California Foreign Qualification: How to Register Your Out-of-State LLC or Corporation in California
If your LLC or Corporation was formed outside of California but you are doing business in California, you must qualify/register your business with the California Secretary of State.
Foreign Qualification is the process of registering your out-of-state LLC or Corporation to do business in California.
Getting Foreign Qualification will allow your LLC or Corporation to legally do business outside the state in which your business was formed.
Why Do I Need to Get Foreign Qualification in California?
In the United States, just because you are registered to do business in one state does not mean that you can legally do business in another state.
If you want to do any business in a state other than the state in which your LLC or Corporation is registered, you will have to register with the state in which you will be doing business before you can legally conduct business there.
Sometimes California-based businesses think that they can avoid California registration fees and taxes by forming their business entities in another state. This is incorrect.
If your LLC or Corporation is doing business in California, then it must register with the California Secretary of State, even if the entity was formed elsewhere.
For example, an LLC that is registered in Delaware wants to do business in California. The Delaware LLC is a "Domestic" LLC in Delaware and will be considered a "Foreign" LLC in California.
The Delaware LLC will need to register with the California Secretary of State as a California Foreign LLC.
Also, keep in mind that most banks will not open a business bank account for a company that has not yet completed its Foreign Qualification process.
How Do I Know If I Need Foreign Qualification?
Generally, you will need to get Foreign Qualification at the time of your business formation.
If your LLC or Corporation was formed outside of California (i.e., Delaware, Wyoming, New York, etc) but you will be doing business in California (even if you are operating an online business), you will need to get Foreign Qualification in California.
If you’re uncertain as to whether or not your company is doing business in another state, ask yourself the following questions:
- Does your company have a physical address in the state?
- Does your company accept orders in the state?
- Are you paying employees in the state?
- Does your company hold any assets in the state?
- Have you opened a business bank account in the state?
Please keep in mind that it is typically best to talk to an attorney regarding Foreign Qualification for your LLC or Corporation.
What is Considered "Doing Business" in California?
The term "doing business" in California is defined as "entering into repeated and successive transactions of business."
So if you are doing repeated business with customers, suppliers, and other businesses that are located in California, you will need to get Foreign Qualification to do business in California even if your LLC is Corporation was formed outside of California.
This is true even if you operate an online business in California. As a result, your online business will be considered doing business in California and you will need to get Foreign Qualification.
What If I Don’t Get Foreign Qualification?
For LLCs and Corporations, getting Foreign Qualification is required before doing business in California. Corporations that do not register before transacting business in California are subject to financial penalties (Section 2203).
Also, a foreign business entity that does business in California without registering in California is not allowed to bring lawsuits or defend itself in California courts arising from such business.
How Long Does it Take to Get Foreign Qualification in California?
Processing times for California Foreign Qualification applications typically take 10 to 15 business days. There are options for expedited services with 24-hour turn around as well.
► How Do I Qualify / Register an Out of State LLC or Corporation in California?
If you need to qualify your business to do business in California, the following process should be followed:
- Get a business lawyer to prepare and file your Application to Register a Foreign LLC (for LLCs) or Statement and Designation by Foreign Corporation (for Corporation)
- The business lawyer will ensure all issues are considered and addressed appropriately and file your application with the California Secretary of State.
- You will receive your Foreign Qualification to do business in California
To ensure that all issues are considered and addressed appropriately, it is highly recommend to seek the assistance of a business lawyer to submit Foreign Qualification documents to the California Secretary of State.
Note: Many registration documents are returned for correction without being filed because of name issues, errors, omissions or misstatements contained in the proposed filings submitted to the Secretary of State. In order to avoid setbacks and delays, it is always best to have business lawyer submit your Foreign Qualification.
We have been getting Foreign Qualification for LLCs and Corporations in California for over 3 years.
If you need to get your LLC or Corporation qualified to do business in California, fill out the form below:
► Email email@example.com or call (818) 925-0002 to get started on your Foreign Qualification.
Why Past Clients Work With Us
- Same day processing for your California Foreign Qualification order
- California name check before submitting Foreign Qualification
- Preparing and filing Statement and Designation by Foreign Corporation
- Priority Mail Delivery
- Unlimited Customer Support
NOTICE: This post is an advertisement and is for general informational purposes only and is not intended as a substitute for legal advice. Mollaei Law and the author, Sam Mollaei, Esq., assume no liability for the contents of this post. To learn more about our services, please contact our office.