you visit.

[jamesray50]

Will you be selling any products related to your training? If so, you will need a sales tax account for your state and then check to see how you would charge tax on your product when you are out of the state.

[mag1343]

Not planning to sell products, but thanks for the tip.

I'd appreciate any more thoughts on this. The question appears to turn on whether I'm conducting interstate or intrastate commerce, and the research I've done online doesn't provide a clear answer. I'm soliciting the business and forming the contract in my home state, but the execution of the contract is in a foreign state, which makes it tricky.

[Evan]

Unfortunately there is no "easy" way of determining whether you need to register, or whether there is an income tax filing requirement for this engagement. States generally allow for "periodic" business to be transacted without having to register if it is done within a relatively short period of time as they define.

David may be able to provide more information on this

[Spider]

Sounds to me like a government ruling which is likely to be different in each state. First, please to clarify - Are you talking about American states, or other foreign states?

This also sounds like a question that local public library librarians could answer about their specific jurisdiction.

[mag1343]

I am referring to American states. I don't plan to do any international business.

Annual LLC fees for some states where I am likely to do run training classes are high (minimum $800 in CA, $300 in NY) so I'd rather not pay if I don't have to. Unfortunately, state statutes are really unclear on what constitutes doing business or what constitutes intrastate vs. interstate business, and say that it depends on a case by case basis. I could contact a lawyer, but that would also have it's own costs, and I'd need separate opinions for each state.

Just trying to see if there's a general wisdom on this message board as to what qualifies as as doing business and what might be applicable in my situation.

I'd also love to hear from this David guy if he has anything to add.

[Reflo Ltd]

I would call your state Secretary of State's office. THey should be able to give you some good information on that.... or at least point you in the right direction.