I formed an LLC in Delaware in March, though I'm based out of California. I filed the foreign qualification by mail last week, though the mail seems to be delayed and I have no idea when the registration will actually get to the CA Secretary of State. Am I getting penalized for every day the LLC operates in CA without being registered?
The only info I could find about not being registered is that the LLC's contracts may not be enforceable. If the LLC later becomes qualified, do the contracts signed while it was unqualified then become enforceable?
An LLC in Delaware? Probably someone told you that's where public companies register. PS - that is both an over-simplification and incorrect, a bad combination.
In addition to not being able to enforce certain contracts or appear in court, there is the Franchise Tax Board. The penalties and interest could be significant. You must have a CPA. Deadline? As soon as possible.
I suggest a lawyer local to you who understands you are a startup on a budget and is willing to grow with you. Consider this: it is often the questions you don't even know you need to be asking which are the most important.
The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts...
"formed" and "operating" are two entirely different things. Your post says nothing whether or when you were operating. Typically, you should be okay if you sent off the properly completed and fees registration already.
As a general point, as a business owner and operator you should be consulting with an attorney for this stuff, not using a general question and answer forum to substitute as a general counsel.
My responses on this website DO NOT constitute a consultation, nor do they establish an attorney-client relationship. Only a written retention agreement signed by client and myself will establish an attorney-client relationship. Please DO NOT message or phone me with further questions or comments as the discussions would be outside this forum and would not be visible to the public (the only exception to this being for serious prospective clients). If you have additional follow up questions or additional facts to add, re-draft them into a new question and repost it.
I blogged about foreign entity qualification in California almost a decade ago. Please see "Doing Business in CA? Be Sure to Register" at https://danashultz.com/2010/05/24/doing-business-in-ca-be-sure-to-register/.
As that post explains, whereas there is a financial penalty for a foreign corporation's failure to qualify when it does business in CA, there is no comparable penalty for a limited liability company.
The major problem for a foreign LLC that fails to qualify is that it cannot file, or defend itself in, a lawsuit. However, once the LLC has qualified, it may proceed with the lawsuit.
Answering this question, there is no deadline, per se. As soon as the foreign LC starts conducting business in CA, it should qualify.
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