By Howard Goldman and Cameron Pease
Question:
My company offers chiropractic services and is registered as an LLC in Massachusetts. I plan to move my company to Florida this year. I will be licensed to practice in both states. If I am only in Massachusetts on a limited basis where I am seeing a handful of patients or running an occasional seminar. Considering the fact that I will be providing these temporary services, do I need to register as a foreign LLC? It seems that it may not be worth it to provide services here if I do.
Answer:
It is good business practice that you are weighing these issues before you move your company out of state. Under Massachusetts General Laws c. 156C, Sec. 48, a foreign limited liability company (LLC) transacting business in Massachusetts must register with the Secretary of State Corporation’s Division within ten days after it commences doing business in the Commonwealth.
The following activities in Massachusetts constitute “transacting business”:
A) The ownership or leasing of real estate in Massachusetts;
B) Engaging in the construction, alteration or repair of any structure, railway or road; or
C) Engaging in any other activity requiring the performance of labor.
Although the law is general in scope, it does carve out an exception for companies that only provide isolated transactions in Massachusetts, so long as the isolated transactions occur infrequently and are not one in a series of repeated transactions of a like nature.
Although you only intend to practice a handful of times per year, we advise that you register your company as a foreign LLC or else cease offering any chiropractic services and/or seminars while in Massachusetts. Offering chiropractic patient services falls under the third prong of the transacting business test in that chiropractic patient care services require the performance of labor. Even though your company would only be offering these professional services a few times a year, you do not qualify for the “isolated transactions” exception due to the nature of patient care you provide. You say you are offering chiropractic treatment directly to patients, and plan to run an occasional informative seminar dispensing medical information. This type of organization is very different from a company that solely sells goods and does not have any direct contact between its employees and its customers. In your case, it is prudent to maintain a registration in Massachusetts and in all states in which the company is offering patient care, even if you only plan to treat a small number of patients in state. Just as your practitioners must carry a current license to practice patient care in Massachusetts and maintain malpractice insurance coverage, your company also should maintain a foreign LLC registration if it is offering patient care in Massachusetts. Being listed as a foreign LLC with the Massachusetts Corporation’s Division of the Secretary of State’s Office will provide a layer of protection to your company against claims of malpractice because it will help demonstrate that your company is on par with other similar companies practicing chiropractic services in the same geographic area.
Prior to registering as a foreign LLC in Massachusetts, you will need to register your company in Florida. Your Massachusetts application must be accompanied by a certificate of legal existence or a certificate of good standing of your company, issued by an officer or agency properly authorized in Florida. You should consider hiring an attorney who is located in Massachusetts to help you draft your application for registration as a foreign LLC. The attorney can also help you draft the company’s annual reports and ensure that they are timely filed and your yearly registration fee is paid. While the yearly registration fee for a foreign LLC of $500.00 is expensive, and may be a deterrent to offering services, bear in mind that the ability to label your company as a Massachusetts company is a good way to attract new patients, generate additional local business and certainly legitimize the company in the eyes of the public.
