Long Beach, CA asked in Business Formation and Business Law for California

Q: Will a parent LLC in NM for a subsidiary in CA need to register as a foreign entity CA if I live in CA doing eCommerce

If a California subsidiary is registered by a parent company in New Mexico and conducts business within California, does the parent company, based in New Mexico, also qualify as 'doing business in California'? Consequently, would it be necessary for the New Mexico parent company to register as a foreign entity in California to continue its operations in the state? I live and operate only out of CA doing eCommerce and did a NM LLC for privacy reasons.

1 Lawyer Answer
James L. Arrasmith
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  • Sacramento, CA
  • Licensed in California

A: In California, if your New Mexico parent company has a subsidiary that conducts business within the state, it may trigger the requirement to register as a foreign entity in California. Even if you operate the subsidiary primarily for eCommerce and live in California, the fact that your parent company is based in New Mexico and the subsidiary operates within California could be considered 'doing business in California' under certain circumstances.

California has specific rules and thresholds for what constitutes 'doing business,' and it's essential to consult with legal counsel to assess your particular situation. Factors such as the volume of business, the nature of operations, and the presence of physical facilities or employees within the state can all play a role in determining whether registration as a foreign entity is necessary.

To ensure compliance with California law and to address any potential registration requirements, it's advisable to consult with an attorney experienced in corporate and business law in California. They can provide guidance tailored to your specific circumstances and help you navigate the legal obligations associated with your New Mexico parent company operating a subsidiary in California.

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