Find out how to qualify your LLC to conduct business in California.
If you own a company that was founded in a state other than California, you must qualify or register it in California in order to conduct business there. The requirements for qualifying your international (non-California) limited liability corporation (LLC) to conduct business in California are summarized here.
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What exactly is a Foreign LLC?
If your LLC is founded in a different state, it is referred to as a foreign LLC in California. In other words, being foreign does not imply being from another nation. Instead, it signifies that your company was formed under the laws of another state. A domestic LLC, on the other hand, is one that is created in the state in which it operates. This is a prevalent phrase in the United States. In Colorado, for example, an LLC founded in Arizona is a foreign LLC.
Doing Business in California
If you are “transacting business” in California, you must register your foreign company with the state, according to California’s LLC Act. What exactly does this mean? Well, California’s LLC Act, like other states’, does not define the word “transacting business” in connection to international registrations.
State regulations determining when foreign enterprises must collect state sales tax in their state, on the other hand, give some advice on the subject. To be obligated to collect state sales tax on sales to citizens of a state, a firm must have a physical presence in, or nexus with, that state. In general, physical presence and nexus are synonymous and refer to:
a storage facility in the state
A shop in the state, an office in the state, or a sales representative in the state are all examples of state-based businesses.
Certain exclusions may apply, and the regulations might become more convoluted in situations such as Internet sales. However, if you have an office, a shop, a warehouse, or workers in another state, you must register your LLC as a foreign corporation in that state.
Some Activities Are Exempt
California’s LLC Act, like other states’, stipulates some actions that do not constitute doing business in the state. Among the objects mentioned are:
defending or settling a lawsuit dealing with internal LLC affairs such as holding member or manager meetings having a bank account in the state selling through independent contractors soliciting or obtaining orders that require acceptance outside the state before they become contracts
Creating or acquiring indebtedness, evidences of indebtedness, mortgages, or security interests in real or personal property; securing or collecting debts; conducting an isolated transaction that is completed within 180 days and is not part of a series of similar, repeated transactions; and transacting business in interstate commerce.
The LLC Act clearly states that this list is not exhaustive; additional activities may potentially be exempt. Check Section 17708.03 of the California Corporations Code for a complete legal definition of each of the listed elements.
If your LLC’s only operation in California is one or more of the activities mentioned above, you should not be required to register with the state.
Registration Certificate
You must submit an Application to Register a Foreign Limited Liability Company (LLC) with the California Secretary of State to register your company in California (SOS). The application form may be downloaded on the SOS website.
To complete the application, you must give the same information that you would provide to register an LLC in your home state. More precisely, for a California registration application, you must provide:
If necessary, an alternate name that your LLC will use in California (required if your LLC’s original name or something very similar is already being used by a California registered business, or the original name does not include words such as “Limited Liability Company” or an abbreviation such as “LLC”).
the state in which your LLC was formed the date on which your LLC was formed a statement that your LLC is currently allowed to conduct business in the state in which it was formed the name and street address of your LLC’s registered agent in California a statement that the California Secretary of State will act as your LLC’s registered agent if your LLC’s appointed agent cannot be located or has resigned the street address of your LLC’s principal office the name and street address of your LLC’s registered agent in California
With your application, you must attach a certificate of good standing. The certificate must have been granted by the agency where the LLC was founded within the past six months (usually a secretary of state in the state where your LLC is organized).
You may attach a copy of your application, which will be returned to you by the SOS with certification (for a $5 cost). You may submit your application by mail or in person. The standard filing cost is $70. Dropped-off applications are charged an extra $15 cost. Check out the SOS’s LLC filing tips website for more information.
What Happens If You Do Not Sign Up?
If your LLC does business in California without authorization, it cannot file a lawsuit there. However, the fact that your LLC is not registered does not preclude it from defending a case in California. Furthermore, a member or management of an LLC is not personally accountable for the LLC’s debts, obligations, or other liabilities just because the organization did business in California without a certificate of registration.
Foreign Corporation Registration in California
The regulations and standards for international qualifying in California are identical whether your company is structured as a corporation rather than an LLC. However, you will need to utilize a separate application form.