Can a Delaware LLC Operate in California? Registration, Fees, and Penalties

Yes, a Delaware LLC can operate in California, but before it starts doing business there it has to register as a foreign LLC with the California Secretary of State and begin paying California’s $800 annual franchise tax. Registration is required whenever the LLC “transacts intrastate business” in California, and the tax clock starts the moment the LLC is doing business in the state, whether or not registration has been completed.¹²

When Registration Is Required

California requires a foreign LLC to register once it “transacts intrastate business,” meaning repeated and successive business transactions inside the state that go beyond interstate commerce.¹ There is no single bright-line test. The state looks at whether the activity is ongoing and regular rather than occasional. A physical office, warehouse, or storefront in California is the clearest trigger. Employing workers in the state or owning income-producing property there also points strongly toward registration.

The Franchise Tax Board applies a separate “doing business” standard for tax purposes. The FTB treats an LLC as doing business in California if it engages in any transaction for financial gain in the state, or if its California payroll, property, or sales exceed annual thresholds. For 2025, the threshold is $75,707 for payroll or property and $757,070 for sales, and the figures are adjusted each year.³ A Delaware LLC that crosses any one of those lines owes California tax even if its activities might not clearly meet the Corporations Code definition. In practice, if you have employees working remotely from California or earn significant California-source revenue, you likely trigger both the registration and tax obligations.

Activities That Don’t Require Registration

California specifically lists activities that do not count as transacting intrastate business, even when they happen inside the state:⁴

Defending a lawsuit or settling claims in California.
Holding internal meetings of the LLC’s members or managers in the state.
Maintaining bank accounts at California financial institutions.
Completing an isolated transaction within 180 days that isn’t part of a pattern of similar transactions.
Conducting interstate commerce, such as shipping goods through California without a persistent presence there.
Selling through independent contractors based in California.
Soliciting orders from California customers by mail, phone, or online when the orders are accepted outside the state.

Owning a membership interest in a California LLC or shares in a California corporation also does not, by itself, require your Delaware LLC to register.⁴

How to Register a Delaware LLC in California

Check Name Availability

Search the California Secretary of State’s business database to confirm your Delaware LLC’s name is available in California. If an existing registered entity already uses an identical or confusingly similar name, you can adopt an alternate name for use in the state.¹

Obtain a Delaware Certificate of Good Standing

California requires a certificate of good standing (or equivalent status document) from the Delaware Division of Corporations, issued within six months before you submit the California application.¹ Don’t order it too early, or it may expire before California processes your filing.

Appoint a California Registered Agent

Your LLC needs a registered agent with a physical street address in California who can accept legal papers and official notices for the company. The agent can be an individual California resident or a corporation authorized to serve in that role.¹ Professional registered agent services typically charge between $35 and $350 per year. If the LLC doesn’t maintain its own California office, a commercial service is usually the simplest option.

File Form LLC-5

The actual registration is done by filing the Application to Register a Foreign Limited Liability Company (Form LLC-5) with the Secretary of State. The form asks for your LLC’s exact legal name as it appears on the Delaware formation documents, the name and address of your California registered agent, and the LLC’s principal business address.⁵ You submit the Certificate of Good Standing with the completed form.

The filing fee is $70.⁵ You can file online through the Secretary of State’s BizFile portal, by mail, or in person at the Sacramento office. Online filings are typically processed within a few business days; mail filings take longer, sometimes several weeks depending on current backlog.⁶ Once approved, the state returns a filed copy of your Form LLC-5, which serves as your certificate of registration to transact business in California.

California Taxes and Fees

$800 Annual Franchise Tax

Every LLC registered in California owes an $800 annual franchise tax to the Franchise Tax Board, regardless of whether the LLC actually earns any revenue.⁷ The tax continues every year until you formally cancel your California registration. A temporary first-year exemption that covered LLCs registering between January 1, 2021 and January 1, 2024 has expired, so a Delaware LLC registering today owes the full $800 starting in its first tax year.⁸

Gross Receipts Fee

On top of the $800 franchise tax, California charges an annual fee based on the LLC’s total California-source income. Below $250,000, no additional fee applies. Above that threshold, the fee scales:⁹

$250,000 to $499,999: $900
$500,000 to $999,999: $2,500
$1,000,000 to $4,999,999: $6,000
$5,000,000 or more: $11,790

“Total income” here isn’t net profit. It is gross income plus cost of goods sold attributable to California, so the fee can hit even when the LLC is barely breaking even or operating at a loss.⁹ The estimated fee payment is due by the 15th day of the sixth month of the LLC’s taxable year, which is June 15 for calendar-year LLCs. Underpayment triggers a 10% penalty on the shortfall.¹⁰

Statement of Information

Within 90 days of registering, the LLC must file a Statement of Information (Form LLC-12) reporting its principal address, the name of its manager or CEO, and its registered agent. The fee is $20.¹¹ After that, an updated statement is due every two years during a six-month window tied to the original registration date. Missing it can lead to penalties and suspension of the LLC.¹²

What You Still Owe Delaware

Operating in California doesn’t relieve you of Delaware obligations. Your LLC must keep paying Delaware’s $300 annual franchise tax, due on or before June 1 each year. Delaware doesn’t require an annual report for LLCs, but if you miss the tax, Delaware adds a $200 penalty plus 1.5% monthly interest on the unpaid balance.¹³ Losing good standing in Delaware can put your California registration at risk, since California expects your LLC to remain authorized in its home state.

Between the California $800 franchise tax, the Delaware $300 tax, a registered agent in each state, and any California gross receipts fee, baseline compliance runs at least $1,100 a year before professional help. For a smaller LLC whose business is really in California, it is worth asking whether forming in California from the start would have been cheaper.

What Happens If You Don’t Register

Skipping registration doesn’t void your LLC or its contracts, but it does cause real problems.

The most immediate: an unregistered foreign LLC cannot bring or maintain a lawsuit in any California court. You can still be sued and defend yourself, but you lose the ability to enforce your own rights. If a customer refuses to pay or a business partner breaches an agreement, you have no access to California courts until you register and pay all outstanding fees and taxes. Your contracts stay legally valid, but validity on paper means little when you can’t walk into a courthouse to enforce them.¹⁴

One piece of good news: failing to register does not strip LLC members or managers of their liability protection. California law provides that a member or manager is not personally liable for the LLC’s debts just because the company operated in California without a certificate of registration.¹⁴

On the tax side, the FTB will still hold you responsible for the $800 annual tax for every year you were doing business in California without registration, plus any applicable gross receipts fees, interest, and penalties.⁷ And if a dispute arises, the Secretary of State is automatically deemed the LLC’s agent for service of process, so you can be served through the state even without an agent set up in California.¹⁴

1
California Legislative Information. California Corporations Code 17708.02
2
California Legislative Information. California Revenue and Taxation Code 17941
3
State of California Franchise Tax Board. Doing Business in California
4
California Legislative Information. California Corporations Code 17708.03
5
California Secretary of State. California Form LLC-5 Application to Register a Foreign Limited Liability Company
6
California Secretary of State. Current Processing Dates
7
State of California Franchise Tax Board. Limited Liability Company
8
Franchise Tax Board. FTB Pub. 3556 – Limited Liability Company Filing Information
9
California Legislative Information. California Revenue and Taxation Code 17942
10
Franchise Tax Board. Instructions for Form FTB 3536, Estimated Fee for LLCs
11
California Secretary of State. Instructions for Completing the Statement of Information Form LLC-12
12
California Secretary of State. Statements of Information Filing Tips
13
Delaware Division of Corporations. LLC/LP/GP Franchise Tax Instructions
14
California Legislative Information. California Corporations Code 17708.07