business corporate-law
Is Foreign Qualification necessary if I work from home?
<p>My cofounder &amp; I just started a Delaware C Corp for an app we're building. The app is comparable to Instagram. We both work from home on our laptops. I work from Connecticut, and he works from Colorado. Do we need to file for Foreign Qualification in either state? If not, we'd like to avoid doing so to save time &amp; money.</p>

<p>Please cite Connecticut &amp; Colorado law to back up your answer.</p>

<p>Note: Feel free to also include the answers for other states.</p>

<p>The general rule is if you are "doing business" in a state you must qualify as a foreign entity. The "doing business" test comes from the language in most state statutes that is some variation of transacting business language in the Colorado statute. However, as pointed out the statute does not define "doing business," rather it provides some exemptions.  The test is a facts and circumstances test and is harder to apply in the case of internet based business with home offices, this is a newer construct that has not been actively tested in the law. I suggest you read/skim the article at the following link, it will provide some helpful examples of what "doing business" means so you can compare against your specific facts. <a href="https://ct.wolterskluwer.com/sites/default/files/CT_What-Constitutes-Doing-Business-2016.pdf" rel="nofollow noreferrer">https://ct.wolterskluwer.com/sites/default/files/CT_What-Constitutes-Doing-Business-2016.pdf</a> </p>

<p><strong>Short answer: Yes, your company will most likely have to file as a foreign entity in both states.</strong></p>

<p>The section of Colorado law you're looking for is <a href="http://lpdirect.net/casb/crs/7-90-801.html" rel="nofollow noreferrer">70-90-81 CRS</a>, which says in part: </p>

<blockquote>
  <p>(1) A foreign entity shall not transact business or conduct activities in this state except in compliance with this part 8 and not until its statement of foreign entity authority is filed in the records of the secretary of state. </p>
</blockquote>

<p>Section 2 of the code lays out the exceptions to this requirement. Check those out, but from the limited information you provide I suspect you would be required to file.</p>

<p>Connecticut has essentially the same requirements and exemptions, laid out in <a href="https://www.cga.ct.gov/current/pub/chap_613.htm#sec_34-235" rel="nofollow noreferrer">34-235</a>.</p>
