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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.
You will need a California 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 Agent 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 7 comments left for Delaware LLC Doing Business in CaliforniaGary said: Sunday, May 26, 2019
Can I register first in CA, and then register in Delaware?HBS Staff replied: Tuesday, May 28, 2019
Gary, you can register your company to do business in as many states as necessary. For example, if you form your LLC in Delaware you will be able to do business in this state. If you then wish to add California and any other states, you typically will apply for Foreign Qualification in those states. Please contact us via email, phone, or live chat if you have additional questions and we will be happy to assist.Sheela Ambre said: Thursday, October 18, 2018
If ayway I have to register my LLC in CA due real estate being in CA, why would I incorporate my LLC in Delaware and pay extra RE fee, annual report fee?HBS Staff replied: Friday, October 19, 2018
Sheela - great question! Many companies choose Delaware as their home state, even if their primary place of business is elsewhere, due its business-friendly reputation. Specifically, Delaware's corporate law structure is favorable for businesses and investors are more likely to invest in Delaware companies. Read more about the Benefits of Incorporating in Delaware.George 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.
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