Doing Business

Doing business refers to carrying on, conducting, or managing a business. A corporation is considered to be doing business in a state if it performs the ordinary functions for which it was organized or engages in activities that subject it to the laws and jurisdiction of that state.
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Definition

Doing Business refers to the activities associated with carrying on, conducting, or managing a business entity. This encompasses a wide range of actions including performing the ordinary functions for which a business or corporation was organized, and engaging in activities that subject the business to the laws and jurisdiction of a particular state or country.

Examples

  1. Retail Operations: A multinational corporation selling goods in local retail stores within a different state is “doing business” in that state.
  2. Service Provision: An IT consultancy firm providing services to clients in other states through physical presence or significant ongoing client engagements.
  3. Manufacturing: A manufacturing company operating a plant or factory in a different state is conducting business there.

Frequently Asked Questions (FAQ)

Q1: How do I determine if my business is “doing business” in another state? A1: Generally, once you perform activities like opening a storefront, having a physical office, hiring employees, or conducting substantial negotiations, your business may be considered to be ‘doing business’ in that state.

Q2: What legal implications arise if a corporation is considered to be doing business in a state? A2: The corporation may be subject to state laws and regulations, may need to formally register with the state, and could be liable for state taxes and potentially subject to state courts’ jurisdiction.

Q3: What is the “nexus” in the context of doing business? A3: Nexus refers to the sufficient physical presence or economic connection a business must have within a state for that state to impose tax obligations on the business.

Q4: Are there activities that do not qualify as doing business in a state? A4: Yes, activities such as maintaining bank accounts, conducting business through interstate commerce, or having isolated or sporadic transactions typically do not qualify as doing business.

  • Foreign Corporation: A corporation that is incorporated in one state but doing business in another state.
  • Nexus: The connection required for a business to fall under the tax or jurisdictional purview of a state.
  • Registered Agent: A responsible third-party in the state where a business entity is forming its business who can receive service of process.

Online References

  1. IRS: Guidelines on State Business Activities
  2. Small Business Administration: Registering Your Business in Another State
  3. The Balance Small Business: Understanding Business Operations

Suggested Books

  1. “Business Law: Text and Cases” by Kenneth W. Clarkson, Roger LeRoy Miller, and Frank B. Cross
  2. “The Entrepreneur’s Guide to Business Law” by Constance E. Bagley and Craig E. Dauchy
  3. “Business Law and the Regulation of Business” by Richard A. Mann and Barry S. Roberts

Fundamentals of Doing Business: Business Law Basics Quiz

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Doing Business As (DBA)
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