What is a Foreign LLC in California?

Foreign LLC California refers to a limited liability company that is formed in another state but is operating in California. The term “foreign” has nothing to do with the LLC operating from or being associated with another country. Rather, it pertains to the laws under which the company was organized. So, if a company is organized under California law, it is not a foreign company because the laws governing it are not foreign. Instead, it is considered to be a domestic LLC.

Choosing a Name

The first thing you must do when setting up your foreign LLC in California is to choose the name to which your company will be referred to while doing business in the state. If the name of your LLC is already being used or does not comply with the California Corporations Code, choosing an alternate name will be necessary. Ideally, you will want to make this as close to your LLC’s original name as you can.

Certificate of Registration

After you have chosen your name, the next step is to submit an Application to Register a Foreign Limited Liability Company with the California Secretary of State. Along with this, a certificate of good standing must be submitted. Such a certificate should have been issued no later than six months previous by the agency that approved your LLC’s formation. Both these documents should be submitted in person or by mail to the California Secretary of State.

To speed up the process of registration, you can include a self-addressed envelope and a letter stating your contact name, return address, telephone number, and the company name. For a $5 fee, you can also include a copy of your application which the Secretary of State will certify and return to you. Processing fees for registration are as follows:

  • Normal processing: $70
  • In-person processing: $85
  • 24-hour processing: $420
  • Same-day processing: $820
  • Four-hour processing: $1320

Normal processing time is two months, in addition to mailing time. In-person processing is 25 business days.

Choosing a Registered Agent

To operate in California, your LLC must have a registered agent. The registered agent accepts and dispenses legal papers on your behalf. It can either be an individual or a corporation (but not an LLC), so long as it has an address within the state.

Reporting Requirements

Foreign LLCs must submit an initial Statement of Information no later than 90 days after they have received registration in California. A $20 filing fee is required for this. California also requires a biennial CA Statement of Information on the final day of the month you registered.

California LLC Law

If you are doing business in California, you should be aware of California LLC law, as it will be different in at least some respects from that of your state. For instance, it is good to know that if you do business with a foreign LLC in California, your LLC will have tax obligations within the state. According to California law, any LLC must file a tax return, as well as be subject to an $800 minimum California franchise tax if:

  • They engage in a transaction in the state for financial profit.
  • They are registered or qualified to conduct business in the state.
  • They are “doing business” within the state, regardless of if they are organized, incorporated, registered, or qualified to do so in the state.

In reference to “doing business,” the California Franchise Tax Board (FTB) defines this to be occurring in California if:

  • Any member, manager, or agent of a foreign LLC does business in the state on the behalf of their LLC.
  • The LLC is considered to be commercially domiciled in the state (meaning that the LLC runs its operations in the state, even though it was formed in another).
  • The LLC’s California sales, including those by LLC agents or independent contractors, exceed 25% of the LLC’s total sales or $500,000, whichever is less.
  • The LLC’s California property is valued at 25% of the LLC’s total property or $50,000, whichever is less.
  • The LLC pays compensation in Florida in excess of 25% of the LLC’s total compensation or $50,000, whichever is less.

When making these calculations, one should include the LLC’s distributive share or pro-rata of any pass-through entities.

From the above example, it can clearly then be seen that there is much to be aware of when it comes to registering a foreign LLC in California, especially if one wants to avoid unexpected taxes and other expenses. If you need more help understanding foreign LLC California, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.