What is the difference between a domestic and foreign corporation?

A domestic corporation is defined as a company that is incorporated in a specific state and operates under the laws of that state. Therefore, the primary distinction is that a domestic corporation conducts its business activities primarily within the state of its incorporation and is subject to the laws and regulations of that state. This means that while a domestic corporation can operate in other states, its foundational legal framework and obligations are tied to the state where it was formed.

On the other hand, the term "foreign corporation" does not refer to a corporation based outside the United States; instead, it designates a corporation that is incorporated in one state but is doing business in another state. This foreign corporation will need to comply with the laws and regulations of the state where it is doing business, in addition to its home state.

Understanding this distinction helps clarify the legal obligations and operational limits that businesses encounter depending on their incorporation status and where they wish to conduct their business activities.