Certificate of authority: what it is and how to get one

Expanding your business into a new state creates exciting opportunities, but you need to meet state registration requirements before you can legally operate there. For most LLCs and corporations, that means obtaining a certificate of authority, a process often called foreign qualification. 

Let’s take a closer look at what a certificate of authority is, who needs one, the different types available, and the steps to register your business in a new state.

What is a certificate of authority?

A certificate of authority is a state-issued registration that allows an LLC or corporation formed in one state to legally conduct business in another state.

You typically need a certificate of authority when your business expands into a state where it was not originally formed. This process is often called foreign qualification. In this context, "foreign" simply means another U.S. state, not another country.

A certificate of authority is different from creating a new business in another state. Instead of forming a new LLC or corporation, you register your existing business so it can legally operate there while keeping the same legal entity.

How it differs from a business license

A certificate of authority gives your business the legal right to operate in a new state. A business license gives you permission to perform specific business activities within a city, county, or state.

Many businesses need both a business license and a certificate of authority. You typically have to obtain a certificate of authority before you can apply for any licenses.

Other names for a certificate of authority by state

States often use different names for the paperwork required to register an out-of-state business. 

Some common names for a certificate of authority across the U.S. include:

• Application for Authority (New York)
• Statement and Designation by Foreign Corporation (California)
• Application for Authorization to Conduct Business in Florida (Florida)
• Application for Registration
• Qualification Certificate

Always check the filing requirements in the state where you plan to do business. Remember, even if the title changes, the purpose remains the same: giving an existing business legal authorization to operate in another state.

Business types that require a certificate of authority

Not every business structure needs a certificate of authority before expanding into another state. Requirements depend on your business entity and where you plan to operate.

LLCs expanding to other states

To expand or move an LLC to another state, whether single-member or multi-member, you will likely need a certificate of authority before operations can begin. Your company will continue to exist as a domestic LLC in the state where it was formed and become a foreign LLC in every additional state where it registers.

Corporations operating across state lines

C corporations and S corporations generally need a certificate of authority before conducting business in states outside their state of incorporation. Your articles of incorporation remain on file in your home state, but the new state typically requires a certificate of good standing issued by your home state's filing office as part of the foreign qualification process.

Nonprofits and other entities

Nonprofit corporations, limited liability partnerships (LLPs), and professional limited liability companies (PLLCs) may also need a certificate of authority when expanding into another state. State requirements can differ, especially for nonprofits. Some states require charitable organizations to complete a separate charitable registration in addition to obtaining a certificate of authority, so be sure to check the requirements for the state you’re expanding into.

Types of certificates of authority

The term ‘certificate of authority’ can refer to several different types of approvals. The one your business needs depends on your industry and the purpose of the registration.

Foreign qualification certificate of authority

Most LLCs and corporations need a foreign qualification certificate to legally operate in another state without creating a new business entity. This certificate is typically issued by the Secretary of State, or a similar business filing agency in the state where you want to do business.

Tax certificate of authority

Some states, like New York, require a separate tax certificate of authority for businesses that sell taxable goods or services. It authorizes a business to collect sales tax, issue and accept sales tax exemption certificates, and remit collected taxes to the state. 

Keep in mind that businesses operating in multiple locations may need a separate certificate for each location. Many states also require businesses to renew these registrations periodically.

Insurance certificate of authority

Insurance companies must obtain a certificate of authority before conducting insurance business in a state. Applications are generally submitted through the state's Department of Insurance using the Uniform Certificate of Authority Application (UCAA). Businesses seeking approval in their home state complete a Primary Application, and companies expanding into additional states file an Expansion Application.

How to get a certificate of authority in another state

The exact process for getting a certificate of authority varies by state, but most follow the same general approach. However, you should always check the Secretary of State website, or the state's equivalent business filing agency, for the most current forms, fees, and filing requirements.

1. Confirm your business is in good standing in your home state

Your business must be in good standing in the state where it was originally formed before you can register elsewhere. That means all required annual reports, fees, and state filings should be up to date. Most states also require you to submit a certificate of good standing, sometimes called a certificate of existence, issued by your home state as part of your application.

2. Check name availability in the target state

Search your target state's business name database to make sure your legal business name is available. If another business is already using that name, you can often register under a DBA or make a small modification to your business name to satisfy the state's naming requirements.

3. Appoint a registered agent in the target state

Nearly every state requires businesses to designate a registered agent with a physical address in the state. The registered agent accepts legal notices, government correspondence, and service of process on behalf of your business. 

This person or service must be available during normal business hours to receive important documents. Businesses often opt for a professional registered agent service to prevent important documents from being overlooked.

4. Gather required documents and information

Before you begin the application, collect the information you'll need to make the process easier. This typically includes:

• Legal business name and DBA, if applicable
• State and date of original formation
• Principal business address and any required in-state address
• Registered agent's name and physical address
• Names and addresses of officers, directors, or LLC members, depending on your business structure
• Business entity type
• Authorized signature of the business owner or another authorized representative

Some states may also ask for a brief description of your business activities or additional information about your business operations or assets.

5. Submit your foreign qualification application and pay fees

Submit your foreign qualification application to the Secretary of State, or the equivalent filing agency, in the state where you plan to operate. Many states accept both online and mail filings. 

Filing fees vary widely, ranging from about $25 to several hundred dollars, depending on the state. Expedited processing is often available for an additional fee.

After your application is approved, you'll receive your certificate of authority. Keep it with your other important business records and compliance documents for easy reference.

Certificate of authority costs and processing times by state

Filing fees and processing times vary significantly across states. The table below provides a general comparison of some of the most common states where businesses register as foreign entities.

Fees, forms, and processing times can change at any time. Always verify the latest requirements on your state authority’s website before submitting your application. 

Penalties for doing business without a certificate of authority

Operating in another state without a certificate of authority can expose your business to legal and financial consequences. The exact penalties depend on state law, but they often include:

• Fines and back fees: Many states assess penalties and require businesses to pay missed filing fees for the period they operated without proper registration.
• Limits on legal action: An unregistered business may be unable to file lawsuits or enforce certain contracts in that state until it obtains a certificate of authority and resolves any outstanding compliance issues.
• Restrictions on doing business: States can prohibit businesses from continuing operations until they complete the required registration. In some situations, additional enforcement actions may apply if the business fails to comply.
• Potential personal liability: Depending on the business entity and state law, owners or officers could face additional legal or financial exposure for failing to meet state registration requirements.

Taking time to understand a state's registration requirements before expanding is almost always easier and less expensive than correcting compliance issues after your business has already begun operating.

Next steps after receiving your certificate of authority

Receiving your certificate of authority is an important step, but it is only the beginning of staying compliant in your new state. Once your registration is approved, make sure you:

• Store your certificate safely. Keep it with your articles of organization or incorporation, operating agreement, annual reports, and other important business records.
• Apply for any required licenses or permits. Many businesses need state or local business licenses before they can legally begin operating.
• Register for state tax accounts. Depending on your business activities, you may need to register for sales tax, payroll tax, or other state tax programs.
• Track annual filing deadlines. Most states require foreign businesses to file annual or periodic reports to maintain good standing. Add these deadlines to your calendar so you don't miss them.
• Stay current with ongoing compliance requirements. Keep your registered agent information up to date, report business changes when required, and renew any licenses or registrations before they expire.

As your business grows, GoDaddy Airo AI Builder can help simplify business setup and ongoing management so you can spend less time on administrative tasks and more time building your business.

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