Does your “foreign” business need to register or get licensed in Washington State?
We often get questions from out of Washington State for businesses trying to plan and make decisions around moving their businesses into or out of Washington State. Some examples:
- You have a company registered and operating in Colorado, but are doing a lot of business in Washington State – so when do you need to file additional paperwork? And what else should you be looking out for?
- Your spouse received an awesome job offer from Amazon, and now you need to move not only house and home, but your small business too. How difficult is this going to be really? What will work differently from New York? Do you need to close down your old entity first or can you just open a new “satellite” office in Washington State?
- You run an ecommerce business in Utah selling rain jackets and nearly all your sales are in Oregon and Washington. Apart from your running the operations from out of state, most of the sales and shipping is done in Washington State itself. Do I need to move my Utah entity?
- You’re selling your business to retire overseas and you still have a few lines of business and customer accounts you are going to maintain remotely. For this residual business, do you need to create a new entity in Washington State or in France where you will be residing? Will you be paying taxes in the USA or in France?
Here’s my best lawyerly answer: it depends.
What exactly does “doing business” mean? Unfortunately, there isn’t a strict statutory definition. The closest thing you will find is in RCW 23.95.520, which provides a “negative” definition, i.e. it specifies what does not constitute doing business in Washington State.
Activities not constituting doing business.
(1) Activities of a foreign entity that do not constitute doing business in this state under this chapter include, but are not limited to:
(a) Maintaining, defending, mediating, arbitrating, or settling an action or proceeding, or settling claims or disputes;
(b) Carrying on any activity concerning its internal affairs, including holding meetings of its interest holders or governors;
(c) Maintaining accounts in financial institutions;
(d) Maintaining offices or agencies for the transfer, exchange, and registration of securities of the entity or maintaining trustees or depositories with respect to those securities;
(e) Selling through independent contractors;
(f) Soliciting or obtaining orders by any means if the orders require acceptance outside this state before they become binding contracts and where the contracts do not involve any local performance other than delivery and installation;
(g) Creating or acquiring indebtedness, mortgages, or security interests in property;
(h) Securing or collecting debts or enforcing mortgages or security interests in property securing the debts;
(i) Conducting an isolated transaction that is completed within thirty days and that is not in the course of repeated transactions of a like nature;
(j) Owning, without more, property;
(k) Doing business in interstate commerce; and
(l) Operating an approved branch campus of a foreign degree-granting institution in compliance with chapter 28B.90 RCW and in accordance with subsection (2) of this section. …
(3) A person does not do business in this state solely by being an interest holder or governor of a domestic entity or foreign entity that does business in this state.
If what you are doing is not specifically excluded, you probably need to. You’ll need to knock out a few steps.
- Check that the entity’s name is available here: https://ccfs.sos.wa.gov/#/
- If the name is already in use you need to get consent from the person using the name and file that with the state.
- If you can’t get that consent, you can just make something up by using a “fictitious name”. See RCW 23.95.545
Have any questions?