Register Your Out-of-State Business in California
Complete guide to qualifying your Delaware, Texas, Wyoming, or other out-of-state entity to legally conduct business in California.
Common States Qualifying in California
When Must You Qualify as a Foreign Entity?
California requires foreign entities to register if they are "transacting intrastate business." This is interpreted broadly by the Franchise Tax Board and courts.
- You have employees working in California
- You have an office, warehouse, or physical location in CA
- You regularly meet with California clients in-state
- You own or lease real property in California
- You have significant and regular California sales
- You maintain inventory in California
- You have California bank accounts for operations
- You perform services regularly in California
- You hold California professional licenses
- Only conducting isolated transactions
- Only holding board/shareholder meetings in CA
- Only maintaining bank accounts (not for operations)
- Only making sales through independent contractors
- Only collecting debts (not lending)
- Only participating in litigation or arbitration
- Purely interstate commerce (shipping through CA)
- Holding passive investments only
- Limited trademark/patent licensing
FTB Interpretation is Broad
The Franchise Tax Board interprets "doing business" very broadly. Even a single California employee or regular sales into the state can trigger registration requirements. When in doubt, qualify.
Economic Nexus Standard
California uses an economic nexus test: if you derive income from CA sources, have CA property, or pay CA compensation exceeding certain thresholds, you're "doing business" regardless of physical presence.
How to Register as a Foreign Entity
The qualification process involves filing with the Secretary of State and registering with the Franchise Tax Board. Here's the step-by-step process.
Check Name Availability
Your entity name must be distinguishable from names already registered in California. If not available, you can use a fictitious business name.
If name taken: File Statement and Designation (Form SI-200 or LLC-5) to use a different name in California
Obtain Certificate of Good Standing
Get a Certificate of Good Standing (or Certificate of Existence) from your home state. California requires this document dated within 6 months.
Most states: Available online same-day or within 24 hours
Validity: Must be dated within 6 months of CA filing
Designate Registered Agent
Appoint an agent for service of process with a California street address. This can be an individual or a registered agent service.
Commercial agents: $50-$300/year
Individual agent: Must be CA resident with physical address
File Qualification Documents
Submit the appropriate form to the California Secretary of State along with the required fee.
LLCs: Application to Register a Foreign LLC (Form LLC-5)
Filing fee: $150 (Corp) or $70 (LLC)
Processing: 3-5 business days standard, 24-hour expedite available
File Initial Statement of Information
Within 90 days of qualification, file a Statement of Information with the Secretary of State.
Corporations: Form SI-350
LLCs: Form LLC-12
Register with Franchise Tax Board
Register your entity with the FTB and prepare to pay California franchise tax. First-year tax may be prorated.
First year: Exempt for new entities (formed after 1/1/2024)
Payment due: 15th day of 4th month after fiscal year begins
Documents Needed for Qualification
Gather these documents before starting your foreign entity registration in California.
| Document | Corporations | LLCs | Notes |
|---|---|---|---|
| Certificate of Good Standing | Required | Required | From home state, dated within 6 months |
| Certified Copy of Formation Documents | Sometimes | Sometimes | Articles/Certificate of Incorporation or Organization |
| Statement & Designation Form | S&DC-S/N | LLC-5 | California-specific application form |
| Statement of Information | SI-350 | LLC-12 | Due within 90 days of qualification |
| Fictitious Name Statement | If needed | If needed | Only if CA name differs from home state name |
Delaware Certificate of Good Standing
Order online at corp.delaware.gov. Standard processing is same-day for online requests. Certified copies available for $50 (short form) or $175 (long form). Short form is sufficient for CA qualification.
Expedited Processing
California offers expedited processing for additional fees:
24-hour: +$350
Same-day (drop-off): +$750
4-hour (drop-off): +$500
Annual Requirements for Foreign Entities
Once qualified, foreign entities must maintain compliance with both California and their home state. Here's what's required each year.
California Franchise Tax ($800+)
Due by the 15th day of the 4th month after fiscal year begins. Pay online at ftb.ca.gov. Corporations may owe additional tax based on CA income.
Statement of Information (Corporations)
Due during your anniversary month each year. File Form SI-350 with $25 fee. Lists officers, directors, and agent for service of process.
Statement of Information (LLCs)
Due every two years during anniversary month. File Form LLC-12 with $20 fee. Lists managers/members and registered agent.
California Tax Return
Form 100 (C-Corp), Form 100S (S-Corp), or Form 568 (LLC). Even if no CA income, a return may be required to report activities.
Maintain Registered Agent
Keep your CA registered agent current. If using a commercial service, renew annually. Agent resignation without replacement leads to suspension.
Home State Compliance
Continue meeting all requirements in your state of formation (annual reports, registered agent, franchise taxes). California qualification doesn't replace home state obligations.
Consequences of Operating Without Qualification
Operating in California without proper qualification exposes your entity to significant legal and financial penalties.
No Court Access
Unqualified foreign entities cannot maintain or defend lawsuits in California courts. You must qualify before the court will hear your case, causing delays and additional costs.
Contract Voidability
Contracts entered while unqualified may be voidable at the other party's discretion. You can cure this by qualifying, but the other party may have already rescinded.
$20/Day Penalty
California imposes a $20 per day penalty for each day a foreign entity does business without qualifying, up to $10,000 maximum. This is in addition to back taxes owed.
Back Taxes + Interest
You'll owe all franchise taxes that would have been due from when you began doing business in CA, plus interest and penalties. The FTB can assess taxes for up to 8 years back.
Personal Liability Risk
Officers and managers who cause the entity to operate without qualification may face personal liability for penalties. The corporate veil may not protect against this misconduct.
Voluntary Disclosure Program
If you've been operating without qualification, consider the FTB's Voluntary Disclosure Program. It may reduce penalties if you come forward before the FTB discovers the issue.
How to Withdraw from California
When you stop doing business in California, you must formally withdraw to end your franchise tax obligations and reporting requirements.
Cease California Business
Stop all activities that constitute "doing business" in California. Close offices, terminate employees, and wind down CA operations.
File Final Tax Return
File a final California tax return marked "FINAL" covering the period up to withdrawal. Pay any outstanding tax liability.
Obtain Tax Clearance Certificate
Request Form 3555 from the FTB to obtain a Tax Clearance Certificate. This confirms all CA taxes have been paid.
Required for: Certificate of Withdrawal filing
File Certificate of Withdrawal
Submit the appropriate form to the Secretary of State along with the Tax Clearance Certificate.
LLCs: Form LLC-4/8
Filing fee: None for withdrawal
Don't Just Stop Filing
Simply stopping California filings doesn't end your obligations. The entity remains qualified and franchise taxes continue to accrue until you formally withdraw. Many businesses discover $5,000+ in back taxes years later.
Post-Withdrawal
After withdrawal, your entity continues to exist in your home state but is no longer authorized to do business in California. You can re-qualify later if you resume CA activities.
Frequently Asked Questions
Only for very limited activities (isolated transactions, holding meetings, passive investments). If you have California employees, make regular sales to CA customers, own CA property, or perform services in CA, you must register as a foreign LLC. The FTB interprets "doing business" broadly.
Yes. Qualifying in California doesn't replace your home state obligations. A Delaware LLC qualified in California pays Delaware annual tax ($300) plus California franchise tax ($800 minimum). You're registered in both states simultaneously.
Standard processing is 3-5 business days. Expedited options: 24-hour ($350), same-day drop-off ($750), 4-hour drop-off ($500). The longest part is often obtaining your home state's Certificate of Good Standing, which can take 1-7 days depending on the state.
You have two options: (1) Change your name in your home state to something available in CA, or (2) Register using a fictitious business name in California while keeping your original name in your home state. Most businesses choose option 2.
Probably yes. California's economic nexus rules mean significant sales into the state (over $610,395 in 2024) can trigger registration requirements even without physical presence. Consult a tax advisor to analyze your specific situation.
If your existing California entity is suspended, you must revive it before the Secretary of State will process any new filings. You cannot qualify a new foreign entity while another entity with the same officers/owners is suspended.
Need Help with Foreign Entity Qualification?
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