Personal emergency response systems (PERS) including medical alert is an emerging service attractive to alarm companies that want to sell nationwide. Because the system is plug-and-play it is self-installed and fairly easy to use. The preprogrammed unit will transmit a digital signal to a designated central station. An alarm company on the eastern tip of Long Island, N.Y., can become a national player with enough Internet marketing, not to mention capital to fund the equipment cost and shipping. Providing this kind of service may soon not even require more than an app on a cellular phone.
So how does a company on Long Island start doing business all over the country? A business is not required to obtain a certificate of authority to conduct business in all states, or in any states other than its state of incorporation for that matter. There may, however, be consequences for not obtaining such authority in a particular state and each state may have its own rules. While a company doing business in New York but incorporated elsewhere, for example, is not required to file for authority to conduct business in New York, it will find that if it is determined that it derives substantial revenue in New York then it will not be permitted to use the courts in New York. Not much of a reason to go to the trouble of filing with the state.
There may be other reasons that filing with the state to conduct business is necessary. If you are required to collect and pay sales tax in a jurisdiction, then you’ll have to obtain a sales tax number for filing. That may not require obtaining a certificate to do business. Since filing for authority to conduct business comes with a modest filing fee, and there will be annual tax return filings with minimum tax payments, most states will no doubt figure out ways to encourage if not compel filing to do business in the state. I’ll leave these nuances to the tax experts.
Licensing is another matter. Using our Long Island company looking to go nationwide, that company may not have any alarm license. In New York no alarm license is needed to provide monitoring. No license would be needed to sell plug-and-play equipment. That may not be the case in all jurisdictions. Nationwide, PERS companies may need to comply with licensing requirements in many jurisdictions, not just states but local municipalities too.
If your company is merely selling the plug-and-play units and the monitoring is performed by one of the nationwide monitoring centers, then more than likely the license requirement for monitoring will be met by the central station. These nationwide central stations have (or should have) already obtained the necessary licenses.
If you’re a start-up PERS operation, however, you don’t really know where your end users will be located. So unless you’re prepared to get licensed, stay licensed and check for new license requirements regularly, it may not be cost effective to obtain the licenses in advance. You may find that if a license is required you won’t be able to get it unless you also file for authority to conduct business in the state.
Luckily I don’t believe most states have license requirements for PERS. As a reminder, end users need to sign a PERS contract.
Ken Kirschenbaum has been a recognized counsel to the alarm industry for 35 years and is principal of Kirschenbaum & Kirschenbaum, P.C. (www.kirschenbaumesq.com). His team of attorneys, which includes daughter Jennifer, specialize in transactional, defense litigation, regulatory compliance and collection matters.
The opinions expressed in this column are not necessarily those of SSI, and not intended as legal advice.