Foreign qualification with the Secretary of State in California is the process by which a business entity that was originally formed in another state or country obtains the legal authority to operate in California. This involves registering with the Secretary of State and complying with state regulations to ensure the business is in good standing to conduct operations within the state.
There are 3 different ways to foreign qualify in California depending on your legal entity type and tax classification. Follow the guide below to help you register with the Secretary of State in California or use Mosey to do it.
Use Mosey to register with the Secretary of State in California.
Avoid the hassle of doing it yourself and use Mosey to automate foreign qualification, annual reports, and registered agent service.
California Foreign Registration for LLP
You must file an Application to Register a Limited Liability Partnership (Form LLP-1) with the California Secretary of State before doing business in the state. California defines "transacting intrastate business" (i.e., "doing business") as "entering into repeated and successive transactions of its business in this state, other than interstate or foreign commerce." Hiring employees in California is generally considered "doing business" in the state. Note: LLPs offering Public Accountancy, Architectural, Engineering, Land Surveying, or Legal services are required to maintain liability insurance policies, trusts, and/or bank escrows to cover claims against it or file an Alternative Security Provision form if the business's net worth meets specific criteria. Foreign LLPs that begin operating or register in California after the 15th day of the third month of their tax year must pay their initial annual tax to the Franchise Tax Board immediately after commencing business in California or registering with the Secretary of State, whichever occurs first.
Obtain a Certificate of Good Standing
California requires you to provide a valid Certificate of Good Standing from your home state issued within six months.
Establish a Registered Agent
Establish a registered agent in California designated to accept service of process. Your registered agent can be an individual who resides in California or a corporation authorized by the Secretary of State to act as an agent for service of process. Note: Your business cannot act as its own registered agent.
Obtain Security Provisions
Certain limited liability partnerships are required to maintain liability insurance policies, trusts, and/or bank escrows to cover claims against it. Public Accountancy and Architectural Services must maintain minimum coverage of $1,000,000 and a maximum of $5,000,000. Engineering or Land Surveying Services must maintain minimum coverage of $2,000,000 and a maximum of $5,000,000. Legal Services must maintain minimum coverage of $1,000,000 and a maximum of $7,500,000. Note: The minimum coverage required is for up to five licensees and $100,000 of coverage must be added for each additional licensee providing services on behalf of the partnership.
Complete Application to Register Form
Complete an Application to Register a Limited Liability Partnership (Form LLP-1) and save it as a PDF. Note: If you are providing: (a) Legal Services and have a net worth of $15,000,000 or more, or (b) Accountancy, Architectural, Engineering, or Land Surveying Services and have a net worth of $10,000,000 or more complete the Alternative Security Provision (Form LLP-3) section.
File an Application to Register Online
Submit your completed Application to Register a Limited Liability Partnership (Form LLP-1), Certificate of Good Standing, and pay the filing fees using the California Secretary of State's online Business Entities eForms service. Note: All uploaded documents must be in PDF format.
Pay Initial Limited Liability Partnership Annual Tax
Pay your annual tax with the Franchise Tax Board online, if applicable. Note: LLPs are not subject to the annual tax and fee if they did not conduct any business in California during the taxable year and their taxable year was 15 days or less.
California Foreign Qualification for LLC
A foreign limited liability company must first qualify with the California Secretary of State before doing business in the state. California defines "transacting intrastate business" (i.e., "doing business") as "entering into repeated and successive transactions of its business in this state, other than interstate or foreign commerce." Hiring employees in California is generally considered "doing business" in the state. Note: Foreign LLCs that begin operating or register in California after the 15th day of the fourth month of their tax year must pay their initial annual tax and fees to the Franchise Tax Board immediately after commencing business in California or registering with the Secretary of State, whichever occurs first.
Sign up for an Online User Account
Visit bizfile Online to create an online user account with the Secretary of State.
Obtain a Certificate of Good Standing
California requires you to provide a valid Certificate of Good Standing from your home state issued within six months.
Establish a Registered Agent
Establish a registered agent in California designated to accept service of process. Your registered agent can be an individual who resides in California or a corporation authorized by the Secretary of State to act as an agent for service of process. Note: Your business cannot act as its own registered agent.
File an Application to Register a Foreign LLC
Go to bizfile Online then select "Registration - Out-of-State LLC" to file the Application to Register a Foreign LLC (Form LLC-5) with the Secretary of State.
Pay Initial Limited Liability Company Annual Tax
Pay your annual tax and fee with the Franchise Tax Board online, if applicable. Note: LLCs are not subject to the annual tax and fee if they did not conduct any business in California during the taxable year and their taxable year was 15 days or less.
California Foreign Qualification for Corporation
A foreign business must first qualify with the California Secretary of State before "doing business" in the state. California defines "transacting intrastate business" (i.e. "doing business") as "entering into repeated and successive transactions of its business in this state, other than interstate or foreign commerce". Hiring employees in California is generally considered "doing business" in the state. Note: The filing fee for nonprofit organizations is $30.
Sign up for an Online User Account
Visit bizfile Online to create an online user account with the Secretary of State.
Obtain a Certificate of Good Standing
California requires you to provide a valid Certificate of Good Standing from your home state issued within six months.
Establish a Registered Agent
You must have a registered agent in California designated to accept service of process. Your registered agent can be an individual who resides in California or a corporation authorized by the Secretary of State to act as an agent for service of process (1505 Registered Corporate Agents). Note: Your business cannot act as its own registered agent.
File a Statement and Designation by Foreign Corporation
Go to bizfile Online, then click "Registration" under your corporation type to file Form S&DC with the Secretary of State.
What else do I need to know?
Once you are registered with the Secretary of State, you may have additional requirements to maintain your "good standing" in the state. Failing to do so can result in fines, back taxes, and forfeiting certain priveleges within the state.
Maintaining a Registered Agent
Most states require that you have a registered agent that can receive important mail from the Secretary of State should they need to contact you. There are many commercial options available or you can use Mosey to be your registered agent and keep your information private in California.
Annual Reports and Taxes
In addition to maintaining a registered agent, most states require you to file a report annually. Registration can also trigger state taxes such as a franchise tax or income tax. You can use Mosey to identify these additional requirements to maintain good standing in California.
