What is an LLC-5?
The LLC-5 is a California State form used when a domestic limited liability company formed in another state (or country) wishes to become a foreign limited liability company in California. The official name of Form LLC-5 is Application to Register a Foreign Limited Liability Company. Approval to operate as a foreign LLC is known as “foreign qualification.”
As a business owner, learning more about the LLC-5 and the process of becoming a foreign LLC in California will serve you well if you’re thinking about expanding your company. If you have registered a limited liability company (LLC) in another state and want to conduct intrastate business in California, you must submit Form LLC-5 with the California Secretary of State office. And all of you professional services providers especially those of you enrolled in CorXec’s Partner Program can benefit from getting better acquainted with the LLC-5 and what is required to register as a California limited liability company.
For legal and accounting guidance related to Form LLC-5 and foreign qualifying in California, it’s crucial to talk with an attorney and accountant or tax advisor. After you’ve gotten that expert advice and if you’ve decided to move forward with registering as a foreign LLC in California, my team at CorXec is here to prepare your LLC-5 and file it on your behalf.
Benefits of the LLC Business Structure
First things first, let’s take a moment to review the potential advantages of the LLC business entity type.
- Administrative simplicity
- Protection of business owners’ personal assets
I like to describe the limited liability company entity as “a hybrid structure that provides the operational flexibility of a sole proprietorship or partnership with the legal and financial protections of a corporation.”
Why You May Need to File a Form LLC-5
Signs that an LLC may need to file an LLC-5 to become foreign qualified in California include:
- Does the LLC have a physical presence (such as a retail store, factory, distribution facility, or an office) anywhere in California?
- Does anyone working for the LLC regularly conduct in-person meetings with customers in California?
- Does the LLC sell its products in California through an agent, distributor, or a manufacturing representative?
- Do any of the LLC’s employees work in California?
- Does the LLC have a business bank account in California?
- Does the LLC own physical property in California?
If an out-of-state LLC considered to be doing business in California fails to file a tax return or pay the required taxes and fees, the state might impose $2,000 penalty per taxable year.
Per the California Franchise Tax Board:
We impose a $2,000 penalty on entities who fail to file a tax return within 60 days after we send a demand to file. This penalty applies to the following entities doing business in California:
- Nonqualified, suspended, or forfeited corporations.
- Nonregistered, suspended, or forfeited limited liability companies.
Ouch! So, you can see why it’s important to register as a foreign LLC in California and pay taxes there if you’re obligated to do so.
How to Register a Foreign LLC in California
Here are the basic steps to register a foreign LLC in California:
- Obtain a Certificate of Good Standing from your LLC’s home state.
- Verify that your LLC’s name conforms with the law in California and is available for use in the State.
- File Form LLC-5, along with your current Certificate of Good standing, and pay associated filing fees.
- File a Statement of Information.
Now, let’s take a closer look at what you can expect when filing Form LLC-5.
Required information Needed to File
To file as a foreign LLC in California, an LLC must provide the following pieces of information on Form LLC-5
- Company name used in the state or country where the LLC is formed. (The name must match the name listed on the Certificate of Good Standing that’s submitted with Form LLC-5)
- Date the LLC was formed in its home state or country
- Principal business address and mailing address of the LLC
- Registered agent’s name and address in California (CorXec provides registered agent services in all 50 states, so contact us about covering you in California.)
- Signature of an authorized person
According to the California Secretary of State website, File an Application to Register (Form LLC,5) and attach to the completed form a valid certificate of good standing by an authorized public official of the foreign jurisdiction under which the foreign limited liability company is organized.
There’s also a Mail Submission Cover Sheet that must accompany the filing. It asks for the LLC’s contact person’s name and phone number, entity name and number (if applicable), and return address.
Note that the Certificate of Good Standing must be current (obtained no more than six months prior) and certify that the LLC is inactive status and in good standing in its home state.
In the state’s instructions for completing Form LLC-5, it also advises that business owners consult with an attorney for advice about their specific business needs and whether additional provisions for the LLC will be needed.
LLC-5 Filing Costs
The filing fee for Form LLC-5 is $70 fee, which should be paid by check or money order. Instructions on the LLC-5 state that completed forms along with the applicable fees can be mailed to:
Secretary of State, Business Entities Filings Unit
P.O. Box 944260
Sacramento, CA 94244-2600
Alternatively, the LLC-5 may be dropped off in person at the California Secretary of State office in Sacramento. The mailing address is:
1500 11th Street
3rd Floor
Sacramento, CA 95814
The LLC must pay an additional $15 handling fee if someone drops off the form at the Sacramento office. The state will accept payment by credit card when the LLC-5 is submitted in person.
The Secretary of State will return one uncertified copy of the filed document for free. A certified copy will be provided upon request for $5. Additional uncertified copies can be requested at the cost of $1 for the first page and $0.50 each additional page. If the LLC wants additional certified copies, add another $5.00 per copy.
To ensure that all of the paperwork gets completed accurately and efficiently, consider asking CorXec to prepare and file your LLC-5. We have extensive experience in registering foreign LLCs in California and can save you lots of time and headaches!
LLC-5 Processing Times
According to information provided in the instructions for the Mail Submission Cover Sheet that needs to accompany Form LLC-5, standard processing is approximately five business days from when the Secretary of State receives the paperwork. California offers options for expediting the process if you need a faster turnaround.
Additional LLC-5 FAQs
What happens after a foreign LLC’s LLC-5 is approved?
The state will issue a Certificate of Registration, which officially acknowledges that the foreign LLC may do business in California.
After the foreign limited liability company gains the approval to operate in California, it must submit a Statement of Information (Form LLC-12) with the California Secretary of State within 90 days after filing the LLC-5 and every two years after that.
What state taxes does a California foreign limited liability company have to pay?
Typically, foreign limited liability companies must pay an annual minimum annual tax of $800 to the California Franchise Tax Board. The California Franchise Tax Board’s website and the California Legislative Information website provide additional information about LLCs’ tax responsibilities.
What other ongoing business compliance responsibilities must a California foreign limited liability company complete?
In addition to filing a Statement of Information every two years and paying required taxes by their deadlines, a foreign LLC in California must maintain a registered agent in the state at all times. As I mentioned earlier, CorXec can serve as your registered agent in California and any other state in the United States. Other compliance requirements may include obtaining and retaining business licenses and permits in the jurisdiction(s) where you do business. Check with the Secretary of State and local government offices to determine what you’ll need. To save you precious time, CorXec can help you identify and obtain the required licenses and permits.
Are there restrictions on what types of businesses can become a foreign limited liability company in California?
Yes! Foreign limited liability companies that provide certain services may not register to operate in California. According to Form LLC-5 instructions, the restriction applies to professional services that may be lawfully rendered pursuant to a license, certification, or registration authorized by the Business and Professions Code, the Chiropractic Act, the Osteopathic Act or the Yacht and Ship Brokers Act.
It’s wise for any business that must be licensed, certified, or registered in California to check with the relevant licensing or certification authority to confirm or deny whether its services are considered professional and restricted from being a foreign LLC. Doing that before completing and submitting the LLC-5 will ensure you don’t waste time and money submitting for foreign qualification if your LLC is ineligible. Another helpful resource you can check for information licenses in the state is the California Department of Consumer Affairs website.
The Smart Way to Register
As you can see, there’s a lot to pay attention to when registering a foreign LLC in California. It’s critical to complete Form LLC-5 accurately and follow the state’s process to a tee so that your request gets approved.
Fortunately, CorXec is here to help you! Contact us and ask us to handle all of your important filings so that you can move forward with doing business in California.
