Delaware LLC Doing Business in California
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, forming an LLC in Delaware vs California is an easy 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 operating in California or any other U.S. state, failure to adhere to local compliance regulations may put the protection of your company at risk.
What does California require to register your Delaware LLC as a foreign entity?
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 Agent will also provide the service in California. The California Registered Agent will not need to sign the filing for a Delaware LLC in California.
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 Delaware LLC operating in California 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.
If you're planning on forming an LLC in California, first consider doing business in California as a Delaware LLC. You can learn more about Delaware Foreign LLC Registration on our website. Contact our team today to learn how to register a Delaware LLC in California.
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*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.
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There are 9 comments left for Delaware LLC Doing Business in California
Mario said: Tuesday, July 26, 2022Can I, as non US resident form an LLC in Delaware for invoicing international sales commisions to a company registered in California? Thank you very much.
HBS Staff replied: Wednesday, July 27, 2022Hell Mario,
Thank you for your email. Yes, anyone anywhere in the world can form a Delaware company and operate lawful business activities. We would be happy to further discuss this with you.
S said: Wednesday, December 9, 2020If my LLC is doing business with a Delaware Corporation not llc doing business in California, do I have to pay taxes to California like I would if I were doing business with a California llc or corporation?
HBS Staff replied: Thursday, December 10, 2020Unfortunately, we're not sure exactly what you're asking here. Typically, you will have to obtain foreign qualification in any state in which your own company is doing business. If you are unsure if your business activities qualify as doing business, please check with the California Department of State or consult an attorney or accountant.
Jennifer Y. Martelino said: Friday, October 18, 2019We are a Delaware registered LLC and the nature of our business is record reform services. We have a client in CA. Do we need to pay CA sales tax? I researched and found out that services are not taxable in CA. Does this apply to us given that we are out-of-state Delaware registered?
HBS Staff replied: Monday, October 21, 2019Jennifer, this is a question that an accountant would have to answer for you as we are unable to comment on your specific tax obligations. Sorry we can't be of more assistance!
Gary said: Sunday, May 26, 2019Can I register first in CA, and then register in Delaware?
HBS Staff replied: Tuesday, May 28, 2019Gary, 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, 2018If 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, 2018Sheela - 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.
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