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Dana Howard Shultz

Dana Shultz’s Answers

4,202 total

  • Is it required for me to register my Delaware C Corporation as a foreign corporation in California?

    If my company needs to register in California as a foreign corporation, when is the right time to register it? Business details: It is an online service (a mobile app) that connects hairstylists with people for free. This service is available...

    Dana’s Answer

    The test for whether a foreign (out-of-state) corporation needs to qualify (register) in California is whether it engages in "repeated and successive transactions" of business within the state.

    California law does not define "repeated and successive transactions". However, in a blog post ("What are Repeated and Successive Transactions?" at, I discussed this term in light of relevant statutory and case law.

    Here is what I wrote at the end of that post:

    You should read that post in its entirety, then figure out whether your corporation is entering into, or at some time in the future starts entering into, repeated and successive transactions, and act accordingly. No one on Avvo can make that determination for you based on the limited information provided above.

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  • Do I have to have a corporate binder and how much does it usually cost?

    I am in construction business and I recently switched my business from a sole proprietor to an S corp. I would like to think that the s corp helps shield my personal asset from unknown liability the business may come across. But after hearing a...

    Dana’s Answer

    A corporate records book is not essential, but it is a helpful way to organize corporate documents. It should cost less than $100.

    Several years ago, I blogged about how to avoid having a corporate veil pierced. Quoting a portion of "Avoiding 'Alter Ego' Problems: A To-Do List" at :


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  • Why several startups incorporate in Delaware? What are the benefits against other states?

    I'm looking to incorporate my company in the US. It's a chilean company looking for expansion.

    Dana’s Answer

    I have helped dozens of international clients bring their businesses to the U.S.

    Almost all have incorporated in the state where they will do business (or will start doing business) because they must register there, in any event.

    Delaware is a good choice if one is seeking institutional (such as venture capital) investment, but that is not the case for most of my international clients.

    I have blogged several times about why companies incorporate in Delaware. I recommend that you start with "Why (not) Incorporate in Delaware?" at and follow links from there.

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  • How to reinstate canceled Californian LLC?

    Few month ago, I cancelled an LLC and forgot to Grant Deed the property out of it prior to cancellation. How do I reinstate an LLC? I called Secretary of State LLC department and was told that its not possible to reinstate an LLC once it is cancel...

    Dana’s Answer

    The first answer (by a non-CA attorney) is irrelevant because it provides a link to a page that discusses revival from suspension or forfeiture, rather than cancellation.

    What the Secretary of State told you is correct: The only way to revive a canceled LLC is pursuant to a court order.

    That said, I believe that you are *not* in as bad a situation as you fear. Corporations Code Section 17707.06(a) ( states:


    So, if I understand the facts correctly, your LLC still exists for the purpose of deeding the property to the appropriate successor.

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  • Is a legal document needed to acknowledge a partnership that has ended when one partner agrees takes over the business?

    Is a legal document needed to acknowledge a partnership has ended when one partner agrees the other partner can take over the real estate investment by a refi? There was no formal agreement initially.

    Dana’s Answer

    There are at least two potential issues.

    First, it appears that there was an assignment of an interest in a business entity (a partnership). That assignment should be documented in a signed, written agreement.

    Second, given the apparent informality of the business's operations, there may be a need to transfer title to the property and have the transfer of title recorded with the county.

    You should retain an experienced business lawyer to help you ensure that these tasks are carried out appropriately.

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  • ALIENS need Start Business In US,Need Lawyer office for several things

    Hi I hope this mail find u well During the previous period of my visits to America, I studied how I set up a small Business that help Arabs they are interested in medical tourism within US. I found it good business to start with. SO N...

    Dana’s Answer

    Having worked with dozens of international clients, I can tell you that you need to retain a business lawyer and an immigration lawyer, who will have to work together closely to form a legal entity and obtain a work visa for you. You can select Find a Lawyer at the top of the page to help locate these individuals.

    In addition - perhaps even before you retain the lawyers - you will need to retain an accountant / tax adviser who is familiar with both domestic and international taxation to help you decide which type of legal entity, and which state of formation, will be most tax-efficient.

    I have blogged extensively about the challenges foreigners face when they start businesses in the U.S. I recommend that you start at and follow links from there.

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  • LLC California State minimum $800 filing tax.

    My ex-husband registered a LLC in 2008 and he transfered the LLC to my sons in 2011. They did not know what is for. They did not involve any business using the LLC. In 2015 the Secretary of State penalize them for not filing the annual statemen...

    Dana’s Answer

    1. The LLC probably has been suspended. It cannot be revived until all past-due amounts, plus interest and penalties, are paid to the Secretary of State (as applicable) and the Franchise tax Board. Based on the information provided, it appears that many thousands of dollars are owed.

    2. The current owners will have to pay all amounts that are due if they want to revive the LLC. They may be entitled to recover pre-2011 amounts from your ex.

    3. The "ask for a refund" part of the story makes no sense.

    4. When such large amounts are owed, people typically just walk away from their LLC, especially if all they plan to do is dissolve it. However, if the LLC has assets or has been conducting business, then there may be a need to revive it.

    5. An experienced business lawyer should review all of the relevant facts, documents and correspondence and advise your sons accordingly.

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  • Stock options dilution/nondilution, how does it work?

    Around 8 months after joining, the startup I work for told me that my stock options will not be diluted. I was given some number of options when I joined and have been given more after that during my promotion and performance reviews. But what sho...

    Dana’s Answer

    Here is a hypothetical example of how anti-dilution protection works:
    - A individual acquires shares that represent 1% of the company's issued and outstanding shares.
    - Anti-dilution protection means that if more shares are issued to other shareholders in the future, the protected individual automatically will receive more shares so s/he will continue to hold 1% of the issued and outstanding shares.

    Anti-dilution protection is not common when one acquires shares. I have not encountered such protection with respect to options.

    That said, one would expect to see such protection specified in an agreement between the company and the option holder. It probably is not in the company's standard stock option grant documents, so one would expect to see the protection specified in a separate agreement.

    Based on the nature of this question, my guess is that you do not have such an agreement. (If you did, you probably would recognize it.)

    You should ask an experienced business lawyer to review all of your option-related documents and communications and to advise you accordingly.

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  • Joint Venture Agreement vs Operating Agreement?

    I'm entering into a business with a partner and we are forming an LLC. Our lawyer drafted a joint venture agreement. Is this the operating agreement for the LLC or something different? Do we need both or just the operating agreement?

    Dana’s Answer

    Like my colleagues, I find it difficult to provide a definitive answer based solely on the limited information that has been provided.

    A limited liability company needs an Operating Agreement.

    A Joint Venture Agreement typically is an agreement between two parties who are developing a business *without* forming a new legal entity. I don't know why such an agreement is being prepared in this case. You should ask your lawyer.

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  • Can I create an LLC or corporation with 2 foreigners?

    I am wondering if forming an LLC with 2 foreign nationals is legal. One foreigner will own 51% of the LLC shares, and the other foreigner and myself will split the remaining 49% shares. Is this legally acceptable? Once formed, the LLC will work wi...

    Dana’s Answer

    I have helped dozens of foreign clients form legal entities (corporations or LLCs) in the U.S.

    Yes, a U.S. citizen or resident can co-own a corporation or LLC with foreigners. The state does not care where a corporation's shareholders or an LLC's members live.

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