Where am I doing business in? Incorporated in Delaware, moving to California from Pennsylvania

Asked over 2 years ago - Pittsburgh, PA

I have a c corporation that incorporated in Delaware, and I have an online startup company that haven't started selling services.
I am planning to move to California very soon. In the mean time can I sign contracts with clients without filing for foreign entity in either Pennsylvania or California?
I don't want to file for Foreign entity since I will be moving to California in 3,4 months, so I see it as a waste of money and will make things more complex...Or I don't even need to file for foreign entity although I am headquartered in Pennsylvania?
In other words, in which state/county as I being considered doing business in?
So if I want to protect my business name further should I file for DBA in that state only ( I already filed for Federal ServiceMark) ?

Additional information

Forgot to mention that website launch will start after moving to California. In the mean while still in pennsylvania i will be selling pre-orders to clients, signing contracts, etc. Those clients can be in any state, not just pennsylvania.
Thank you

Attorney answers (2)

  1. Melissa D. Lenhard

    Contributor Level 13

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    Answered . If you are operating a business headquartered in Pennsylvania, selling orders and signing contracts with individuals or companies in Pennsylvania, you are “doing business” in Pennsylvania. Regardless of your plans to move to another state, it sounds like you are currently doing business in Pennsylvania. While the PA statute does not explicitly define what it means to do business in the state, it does list some exceptions — activities that do NOT constitute doing business in Pennsylvania, including: “Soliciting or procuring orders, whether by mail or through employees or agents or otherwise, and maintaining offices therefor, where the orders require acceptance without this Commonwealth before becoming binding contracts.” Accordingly, if your orders/contracts are strictly with non-Pennsylvania residents or entities, you are likely NOT doing business in Pennsylvania. The corollary to that exception is, however, that if you are making sales and signing any contracts that are completely within the boundaries of Pennsylvania, you are doing business in Pennsylvania. If that is the case, you should register your foreign corporation to do business in Pennsylvania.

    Generally, foreign corporations cannot operate in Pennsylvania without a Certificate of Authority. The Application for a Certificate of Authority is a 2-page form that must be submitted with a $250 fee. Failure to obtain this Certificate will deny the foreign corporation access to Pennsylvania courts for bringing suit, though the corporation will still be subject to suit in Pennsylvania. The restriction on bringing suit, however, is not permanent — once you register in PA, you can sue in PA. Also, failure to register the foreign corporation does not invalidate the contracts you are signing (they are still good, valid contracts). With that in mind, you may be able to wait and see if you’ll need to resort to the courts before you move to California. If you do, you can file your Application for a Certificate of Authority then. If not, you may be able to save the time and expense of doing so, and wait to register your foreign corporation in California alone.

    In summary, based upon the facts you have provided, it seems that you are, indeed, doing business in Pennsylvania. Accordingly, you should file for a Certificate of Authority to do so. However, it is possible that, depending on the specifics of your activities, you may fall under one of the exceptions and be deemed to not be doing business in Pennsylvania. In either event, you may register your corporation at a later time if you need to resort to Pennsylvania courts.

    This response does not create an attorney-client relationship and is not intended to provide legal advice for your... more
  2. Kenneth Allyn Sprang

    Contributor Level 15

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    Answered . You are registered in DE so that piece is taken care of. If you have not begun doing anything with the business in the C corporation, you can probably avoid filing as a foreign entity in PA. The definition of "doing business" varies from state to state. If you are signing contracts in PA, and if you are living and working in PA, you are almost certainly doing business in PA. The prudent thing to do is to register as a foreign entity in PA.

    As a practical matter, the consequence of failing to register tends to be preclusion from the courts as a plaintiff and a few other things. I say that without reviewing the statute, which I have not looked at recently. So though the proper thing to do is likely to register as a foreign corporation in PA.

    Of course, to be certain of a response, one would need to gather more information about exactly what you are currently doing while in PA.

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