If you're a Delaware LLC doing business in California, your company is considered domestic to the state of Delaware and foreign to California. To take advantage of strong corporate law structure, Delaware is by far the most popular domestic choice.
If your business will have a physical presence by operating, hiring employees, banking or even holding an asset in California, you will typically need to qualify the business to operate there through a process known as Foreign Qualification.
The Foreign Qualification process enables a company to transact business in California. If you're a Delaware LLC doing business in another state (including California), failure to adhere to local compliance regulations may put the protection of your company at risk.
California will require a limited liability company application for registration form, your approved Certificate of Incorporation from Delaware and a Certificate of Good Standing from Delaware. The Certificate of Good Standing can be no more than six months old.
California will also require you to have a Registered Agent in California. A Registered Agent is your liaison with the state, and provides a physical address within the state for the purpose of receiving any legal documents or service of process from the state.
Some people elect to be their own Registered Agent while others enlist the support of their Delaware Registered Agent. Often, the Delaware Registered Aagent will also provide the service in California. The California Registered Rgent will not need to sign the filing.
California will require a person with the authority to sign under the laws of the state of organization of the LLC to sign the application. Keep in mind that they will require this person’s name and address.
All information provided to California will be made public; however, there is no publication requirement unless specifically required by the county in which your Registered Agent resides.
Once registered in California, your company will have reporting requirements. The initial report is due within 90 days of your filing, and the biennial reports are due on the last day of the month in which you filed.
The cost of this filing is $20 initially and is the same for the biennial report. Please keep in mind that California has a late fee of $250 if this requirement is not met on time. California also has a well-known minimum franchise tax of $800/year.
One way that California varies from other states is that a foreign LLC may not render professional services in the state of California. California will often advise you to contact your licensing authority before filing with the Secretary of State if your business is required to be licensed, registered or certified.
THE AUTHOR OF THIS BLOG ARTICLE IS NOT A LAWYER AND HARVARD BUSINESS SERVICES, INC. IS NOT A LAW FIRM. THE ARTICLE ABOVE IS NOT INTENDED AS LEGAL ADVICE AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. THIS SHORT ARTICLE IS STRICTLY TO MENTION SOME ASPECTS OF DELAWARE’S CORPORATION LAWS AND/OR LAWS RELATING TO OTHER FORMS OF ENTITIES WHICH YOU MAY NOT BE FAMILIAR WITH. WE RECOMMEND THAT YOU CONSULT WITH A LAWYER BEFORE FORMULATING A STRATEGY WHICH WILL BE SUITABLE FOR YOUR SPECIFIC CASE.
There are 5 comments left for Delaware LLC Doing Business in CaliforniaGeorge Cornell said: Wednesday, October 17, 2018
If you are doing anything in California including internet sales the State will make you pay the franchise tax. Simple as that.tom pere said: Saturday, May 5, 2018
I did independent contractor work for a business Registered in Kent County Delaware - but their entire operations and principal place of business is in Irvine, CA and after completing the work to their entire satisfaction they refuse to pay the bill per our contract. How can you help?HBS Staff replied: Monday, May 7, 2018
You should call your attorney to assist you with that issue.Thomas R. Lamons said: Wednesday, March 14, 2018
If you form a Delaware series LLC to own California real estate assets, does the Delaware LLC itself register to transaction business in California, or does each series register separately?HBS Staff replied: Wednesday, March 14, 2018
While the Delaware Series LLC sounds great in theory, it’s often not in practicality. Typically, clients will consult with a tax professional and/or an attorney to help determine if the Series LLC is the best structure.
All the internal “Series” are handled internally within the LLC Operating Agreement. Here are a few helpful blog articles.
Jorge said: Friday, January 5, 2018
Do you know any lawyer that has done this process already? I need to do business in California...HBS Staff replied: Monday, January 8, 2018
We can help you foreign qualify in California. Give us a call at 1-800-345-2677 or Live Chat with us from our homepage.NDA said: Tuesday, October 3, 2017
IF your an Independent contract working for an out of state LLC “Doing Business” in California, which contract laws apply to you. E.G. A non-compete was signed. Does CA law apply or the out of state law?HBS Staff replied: Wednesday, October 4, 2017
We are sorry, but this question is outside the realm of our knowledge. Your best bet would be to talk to an attorney. Thanks for reading our blog.