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What Constitutes Doing Business in Illinois?
Companies located outside of Illinois that have an interest in pursuing business ventures here in the State of Illinois have all asked this same question -Do I really need to qualify my company with the Secretary of State to transact business in Illinois?
What do I mean by qualify in Illinois? Simply put, qualifying means that your company is required to provide some corporate financial, organizational and officer information to the Secretary of State on their prescribed forms and obtain and attach copies of the certified evidence of your company’s filing history and provide evidence of your company’s status with your domestic state. Status may include your standing with filings of annual reports, business taxes and any other annual filings that are specified as required from your domestic state.
Corporations filing the application for authority to do business in Illinois, the BCA 13.15 form is one of the most frequently rejected forms due to the vagueness of the initial franchise tax requirements and calculations, improper supporting evidence from the domestic state that is either not certified, not attached or not in its entirety, by conflicting information presented on the Illinois form that does not match the supporting documentation from the domestic state, or the purpose clause. Needless to say, it is a hard form to get past the Illinois Secretary of State filing clerks. (Information regarding the content of the applications for authority can be found in earlier articles posted on this blog).
What constitutes doing business in any state (or exceptions to doing business) is truly interpretive and if you have any question at all after reading this article, I would suggest enlisting professional legal help to determine if the nature of your business is one that would trigger the state’s qualification requirements. An attorney will be able to interpret these exceptions and apply them in the proper context to your business purposes. In general, what constitutes doing business or qualifying to do business revolves around the ability to sue and be sued.
Activities That Do Not Constitute Transacting Business in Illinois - Corporations(Pursuant to the Illinois Business Corporation Act of 1983)
1. Maintaining, defending or settling any proceeding;
2. Holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs;
3. Maintaining bank accounts;
4. Maintaining offices or agencies for the transfer, exchange, and registration of the corporations own securities or maintaining trustees or depositories with respect to those securities;
5. Selling through independent contractors;
6. Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if orders require acceptance outside the State before they become contracts;
7. (blank)
8. (blank)
9. Owning, without more, real or personal property;
10. Conducting an isolated transaction that is completed within 120 days and that is not one in the course of repeated transactions of a like nature; or
11. Having a corporate officer or director who is a resident of this State.
Activities That Do Not Constitute Transacting Business in Illinois - LLC's(Pursuant to the Illinois Limited Liability Company Act)
1. Maintaining, defending or settling any proceeding;
2. Holding meetings of the managers or members or carrying on other activities concerning internal company affairs;
3. Maintaining bank accounts;
4. Maintaining offices or agencies for the transfer, exchange, and registration of the limited liability company’s own securities or maintaining trustees or depositories with respect to those securities;
5. Selling through independent contractors; (
6. Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if orders require acceptance outside the State before they become contracts;
7. Owning, without more, real or personal property;
8. Conducting an isolated transaction that is completed within 120 days and that is not one in the course of repeated transactions of a like nature; or
9. Having a member or manager who is a resident of this State.
Activities That Require Qualification in Illinois
This list is a general representative of the activities conducted in a foreign state that are sufficiently regular, systematic, extensive and continuous to trigger the qualification requirements in most states:
1. Accounting;
2. Advertising;
3. Banking;
4. Construction;
5. Sales; and
6. Third Party Sales.
