How to Qualify as a Foreign Business in California

Did you form your company in another state but want to start doing business in California? Learn the rules for qualifying your foreign (out-of-state) corporation or LLC in California.

By , Attorney · University of North Carolina School of Law

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.

When You Have to Register to Do Business in California

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:

  • are engaged in any transaction for the purpose of financial gain within California
  • are organized or commercially domiciled (headquartered) in California, or
  • have sales, property, or payroll over certain amounts.

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.

When You Don't Have to Register to Do Business in California

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:

  • defending or settling a lawsuit or claim
  • dealing with internal company affairs such as holding meetings for its members or managers (or shareholders or board)
  • having a bank account
  • having an office, agency, or persons in the state for handling the company's securities
  • selling through independent contractors
  • soliciting or obtaining orders where the orders require acceptance outside the state before they become contracts
  • creating or acquiring debt, evidence of debt, mortgages, or security interests in real or personal property
  • securing or collecting debts
  • conducting an isolated transaction that's completed within 180 days and isn't one in the course of similar, repeated transactions, and
  • transacting business in interstate commerce.

(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:

  • a shareholder of a domestic corporation
  • a shareholder of a foreign corporation transacting intrastate business
  • a limited partner of a domestic limited partnership
  • a limited partner of a foreign limited partnership transacting intrastate business
  • a member or manager of a domestic LLC, or
  • a member or manager of a foreign LLC transacting intrastate business.

(Cal. Corp. Code § 191 (2023); Cal. Corp. Code § 17708.03 (2023).)

Filing a Certificate of Registration to Do Business in California

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:

  • the name of your business as registered in the state where it was formed
  • if necessary, an alternate name that your business will use in California (necessary if your company's original name or a similar name is already being used by a California registered business, or if the original name doesn't include the proper entity designation as required by California)
  • the state where your business was formed
  • a statement that your business currently is allowed to conduct business in the state where it was formed
  • the name and street address of your business's registered agent in California
  • a statement that the California SOS will act as your company's registered agent if your appointed agent can't be located or has resigned
  • the street address of your business's principal office
  • the street address of your business's principal office in California, if any
  • the mailing address of your business's principal office, if different from its street address, and
  • an authorized signature.

(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.

Consequences of Not Registering Your Business in California

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:

  • a daily fine
  • a fine for a misdemeanor, and
  • the inability to file a lawsuit in California.

(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).)

Additional Information About Registering Your Foreign Business

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.

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