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If you own a business that was created in a state other than California, you'll need to register that business in California if you want to do business there. Here's an overview of the rules on when and how to qualify your foreign (non-California) limited liability company (LLC) or corporation to do business in California. This article covers when you should register as a foreign business in California. For more general guidance, read our article on qualifying to do business outside your state.
California requires any out-of-state business that enters into repeated and consecutive transactions in California—other than for foreign or interstate commerce—to register as a foreign entity with the state government. These types of activities are considered "intrastate commerce," meaning activities that happen within the state. (Cal. Corp. Code § 191 (2023); Cal. Corp. Code § 17708.03 (2023).)
Two common types of foreign businesses that California recognizes are:
When transactions are considered repeated and consecutive might be tricky to nail down. The state Franchise Tax Board (FTB) considers companies as "doing business" if they either:
You can find more information, including the qualifying sales, property, and payroll amounts on the doing business in California section of the FTB website.
Some activities that are considered "doing business" by the FTB for tax purposes can be different from the activities considered "doing business" for the purpose of foreign registration. If you need legal advice about whether your business activities require foreign registration, you should talk to a California business attorney. They can advise you on your filing obligations and can file the appropriate registration form for you.
California's Revised Uniform LLC Act and General Corporation Law provide a list of activities that don't constitute transacting intrastate business and—as a result—don't require registration. So, any company that engages only in these activities in California wouldn't need to register as a foreign business.
These excluded activities are the same between LLCs and corporations and include:
(Cal. Corp. Code § 191 (2023); Cal. Corp. Code § 17708.03 (2023).)
As discussed above, in California, some activities don't qualify as transacting intrastate business. Likewise, certain statuses or positions the business has don't qualify as transacting intrastate business. For example, a foreign business doesn't need to register in California merely because its subsidiary does business in California or merely because of its status as any one or more of the following:
(Cal. Corp. Code § 191 (2023); Cal. Corp. Code § 17708.03 (2023).)
If you're doing business in California and you don't qualify for one of the listed exemptions, then you'll need to register your business with the California Secretary of State (SOS). Your business will need to file a certificate of registration or qualification:
You can complete and mail the form to the SOS or file the form online.
To complete the application, you must provide more or less the same information that you need to register a business in your home state. For an application for foreign registration for both corporations and LLCs, you need to provide:
(Cal. Corp. Code § 2105 (2023); Cal. Corp. Code § 17708.02 (2023).)
You must include a current certificate of good standing with your application. The certificate must be issued by the agency where the business was formed (usually a secretary of state).
The SOS can certify a copy of your application for a small fee. You can also drop your application off in person. In-person filings have an additional fee. For more information on business forms, check the SOS's filing tips webpage.
There are fees and penalties associated with transacting business in California when your company hasn't registered as a foreign entity.
The penalties for a foreign corporation that doesn't have a valid certificate include:
(Cal. Corp. Code § 2203 (2023).)
LLCs that don't have a valid registration certificate also can't file a lawsuit in California. However, not being registered doesn't prevent your LLC from defending against a lawsuit in California. Also, a member or manager of the LLC isn't liable for the LLC's debts, obligations, and other liabilities solely because the company transacted business in California without a certificate of registration. (Cal. Corp. Code § 17708.07 (2023).)
You'll need to maintain your registration just as you would if you incorporated or organized your company in California. After registering your foreign business, you'll also be responsible for paying applicable business taxes and filing the associated returns. Make sure you keep up with these registration and filing requirements. You can find information about these requirements in the business sections of the SOS website and the FTB website.
For more guidance, check out the SOS's frequently asked questions page. You can find answers to questions about when and how to register your foreign business. This page also directs you to the relevant state laws if you're interested in reading further.
You can also find more information about maintaining your LLC's registration by reading our article about California LLC's annual report and tax filing requirements.