Verify Secretary of State status

While a business can be formed and established in one jurisdiction, it can operate in many other states. When filing to conduct operations in another jurisdiction with a state’s Secretary of State, a business entity files a registration with that government body. This new state is referred to as one of the entity’s foreign jurisdictions.

An entity is considered as conducting business in a state when:

• The business has a physical presence in the state
• The business often has in-person meetings with clients in the state
• The business has a significant portion of company revenue coming from the state
• The business has employees working in the state

While registering a business is not a legal requirement in every state, if a business does not register or falls out of good standing with the state, the business forfeits many of its protections as a business in that state. These include founders’ personal liability protection, legal benefits, and tax benefits.

When registering a business in a foreign jurisdiction, it typically provides information about its location, directors, officers, and financial standing, as well as a series of legal documents capturing additional information about that business.

In addition to the initial state registration, nearly every state requires a regular information report to be filed. Whether annual or biannual, the purposes of a company’s annual report are to provide the state with updated information on the business. If an entity does not file an annual report, the entity may fall out of good standing with the state, which can be interpreted as a risk signal.

How Middesk summarizes SOS statuses

Determining the state registration for businesses is a critical part of due diligence, as the actual status of that business is commonly determined at the state level. Additionally, the IRS doesn’t maintain accurate records on the status of a business entity. As such, EIN verification alone doesn’t signal if a business is active or defunct.

For all businesses verified through Middesk, Middesk conducts searches for that business entity in all 50 states and D.C. This forms a clear picture of the business, where it operates, and its health and relationship with each state in which it operates.

Secretary of State filings also provide a wealth of information about a business. Middesk always uses registration records to summarize key statuses, as shown in the review tasks.

To understand the results Middesk returns in a registration record see the registration reference.