Moving On Up: Considerations for Expanding Your Business Beyond State Lines

Business.com / Starting a Business / Last Modified: February 22, 2017

When looking to expand your business, make sure to take all of these items into consideration before you commit.

Before you can realistically consider expanding your business across state lines and into new markets, you need to go back to square one.

Think about all the research and careful attention to detail that went into first starting the business. If you’re not willing to put in that same dedication and time, your efforts to grow your business will be futile. However, if you’re willing to invest the sweat equity (and money), you can make it happen.

What does it mean to do business in another state? The answer is more complicated than merely having a customer base outside of your home state. People from other states are more than welcome to come and go as your customers without you needing to file as a foreign corporation.

Expanding a business to another state generally includes the following:

  • Having a bank account in the state
  • Operating a business property in the state
  • Selling goods or services in the state, whether through a store or through a distributor or sales rep
  • Owning an office or facility in the state or you hold regular business meetings there

It’s important to note that these are general indicators of an expanded business, but the specific regulations vary from state to state. The US Small Business Administration serves as an excellent resource for those looking to expand a business beyond state lines.

Related Article: 6 Customer Service Tools for Expanding Businesses

Register as a Foreign Corporation (or LLC)

The corporate formalities only get more complex when you expand your business, and one of the most important aspects of expansion is registering as a foreign corporation or LLC. Foreign in this case does not refer to doing business outside the country. In business terms, foreign generally refers to doing business in another state.

When you register for a new LLC, the information you need may vary slightly from state to state, but in general, you can count on being asked for similar paperwork across the board. The initial paperwork will be known in some states as the Statement and Designation. In others, it’s the Foreign Qualification application. A quick internet search will yield the proper name for your state’s form.

You’ll also need to present the name of your business and information regarding the formation, principal officer and registered agent of your business. There will also be a fee associated with the application.

Related Article: To LLC or Not to LLC?

Find and Trust Remote Owners

Once you grow your business, you won’t be able to control everything alone. You’ll need a team of employees specifically in charge of running the business in other states. This branch of your business will have its own shareholders, stocks, officers and directors.

If you have a physical office, you’ll need to screen and hire new directors, officers and employees to take charge of the business. It’s always a good idea to promote employees in-house. That way you already know who you can trust to handle such a large part of your business. You can then monitor the business dealings from your home state.

Establish Systems to Provide Real-Time Visibility

Keeping an eye on every branch of your company will prove invaluable as a business owner. You want to monitor every aspect of the business dealings, since you won’t be onsite all the time.

Thankfully, there is software available to make that happen. Today’s software solutions can connect companies of all sizes to keep cross-company continuity, improve logistics efficiency and expand your markets. Essentially, you’ll be getting an integrated program that can help you expand your geographical footprint while retaining top-down visibility.

This kind of software comes with a myriad of benefits. For example, Key Software Systems offers system management through Xcelerator, MobileTek, Interconnect and EDI. Each of these systems has specific software to meet a variety of business needs. Thanks to the interactive technology, you can keep a close watch on your business.

Key software system image

Image via Key Software System

Create Liability Separation

You’ll want to decide on creating liability separation between the multiple branches. This acts primarily as a safeguard so that if a branch of your business goes bankrupt or suffers financial hardship, the other branches won’t suffer. This happens automatically when you register as a new LLC in each state.

This is particularly useful for those who are undertaking a high-risk business. It protects the original company in the event that the new expansion tanks. About 15 percent of all new businesses go bankrupt, so adding some extra protection in the form of liability separation is a good idea. It creates an entirely separate company, so it stands and falls on its own financially.

Expanding your business is a thrilling prospect. With the right tools, you’ll be able to reach your full business potential and market to a wider audience.

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