Legal Question in Business Law in California
If an out-of-state LLC advertises and subcontracts work to independent contractors in California, is the LLC:
1) Required to register as a foreign entity
2) Required to pay the annual franchise tax
3) Considered as "doing business" in California
2 Answers from Attorneys
If this happens once, for a relatively short project, maybe, maybe not. If this is an ongoing practice, the answers are yes, yes and yes.
Under California law, a foreign (i.e. non-Californian) corporation shall not transact intrastate business without having first obtained from the Secretary of State a certificate of qualification. �Transact intrastate business� means entering into repeated and successive transactions of its business in this state, other than interstate or foreign commerce. A foreign corporation shall not be considered to be transacting intrastate business within the above meaning solely by reason of carrying on in this state any one or more of the following activities:�(among others listed in California Corporations Code Section 191)
(5) Effecting sales through independent contractors.
(6) Soliciting or procuring orders, whether by mail or through employees or agents or otherwise, where such orders require acceptance without this state before becoming binding contracts�
(8) Conducting an isolated transaction completed within a period of 180 days and not in the course of a number of repeated transactions of like nature.
Proviso: My response does not constitute legal advice, as I do not know all of the relevant facts of your case, and I do not legally represent you. Although I strive to make sure the information I provide is generally accurate and useful, you should promptly consult an able lawyer who can learn the unique details of your case more completely in a confidential relationship to ensure that the information I provide, and your interpretation of it, is appropriate to your particular situation.
Contact: If you would like to discuss this matter further in a more private forum, please feel free to contact me directly at the email address provided through Law Guru or through my firm�s website located at BealBusinessLaw.com.
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