US companies doing business in the territory of a specific state or circuit should get licenses in the respective state or circuit. Moreover, the expression “doing business” is the notion that is much wider than mere registration.
Here are several examples as to when one needs to obtain additional licenses:
- If the company registered in one state has an office (not necessary the HQ) in another state.
- Has employees or contractors acting in the company’s interests.
- The services are provided to the residents of another state.
We have analyzed the risks of carrying out activity without the respective license:
- Labour: a fine from controlling authorities (like Workforce Commissions) in case an employee or a contractor files a complaint.
- Business: after compliance inspection the clients may refuse to conclude agreements with companies that don’t have a business license or may terminate such agreements.
- Tax: penalties, ban on doing business or provision of services, payment blocking, etc. in this territory in case the tax authorities identify the fact of doing business without the license.
- Judicial: in case the state is acknowledged as jurisdiction for dispute settlement and applicable legislation, court may take into account the fact of doing business without the license in the territory of the state or the circuit within the state.
Therefore, we recommend getting a license in the states where the company is carrying out its business activity, among other things, in the form of office operation, employee hiring, etc., as well as in the states where the largest company clients are located or where the most valuable agreement have been concluded.