Foreign (Out-of-State) LLC Doing Business in CA? What to Know

UPDATED as of 4/22/2025 (originally published in July 2023)

A California Foreign LLC refers to any business that’s been created in a state other than California. 

In this context, “foreign” doesn’t mean another country – just another state within the United States. A business organized in the state where it does business is referred to as a “domestic LLC.”

 If you’re looking to do business in the Golden State, your company must first register in the state, as there are specific rules and regulations surrounding registration and compliance that you will need to meet in order to do business here. California is one of the most popular states for businesses looking to expand, thanks to its massive consumer market, diverse economy and strong presence in industries like technology, entertainment and tourism.

In this updated guide, we explore some of the important things you need to know about doing business here as a foreign LLC in 2025, including registration requirements, tax obligations, and changes to the legal and political landscapes that might affect you. 

Which Out-of-State Businesses Need to Register in California?

As long as a foreign LLC transacts business within the state of California, they will need to register with the California Secretary of State. “Transacting intrastate business” in California is defined as entering into repeated and successive transactions of its business in this state — other than interstate or foreign commerce.

This means that having a physical office and employees within the state of California is not necessary for an entity to be considered as transacting business within California. As long as the business conducts any sales or services in the state, they’ll need to register, and failing to do so can potentially result in penalties including fines and the inability to bring lawsuits before Californian courts. 

If you are unsure about whether your out-of-state business needs to register (or any other related questions), consult an attorney who will be best able to advise you on your obligations.

Consequences of Not Registering in CA

A foreign corporation that fails to register in California may not bring or maintain a lawsuit in California courts (although it may be able to defend the action, it could not bring a cross-complaint or counterclaim). However, to be clear, any entity, even unregistered foreign entities, is entitled to defend against lawsuits brought against them in California.

All corporations and LLCs, even small ones like subchapter S corporations, are legally separate and distinct from their shareholders or members, even if there is only one shareholder. Corporations and LLCs protect their shareholders or members with limited liability. Because the only person who may legally represent another person in court is an attorney, only an attorney may represent a corporation in court. 

In California, the only exception is that a corporation cannot be represented in small-claims court by an attorney. 

How to Register Your LLC with the Secretary of State

If your business needs to be registered with the California Secretary of State, there are a few important steps you will need to take:

• California Registered Agent: To register a foreign LLC in California, you will need to designate a California registered agent. Your agent must have a physical address in California to accept service of processes. 

• Certificate of Good Standing: Part of the application requirements is a certificate of good standing from the home state in which your LLC was originally incorporated. This certificate confirms that your business is legally registered and authorized to do business in its home state. Without the certificate, your application may be rejected. 

• Form LLC-5: Form LLC-5 is the official application form that you will need to file with the California Secretary of State. As of 2025, the filing fee for this form is $70.

California Privacy Laws

Apart from ensuring that your business is properly registered with the California Secretary of State, you should also check that it complies with California privacy laws and corporate registration requirements if it handles or processes consumer data. 

Tax Obligations for CA Businesses

Beyond registration requirements, all businesses that organize in California are also required to pay an annual franchise tax of $800. This tax is due every year until you cancel your LLC and must be paid by the 15th day of the 4th month from the date that you file your first-year annual tax. 

The only exemption from this tax is if you cancel your LLC within one year of organizing.

Apart from the annual franchise tax, LLCs that will make more than $250,000 in California income must estimate and pay an additional LLC fee. This fee starts from $900 and can go up to $11,790, depending on the projected California income for the LLC during that tax year. 

California’s Franchise Tax Board scrutinizes LLCs that it suspects of transacting intrastate business in California for compliance audits because an LLC is more likely to be an informally operated out-of-state company that may be unaware of its non-compliance. It is therefore important for you to be aware of and to adhere to your tax obligations in California in order to avoid penalties. 

Suppose your company receives a letter from the California Franchise Tax Board informing it that it has been doing business in California without filing a tax return. In that case, it must file such a return within sixty (60) days or face a potential fine of $2,000.

Additionally, when a company has a physical presence in the state, it must also collect sales tax on its sales to residents of that state. 

Compliance Best Practices for Foreign LLCs

Because of the rapidly changing legal and political landscape in California, the obligations that foreign LLCs are subject to can quickly change.

To avoid being blindsided by such changes, it is important for you to take steps to ensure that your business stays compliant with all applicable laws. Some compliance best practices you should implement include:

Staying Informed

As the legal landscape shakes up, staying in the loop on potential changes to laws and regulations can help your business stay compliant. For example, under the Corporate Transparency Act, non-US based companies are required to report beneficial ownership information to FinCEN as part of a push for greater business transparency. 

While U.S. entities are exempt from this requirement, this may change in the future and it is thus important to ensure you stay informed. Engaging an attorney who specializes in business law can help you navigate these evolving requirements with confidence. 

Making Timely Filings

At the same time, ensuring that you keep up with your filing requirements and make timely filings is also a good practice. By staying organized and meeting all state obligations as a foreign LLC in California, your business will remain in good standing and avoid unnecessary administrative headaches.

At Gallagher Krich APC, our attorneys have decades of combined experience in all manner of legal transactions including filing and compliance matters. Whatever your legal needs are, we can provide creative legal solutions tailored specifically to you or your business. 

Call us for a free consultation at (858) 926-5797 should you have any questions about registering your out-of-state company in the State of California, or see our LLC Help Form here.