Doing Business in the Delaware Tri-State Area
Delaware is a relatively small state surrounded by three others: Pennsylvania, New Jersey, and Maryland. Because of this, it’s almost inevitable for business to cross state lines.
People can generally cross state lines freely, but when commerce spreads from one state to another that usually requires businesses to obtain additional documentation and fees.
Seem overwhelming? It doesn’t have to be.
We’ll take you through what you need to know about operating your DE business in another state.
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What is the Delaware Tri-State Area?
A tri-state area is a heavily populated geographic region that spans three different states. When it comes to Delaware, this region centers on Wilmington, which is just across the river from New Jersey and less than an hour’s drive from Philadelphia, PA.
It’s only natural for business owners in Delaware (a state with about 1 million people) to stretch business operations into Philadelphia, a city with a population over 1.5 million people.
Why isn’t Maryland included in the DE Tri-State Area?
Delaware’s largest shared border is with Maryland, so it’s definitely a state that many DE businesses cross into. (Especially those located in Kent and Sussex counties.) The main reason Maryland isn’t included in the “tri-state” designation is because tri-state areas are typically centered around a metropolitan area, in this case: Philadelphia and Wilmington – in the northern-east corner of Delaware.
Getting Foreign Qualification
The process of getting permission to do business in another state is typically referred to as foreign qualification, or foreign registration. It sounds weird, but your Delaware business is considered “foreign” in other states. (“Foreign,” in this case, just means “out of state.”)
In addition to filling out paperwork and filing it with the state department responsible for foreign registrations, you’ll have to do the following:
1. Get a Delaware Certificate of Good Standing
Before you can register your Delaware LLC or Delaware Corporation in another state, you’ll need to obtain a Certificate of Good Standing from the Delaware Division of Corporations. This needs to be included with your foreign registration materials. The DDC charges $50 for a Delaware Certificate of Good Standing.
NOTE: This is also know as a Certificate of Status. Same thing.
2. Get State-Specific Business Licenses
Whether or not you need a business license (or several) depends in large part on the type of business you operate, and where you operate it. Business licenses can be based on:
- Industry. Restaurants and construction companies, for example, typically need state permits in order to operate.
- Location. Certain cities and towns require business licenses for companies that operate within their jurisdiction.
- Profession. Regulated professions, like medicine and law (among others), require practitioners to be licensed by a state board.
If you need a professional license to operate in Delaware, chances are you’ll need a professional license to operate in any other state. Similarly, if you need a special permit for your business (like a liquor license for a restaurant) you’ll probably need that same permit in any other state.
On the other hand, geographic regions have different requirements. For example, Philadelphia requires all businesses operating within city limits to obtain a Commercial Activity License, whereas Camden, NJ – just across the river – does not. It’s a good idea to check with the clerk’s office in the county in which your business operates to find out what licenses and permits your business might need.
Documents and Fees by State:
Pennsylvania
New Jersey
Maryland
State Department
Document Name:
Foreign Qualification
Certificate of Authority
Foreign Registration Form
Filing Fee (LLC and Corp):
$250
$125
$100
Online Filing:
Fun Facts:
- PA refers to foreign entities as Foreign Associations
- PA government is referred to as “The Commonwealth”
- You’ll need to file two types of registration, 1.) Foreign Registration Statement, and 2.) Docketing Statement
- Pennsylvania has an Advertising Requirement for foreign corporations.
State Filings:
In most states, you have to file formation papers with the office of the Secretary of State…
In New Jersey, business filings are generally filed with the New Jersey Department of the Treasury.
MD Annual Reports:
You will be required to file an annual report for your foreign entity in Maryland, but here’s where it gets tricky:
If you own personal property in MD, you’ll be required to file a Business Personal Property Tax Return, which must be filed with your annual report.
Easiest Way to Register Your
DE Business Outside of Delaware
If you want to go through these steps on your own, follow our helpful guide:
Expand Your Business Outside Delaware.
If you want it all done for you, we got it! For just $100 plus state fees, we’ll complete your registration for foreign qualification in whichever state you plan to do business.
Frequently Asked Questions
What qualifies as “doing business”?
While it can vary state to state, doing business generally refers to commercial activities related to spending money or receiving payments. The most obvious example is selling products or services. But, according to Del. Code tit. 6 § 18-911, doing business in Delaware can also include:
- Hiring employees
- Renting a warehouse
- Owning property
- Holding meetings with members or managers
- Collecting debts
- Maintaining bank accounts
- Etc.
This list is not exhaustive, and only pertains to Delaware. If you’re unclear whether or not your business is operating out of state, it might be a good idea to consult a business attorney.
Do I need to file an annual report in states where I’ve registered as a foreign entity?
Foreign LLCs and corporations generally have to abide by the same regulations domestic entities have to follow. In most cases – and definitely in Pennsylvania, New Jersey and Maryland – your foreign entity will have to file an annual report.
State
Fee
Deadline
Pennsylvania
LLC
$7
Jan. 1 – Sep. 30
For-Profit Corporation
$7
Jan. 1 – Jun. 30
Nonprofit Corporation
$0
Jan. 1 – Jun. 30
New Jersey
LLC
$75
End of the month your entity was formed.
For-Profit Corporation
$75
End of the month your entity was formed.
Nonprofit Corporation
$30
End of the month your entity was formed.
Maryland
LLC
$300
April 15
For-Profit Corporation
$300
April 15
Nonprofit Corporation
$0
April 15
What’s the “Advertising Requirement” for foreign corporations in Pennsylvania?
In the Commonwealth of Pennsylvania, a foreign corporation must publish its “intention to register” or its “registration to do business” in PA (Commonwealth of Pennsylvania – Foreign Associations). This ad must be published in two newspapers, one of them being a legal journal, if possible.
Proof of publication doesn’t actually have to be submitted to the state. Instead, it should be included with the minutes of your corporation.
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