If you want to do business in one of the largest economies in the world, home to a wide variety of consumers, California is an irresistible opportunity. As a trend-setting market hub for arts, media, and marketing, California is a great place to catapult your brand.
But instead of starting a brand new business in California, registering a foreign LLC allows you to expand smoothly into the state with most of the groundwork taken care of.
To legally do business in the Golden State, LLCs expanding to California must register a foreign LLC with the California Secretary of State. The application to register a foreign LLC in California is called form LLC-5. This article will tell you what's required for the LLC-5, which businesses need to file, and why it’s essential to do so.
Key Takeaways
Form LLC-5 registers your out-of-state LLC as a foreign LLC authorized to do business in California.
To file the form, you must obtain a certificate of good standing from your home state, elect a California registered agent, and ensure your company name is available in California.
As a California foreign LLC, you’ll owe an annual $800 franchise tax and LLC fee based on your in-state income.
What is the LLC-5 Form?
California Form LLC-5 is officially called the Application to Register a Foreign Limited Liability Company (LLC). This form allows your LLC from another state to do business activities in California, such as buying or renting property, selling your goods or services, or hiring employees, without incorporating a new LLC.
In addition to a completed LLC-5, you must attach a certificate of good standing from your LLC’s domestic jurisdiction to be approved.
What is a Foreign LLC?
Business entities are “foreign” if incorporated in a different state than the one they’re trying to do business with. The process to register a foreign LLC is also called foreign qualification.
You should register your LLC in every state where you have substantial business operations. Otherwise, you’ll accrue back taxes and penalties in each of those states, and your business won’t be able to defend itself in a lawsuit there.
California LLC-1 vs LLC-5
While they have similar names, the California LLC-1, also known as articles of organization, and LLC-5 are two different forms.
LLC-1
LLC-5
For new California businesses that have never incorporated in any state and are looking to start an LLC in California.
For LLCs that are incorporated in a state other than California that want to register as a foreign LLC before doing business in California.
Do I Need an LLC-5?
Any LLC incorporated outside of California that wants to “transact business” in California must file form LLC-5. According to the California Secretary of State, “transacting business” roughly means “entering into repeated and successive transactions of [an LLC’s] business in this state, other than interstate or foreign commerce.”[1]
California law is not precise regarding the definition of “transacting business.” In general, if you plan to pay rent, purchase property, start a bank account, hire employees, or make sales in California consistently, you’ll want to register as a foreign LLC by filing form LLC-5.
If you or any fellow LLC members reside in California and are ultimately responsible for the company’s business, you must register a foreign LLC in California.[2]
Failing to register as a foreign LLC in California comes with significant risks. Business entities that do business in California without registering cannot defend themselves in court. This could put your personal assets at risk if you find yourself with a service of process in California. Unregistered foreign LLCs are also liable for back taxes, penalties, and fees.
LP-5 for Foreign Limited Partnerships In California
Take note: Form LLC-5 is for LLCs only. Limited partnerships providing professional services, such as law firms, that want to expand their practice to California must file a separate form, LP-5, to the California Secretary of State. An LLC-5 would be rejected.
California LLC Taxes
For all its opportunities, California is not a cheap state to operate in. California LLC taxation is administered by the state Franchise Tax Board (FTB) and includes:
Annual fee of $800
Additional LLC fee based on an LLC’s California income over $250,000
The California LLC fee starts at $900 and goes up to $11,790 for California income exceeding $5 million.
These tax requirements apply to domestic and foreign LLCs in California. Sales and employment taxes and taxes relevant to specific activities and businesses also apply.[3]
Steps to Register a Foreign LLC in California
For those planning to take their LLC to California, here’s a close look at form LLC-5, the application to register a foreign LLC with the California Secretary of State.
Requirements for Foreign LLC Registration
Before filing California form LLC-5, ensure you have the following documents and details sorted out.
1. Certificate of Good Standing from Your Home State
Your certificate of good standing must be attached to your LLC-5 filing. You can order it from the state office that registers businesses in your state. We can also help order your certificate of good standing in your state and take care of it for you.
2. Valid LLC Name
Your business name must be available in California for your LLC-5 to be approved. Search the California Secretary of State database or use our free business name search tool to check if your name is available. If your current LLC name is taken, you must find an alternative name for your business to use in California.
3. California Registered Agent
In California, your registered agent is called an “agent for service of process.”[4] Your registered agent is where courts will send legal documents in the event of a service of process against your business or other legal proceedings. They can be an individual or corporation but must maintain regular hours at a California business address. Note that a P.O. Box doesn’t count.
Our registered agent service is available in all 50 states. If you’re looking for a California registered agent, we’ll handle the paperwork on your behalf and ensure you never miss a legal notice, critical document, or deadline.
How to Complete Form LLC-5
You can get form LLC-5 from the California Secretary of State website. If you file online, you’ll get a quicker response and avoid a $15 handling fee.
The LLC-5 form requires the following information:
LLC name: It should match your certificate of good standing, including exact abbreviations, designations, and your California alternate name, if necessary.
LLC jurisdiction: This is the state where the LLC was originally formed.
Principal executive office address
Principal California office address, if applicable
Principal office mailing address: Include if different from your principal executive office mailing address.
California registered agent’s name and address
Authorized party signature
IMPORTANT: Don’t forget to attach a copy of your certificate of good standing from your home state.
If you don’t want to file online, you can mail your form to the address below or drop it off in person at the Sacramento office. A $15 service fee applies when filing in person.[5]
By Mail
In Person
Limited Liability Company Filings
P.O. Box 944260
Sacramento, CA 94244–2600
1500 11th Street
Sacramento, CA 95814
Filing Fees and Costs
Until June 30, 2023, your LLC-5 has no filing fee. It’s usually $70.
If you’re dropping off your form in person or by mail, enclose a $15 check or money order payable to the California Secretary of State. To receive certified copies of the filed document, include a $5 certification fee per copy.
California LLC taxation will apply to your business when your form is accepted. You will owe the $800 franchise tax paid by all LLCs and an additional LLC fee if your California revenues exceed $250,000.
LLC-5 Approval Process
The Secretary of State expects to process your LLC-5 within five business days.[6] Online form submissions are processed first. If you’re worried about timing, expedited options are available.
To avoid rejection, you must submit a certificate of good standing from your home jurisdiction, and the company name on the certificate must perfectly match the name on your LLC-5.
Ninety days after your foreign LLC is approved, you must file a statement of information (LLC-12) to the Secretary of State. After the initial filing, this form will be due every two years. Like an annual report, the LLC-12 applies to all California LLCs and has a $20 filing fee.
Let Us Handle Your LLC Paperwork for Peace of Mind
Doing business in California is a major undertaking, and the state government doesn’t play around regarding fees, penalties, and taxes. To get your LLC-5 done right the first time, recruit Swyft Filings for the job. Our filing service will save you precious time, and you’ll gain expert support to keep your foreign LLC in good standing for the long haul.
FAQs
What is an LLC-5?
Form LLC-5 is the form that LLCs from out-of-state file to qualify as foreign LLCs in California.
What are the requirements for an LLC in California?
Foreign LLCs must obtain a California registered agent and submit a certificate of good standing from their home state with form LLC-5. They must also submit a statement of information within 90 days and pay relevant franchise and LLC taxes.
What are the benefits of a foreign LLC?
A foreign LLC allows you to legally do business in California without establishing a separate California LLC.
Do I need to register an out-of-state LLC in California?
If you transact business in California consistently, you must register your LLC as a foreign LLC or risk strict penalties and back taxes. You also could not represent your business in a California court of law.
What is the difference between an LLC-1, LLC-5, and LLC-12?
The LLC-1, called the articles of organization, establishes a domestic California LLC. The LLC-5 form registers a foreign LLC in the state of California. LLC-12, the statement of information, is like an annual report and is due every two years for foreign or domestic LLCs in California.
What is the California LLC tax rate?
LLCs in California pay an $800 annual franchise tax and an LLC fee based on their California income, ranging from $900 to $11,790. Beyond that, income tax rates vary based on the LLC’s members' personal income taxes, relevant sales, and other taxes.
How do I register a business in California?
You can register a foreign LLC by filing form LLC-5 to the California Secretary of State. It’s fastest and cheapest to do so online. You may also establish a new LLC in California by filing form LLC-1.
How long does it take to get an LLC-5 approved in California?
The Secretary of State estimates about five days to turn around an LLC-5.
What else does my LLC need to be compliant in California?
Your LLC needs to pay all of its taxes, file its statement of information, and secure relevant licenses and permits depending on its business type.
Bibliography
California Secretary of State Shirley N. Weber, Ph.D. “Frequently Asked Questions.” Accessed May 22, 2023.
State of California Franchise Tax Board. “Limited Liability Company Filing Information.” Accessed May 23, 2023.
State of California Franchise Tax Board. “Limited Liability Company.” Accessed May 22, 2023.
California Secretary of State Shirley N. Weber, Ph.D. “Service of Process.” Accessed May 22, 2023.
California Secretary of State Shirley N. Weber, Ph.D. “Contact Information - Business Entities.” Accessed May 22, 2023.
California Secretary of State. “Application to Register a Foreign LLC (Form LLC-5).” Accessed May 22, 2023.
