Definition and Requirements
"Doing business" refers to carrying on normal business activities in another state regularly or with substantial contacts. This may require "foreign qualification" registration within that state. Requirements for "doing business" differ by state.
An enterprise "does business" in a state for legal jurisdiction, taxation, and regulatory compliance. Consequences include state income, sales, and other taxes, plus fines for noncompliance.
To "do business," many states require registration with the state or locality. "doing business as" (DBA) is for sole proprietors using a separate business name.
Check if your out-of-state activities like a physical office, employees, property, sales, or contracts require foreign qualification. This prevents penalties. Adherence to each state’s laws is recommended. Consult a legal or accounting professional for a definitive answer.
Taxation and Legal Implications
One of the most significant consequences of doing business in a state is taxation. Businesses that are considered to be doing business in a state are generally subject to state income tax, sales tax, and other state-specific taxes.
A corporation may be created under the laws of one state and have its principal place of business in a different state. The state where a business intends to locate its operations is often a logical choice to incorporate in.
Professional Advice and Registration
With businesses able to operate across state lines through digital means, seeking professional advice from your attorney or accountant is highly recommended. They can provide tailored guidance regarding state laws.
You may ask yourself if you should register with the Secretary of State in every state in which you do business. Many states have activities that will not require an out-of-state business to register.
In general, a company’s activities in a state help indicate whether “doing business for state registration purposes” applies. If a company has employees, real estate, or a warehouse in another state to ship products, most states will consider it to be doing business there.
A company may “do business” in several states, registering separately in each according to state laws.
The Significance of Being a Business
What Is a Business?
The term business refers to an organization or enterprising entity engaged in commercial, industrial, or professional activities. The purpose of a business is to organize some sort of economic production of goods or services.
Business organizations are commercial, industrial, or mercantile enterprises, comprising the people who constitute it. Business is a legally-recognized organization which provides goods, services, or both to the consumers.
The reality is that business regulations and their enforcement may differ within a country, particularly in a federal state and large economies. However, gathering data for every relevant jurisdiction in each of the 190 economies covered by Doing Business is infeasible.
These taxes include income taxes, sales taxes, and other taxes on business entities with a tax nexus (presence) in that state. The concept of tax nexus is more specific than the general concept of “doing business.”
According to the modern concept, the underlying objective of every business is customer satisfaction as this leads to profits. If the customer is satisfied, the business excels.