Legal Question in Business Law in California

Your corporation or LLC must register with the California Secretary of State and must pay the annual franchise tax.

Whether you need a business license from a city (or county) where your consultants are headquartered and/or do much of their work would depend upon local ordinances, but it is rather likely that a business license or licenses is/are also needed.

Be sure to classify your consultants properly......they may be independent contractors, or they may be employees. If you are deemed to be a California employer, you will be subject to several other requirements, including withholding, unemployment and workers' comp.

The other attorney is right on point here. If you're doing business in California, you need a business license. The "consultant" vs. "employee" is a trap for the unwary business person. Consult with an attorney in your area for specifics.

Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise

Franchise Attorney

The two attorneys who gave you previous answers obviously do not know your industry. I was in-house counsel and general manager for a software VAR for several years. Even so, however, I am not entirely clear on what you are asking. Are you opening a branch office of your consulting practice in California, or are you simply putting consultants on a job in California? Also, are you hiring these consultants in California for this project, or are you sending regular employee consultants to the project? If you can answer those questions, I can answer yours.

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. For more information, please visit: http://www.bealbusinesslaw.com/.

Proviso: The above information does not constitute legal advice and does not establish an attorney-client relationship between us.