California Foreign Qualification
Doing business in California allows businesses to tap into a huge population and one of the strongest economies in the country. But if you’re based in a different state, the first step to doing business in California is to complete the process of foreign qualification.
What is Foreign Qualification?
Foreign qualification is nothing more than the process of registering a business that is based in one state to legally do business in another. This applies to everything from opening a warehouse to a storefront, and it must be done when branching your business out into a different state.
Why Does A Company Need Foreign Qualification?
Why You Need To Do It – A corporation or LLC will need to file for California foreign qualification if it intends to do business but they are based in another state. Doing so is the only way to remain compliant while doing business.
When Should You Do It? – As soon as a business decides that it is going to do business in California, it should begin the process. Failing to do so can lead to delays that may impact the overall business plan. Generally, you will need to foreign qualify if your company falls under any of the following criteria:
- Has a physical presence in California
- Buying a property there
- Have remote employees
- Accepts orders in California
- Owns a bank account in California
What Happens If Your Entity Does Not Foreign Qualify?
If you fail to foreign qualify, your business can face major penalties, fines, and fees. It also will be unable to bring any legal action to the courts in California. Foreign qualification keeps you compliant and avoids all fees and penalties that can impact its bottom line.
Steps To Obtain Foreign Qualification
There are several basic steps that you’ll have to take in order to foreign qualify your business. These steps include the following.
1. Obtain Certificates – If you have an LLC, you will have to file an Application to Register a Foreign Limited Liability Company with the Document Filing Support Unit of the Secretary of State. Meanwhile, corporations who wish to do business in California should file a Statement and Designation by Foreign Corporation with the Secretary of State. You can submit the document in person or by mail.
In addition to the above mentioned documents, you will also have to secure a Certificate of Good Standing from your home state.
2. Collect And Submit Information – Information that a business will need to submit includes basic info regarding your business.
- LLC name registered in your company’s home state
- LLC name you will use in California or an alternative name if the original does not comply with the state regulations
- The original date of formation
- Your LLC’s business address
- Proposed name for the California Foreign Corporation
- Name of the company’s home state
- The corporation’s principal office address
- A California office address, if any
3. Appoint Registered Agent – Your registered agent handles the legal documents that your business receives, accepts service of process, and more. They accept documents from the state and pass them on to the LLC or corporation they represent. To handle the heavy workload, most businesses will use a third party organization such as DoMyLLC to serve as their registered agent.
4. File The Application – With all the information gathered, you’ll need to fill out the application in full and submit it along with the $70 filing fee.
5. Ongoing Maintenance – California Requires all Foreign Corporations and LLCs to file an initial report within the first 90 days of registration with the state. Corporations are also required to file an annual report every year while LLC’s are required to file one every other year.
What Is the Difference Between Foreign Qualification And Incorporating?
Incorporation is a process that forms an entirely new business entity within the state. Foreign qualification does not create a new LLC or corporation. Instead, it allows an existing business to begin operating in another state legally.
How DoMyLLC Can Assist With Streamlining The Process
We understand that business owners have a lot to worry about. That’s why we take care of the process of California foreign qualification for you. We offer:
- Unlimited customer support
- Dedicated account managers
- Name availability checks
- Full registration
We take care of the entire process so you can focus your attention on other things. Contact us today to see how we can help you.
California Foreign Qualification FAQs
California requires that an LLC or corporation file an application for certification to register as a business. The application to register for foreign qualification must then be submitted. Additionally, a statement of information must also be submitted within 90 days.
Basic filing fees are $70. Applications dropped off in person also must have an additional $15 fee paid upon delivery.
Any business that is planning on operating in California can file for foreign qualification.
Companies don’t need an attorney to register for foreign qualification, but it is always a good idea to talk to a lawyer to ensure you’re taking steps to stay compliant.
You’ll need to submit several pieces of information including things like:
- Name of your business
- Primary address of the business
- Date of business formation
- Statement of good standing in home state
- Name of registered agent
If your name isn’t available in California, you may have to register a fictitious name and operate under it when doing business in the state.
California Business Resources
California Office of Secretary of State
California Secretary of State
1500 11th Street
Sacramento, CA 95814