Wednesday, July 22, 2009

Do I Need to Organize or Register my Foreign Business in California?

A foreign corporation shall not "transact business" in California without having first obtained from the Secretary of State a certificate of qualification. This is a substantial administrative and taxation step.

According to California case law, activities that almost invariably lead to a finding of "transacting business" in California are the physical presence of corporate employees or agents, rather than independent contractors, in California, or the physical location of offices, particularly headquarters, in California. Other key factors are signing of contracts, particularly those to be performed within California.

If your circumstances fall into the grey area between the need to qualify or not qualify, it is important to plan this properly, as there are significant penalties, if you do not qualify, when the State of California thinks you should have.

IMPORTANT DISCLAIMER: The above material does not constitute legal advice and should not be relied on. It does not create an attorney-client relationship. Each locality has differing laws. A legal matter cannot be satisfactorily resolved without a comprehensive review and analysis of all the unique facts and laws at issue by an able attorney. Your matter may result in a loss of rights if you do not timely retain such an attorney. For more information, please visit:

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