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
George Cornell said: Wednesday, October 17, 2018If 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, 2018I 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, 2018You should call your attorney to assist you with that issue.
Jorge said: Friday, January 5, 2018Do you know any lawyer that has done this process already? I need to do business in California...
HBS Staff replied: Monday, January 8, 2018We 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, 2017IF 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, 2017We 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.
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