Do you own a business that is built in a different state other than California and you still want to do business in California? Is so, you would require to register your already existing business in California too. Let us throw some in-depth insight over the rules for qualifying for the foreign LLC in California or non-California limited liability company for doing business in California.
Foreign LLC California
If your LLC is formed in another state, but you want to conduct your business in California, then your LLC will be termed as a Foreign LLC in California. Sometimes people get confused with the word “foreign” since it represents an outside country.
However, Foreign LLC in California actually describes that your business is formed abiding by the rules & regulations of some other state (and not a foreign country) instead of California.
On the contrary, if we talk about a domestic LLC, it is formed under the guidelines of the particular state where it is doing business. As an example, if an LLC was formed in Texas, it would be considered as a foreign LLC in California.
Transacting Business in California
As per the LLC Act of California, if you want to conduct business within California, you have to register your foreign company. If your company has a “sufficient physical presence,” in the state, which is also termed as “Nexus” (a legal term), you have to collect and pay tax on sales in that state (where your company is doing business). As an example, if you are selling goods & services in San Francisco, you are bound to pay California state taxes.
The physical presence usually requires to qualify the following checklist:
- You can own a store in the California state
- You can have a warehouse in the California state
- You can have an office in the California state, or
- You can have a sales representative in the California state
Exceptions That May Apply
Some specific exceptions may apply to the foreign LLC in California, and the rules & regulations may get more complicated concerning few things like Internet sales. In general, we can say that if you have an office, a store, a warehouse in any other state, you have to qualify your LLC as a foreign company in that particular state. According to California’s LLC Act, there are a few activities that do not constitute doing business in the state.
Some of those exceptions or activities, which are exempted, includes:
- dealing with internal LLC affairs like manager meetings or holding member
- settling or defending a lawsuit
- opening a bank account in the state
- having an agency, office, or persons in the state for handling the security of your own company.
- soliciting or taking orders wherever the orders require acceptance outside the state (before they are converted into contracts)
- selling through independent contractors
- creating or acquiring indebtedness, mortgages, shreds of evidence of debt, or security interests in personal property
- collecting or securing debts
- transacting business in interstate commerce
- conducting an isolated transaction or a business that is completed within 180 days and is not one amongst the repeated transactions
Also note that as per the LLC Act, the list as mentioned above is not exclusive, there are many other activities as well that also may be exempt. If you would like to figure out the full legal description of each of the listed items, you may refer to the California Corporations Code – Section17708.03. You should not register with the state if your LLC’s activity in California is only one of the above-listed items. Still, if you have got stuck amid the turmoil, you must seek the help of a professional.
Certificate of Registration
To register your foreign LLC in California, as an owner, you need to file an application through the California Secretary of State (SOS). The copy of an application form can be downloaded from the official website of the SOS, at any time of the year, whenever you want to register your business in California. To process the application form, you would require to provide the information similar to the one you would have provided in your home state ( except for a few data).
Here is a checklist of the information required to register your foreign LLC in California.
- The LLC name as registered in the home-state or where it was formed.
- If required, an alternate name that you would like to use for your foreign LLC in California, if your original name is already in use. Or an optional name is required if the original name is not having the words such as “Limited Liability Company” or “LLC”.
- The date information on which your LLC was formed.
- The state information where your LLC was formed.
- A statement that represents that you are allowed to do the business. transaction in the state that your LLC was actually formed.
- The name & address of the streets of your LLC’s registered agent in California.
- If you do not have a registered agent within California, a statement that the California Secretary of State will serve as your LLC’s registered agent. Or it is even valid for the case if your appointed agent could not be located or has resigned.
- The street address of your LLC’s principal office.
- The street address of your LLC’s principal office in California, if any.
- The mailing address of your LLC’s principal office would be required if it is distinctive from its street address.
- An authorized signature.
Cost in Registering Foreign LLC in California
The basic fee to register your Foreign LLC in California is $70 and $20 to be paid as Initial Statement of Information fee (total $90). If you would drop it in person then you have to pay an additional $15. There is also a provision to get your form processed on the priority basis/same day or within 24 hours (expedited filing). To get detailed information about its processing fee information, you can visit the SOS’s official website.
After applying for the registration of your Foreign LLC in California, you will receive a qualification certificate in the registered email. In case, you want to keep a copy of the application for your records, you have to send two copies of it. The California Secretary of State will then send back these copies to you.
When is the LLC Statement of Information Due?
Once you qualify as a foreign LLC in California, an Initial Statement of Information fee is to be submitted within 90 days. Later, you would have to file an SI biennially after every two years. To be more precise, your foreign LLC has to submit it, in the month of registration. As an example, if your LLC was registered in the month of February, then you have to file SI in February (of that year), as per the mandatory biennial filings (legal requirements).
Quick Facts For The Registration Of Your Foreign LLC
- Form: Application to Register a Foreign LLC in California
- The Registration Fee: $90
- The Agency: Secretary of State of California
- Online Filing: No
- Additional Document Required: Certificate of Good Standing (home state)
- State Filing Time: 14 business days
- Expedited Filing: 1 business day ($350)
- Prioritized Filing: 8 business days ($15)
What Happens if You Don’t Register Your Foreign LLC?
Let us assume that you have decided to transact business without registering your foreign LLC in California. In this case, your LLC may later get involved in some dispute or subject to a lawsuit. As a matter of fact, you can still defend your LLC within California.
Additionally, managers or other LLC members will not be liable to the lawsuit – obligations or debts that may occur as a result of directing an unregistered business. In short, if your foreign LLC is transacting business without holding a certificate of registration, it will have to face the legal issues in the long run.
How may IncParadise help you?
Now that you might have understood that starting a Foreign LLC in California is a complicated task. Registering your LLC on your own may become a hassle and very time-consuming. To avoid such hindrances, you can hire corporate filing solutions like IncParadise. The experts at IncParadise, have all the expertise in the registration and incorporation process.
Let us help you with the complete registration process of your foreign LLC in California to protect it from any possible legality issues. For more information, contact us now!