Legal Question in Business Law in California
Hi,
I have recently incorporated my business as C corp. in Delaware. I have mentioned my home address (CA) in all the paperwork and in D&B form. I would like to know, if I need to file a "qualification to do business" in CA, even if I am not hiring any employees, trading or doing any other business activity except writing the federal grants (which also requires opening the business account).
Thanks for your advice.
2 Answers from Attorneys
Yes. If you are doing your business in CA, you must register your out of state corp. with the CA Secretary of State.
I think Mr. McCormick is probably right, in that what you are going to be doing PROBABLY would meet the test of "doing business" in California. The list of things a business can do without being required to register as a foreign corporation and pay California franchise and income taxes is rather limited, and having the headquarters and the principal executives in California will almost certainly trigger a duty to register and pay taxes here.
What puzzles me is why new small businesses owned by Californians and operating from California addresses continue to think there is an advantage to incorporating in some other state such as Delaware or Nevada. There are good reasons for large, publicly-traded corporations to be domiciled in these states, but the reasons simply don't apply to 99.5% of small California-centric corporations.
These corporations should avoid the double-filing and double-taxation and double record-keeping that'll be required, and just form and operate as a California corporation in the first place.
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