California LLC filed in the California Secretary of State

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CALIFORNIA SHELF LLC'S AND CORPORATIONS

INFORMATION ON THE CALIFORNIA SECRETARY OF STATE

When to avoid acquiring a California Shelf LLC. This is critical information if you need a shelf corporation or shelf LLC, and when you must do business in California. This information applies to those who are interested in obtaining a shelf LLC and doing business in California.

DO NOT acquire a California shelf LLC to build corporate credit or to start a business.

Please consider the following reasons:

California LLC's, and CA companies in general, have a horrible record of an insecure corporate veil. When the corporate veil is pierced due a weakness, your personal assets can be attacked to satisfy the debts and obligations of the California LLC. If you had a strong corporate veil, you retain limited liability. This means that your personal assets cannot be used to satisfy the debts of the California LLC.

Attorneys in California are famous for selling people on incorporating. Attorneys push the CA LLC to generate more fees for themselves. Many California attorneys are known to attack other LLC's, filed by other attorneys, to access the personal assets of the owners in lawsuit claim.

The corporate veil is what protects you from the liabilities of the company. When the corporate veil is strong, you are not personally liable for the debts of the company. When the corporate veil is weak and its pierced, the creditor can make you personally liable and attach your personal assets. Anyone who lives in California knows of the over-population of lawyers, and the risks from these vermin.
- California companies are weak in corporate veil. California lawyers sell their clients on incorporating, and then they routinely attack the corporate veil of other corporations and LLC's. Attacking the corporate veil is routine in California.
- California corporations and LLC's are equally weak. California companies simply cannot hold up to the challenges of attorneys in California.

The Solution: Obtain an out-of-state shelf corporation or shelf LLC, and file the company in California. The corporate veil of an out-of-state LLC is much stronger than those of California. Further, our shelf companies filed in Montana, Wyoming and New Mexico are extremely strong in the corporate veil. We challenge any attorney in California to attempt to pierce the corporate veil of any of our companies.

The California Franchise Tax Board poses certain challenges when buying a California shelf LLC
- The annual $800 fee with the California Franchise Tax Board means that a California shelf LLC will cost much more. When you buy a California shelf LLC, you're paying for the maintenance fees of the previous years and a premium for the age of the company. Since the California Franchise Tax Board charges an annual fee of at least $800, then you are also paying this fee for the previous years of the shelf LLC. If the seller of the California shelf LLC hadn't paid the fee, then you must pay it in arrears, plus penalties and interest. In addition, the reports made the California Franchise Tax Board may not have been truthful.
- The California Franchise Tax Board, and the local business license, also requests the identity of the owners of the corporation or LLC. A change of ownership resets the age of the company to ZERO, from the standpoint of Dun & Bradstreet, and the banks. Since there was a filing of the initial owner of the company, and you recently bought it, this means you're the second owner. When a company is purchased, the existing credit and age is reset to ZERO. As a result, obtaining any shelf LLC with established credit is futile, since the established credit is reset to ZERO within a couple of months. This would also apply to California shelf LLC's.

The Solution: Obtain an out-of-state shelf LLC, and file the company in California as a foreign LLC. Out-of-state shelf LLC's don't need to pay the California Franchise Tax Board until the company is filed in California. And even then, the fee isn't paid until the first anniversary from when the out-of-state (foreign) LLC is filed in California.

You and your business are safer when certain that the California Franchise Tax Board fees are paid when owed, and back taxes are taken care of.

The states of Montana, Wyoming and New Mexico don't request the information on the owners of the company. The owners' identities aren't disclosed. This means that you are considered the FIRST owner of the company once you register the foreign shelf LLC to do business in California. This is important if you intend to build corporate credit or obtain private financing.

You will pay less, in terms of the sales price of the company, by acquiring an out-of-state shelf company and then filing it in California. This is because the annual maintenance fees are lower by obtaining a shelf corporation out of Wyoming, Montana or New Mexico, than a California company.

California shelf LLC's always costs more than what they are worth. You're best with a shelf LLC out-of-state and then file the LLC in California; if you do business in California.

CALIFORNIA BASICS ON CORPORATIONS AND LLC'S

A domestic LLC formed in California is a company that was filed in California.

This also means that a corporation filed in any other state, such as in Oregon, is considered a foreign corporation in California. But, an Oregon, an Oregon company is domestic to Oregon. A California company filed in Oregon is a foreign company in Oregon. Got it?

A foreign corporation that seeks to do business in California must file one of these forms:

Since California requires disclosure of the owners at the business license level, this will reveal the owners for anyone who is looking. When you apply for corporate credit, a change of ownership is detected. As such, a change of ownership is considered a new company. The age of the company and its corporate credit is reset!

The solution is to obtain a foreign company and file it in California. An aged shelf corporation or an aged shelf LLC will provide the following advantages:

Instant credibility
Increased access to Funding
Overcome customer objections
Access to bidding opportunities.

There are 49 other states! From which state should I buy a shelf corporation or shelf LLC?

The states to consider are:

Montana, for corporations and LLC's
Wyoming, for corporations and LLC's
New Mexico, for LLC's only.

These three states don't ask for the owners of the companies.

How to Register a Foreign Corporation or LLC in California

Step 1: Is your entity name already in use?

Check to see if the name of the Corporation or LLC you are wanting to register is already in use. If your entity name is already taken, you may need to modify your entity name slightly to register in that state.

To check names in California:

http://www.sos.ca.gov/business/corp/corp_naav.htm Corporation

http://www.sos.ca.gov/business/llc/llc_naav.htm LLC

Step 2: Complete Application Form

Obtain an application from the state's department of commerce. The application will be called something like, "Application for Authority to Conduct Affairs" or “Registering a Corporation or LLC”. Often, you can download this from your state's official Web site.

All California registration Forms are located here:

http://www.sos.ca.gov/business/bpd_forms.htm

Some specific forms and filing fees are listed here for your convenience:

Statement and Designation of Foreign Stock Corporation - $100

http://www.sos.ca.gov/business/corp/pdf/foreign/corp_s&dcgen.pdf

LLC Articles of Organization Domestic - $70

http://www.sos.ca.gov/business/llc/forms/llc-1.pdf

LLC Registration Foreign - $70

http://www.sos.ca.gov/business/llc/forms/llc-5.pdf

Step 3: Certificate of Good Standing for Foreign Entities

If your corporation or LLC is domestic (same state), you can skip this step.

If you are a foreign organization, go to the secretary of state in the state where you are incorporated, and get a Certificate of Good Standing. This must be attached to the application form.

For foreign entities wishing to register in California, the certificate must be dated within 6 months of the time of filing.

Step 4: File Application, Fee, and Return Envelope with Department of Commerce

File your application and fee with state's department of commerce. Know that nonprofit corporations may qualify for reduced filing fees.

For California, you may hand deliver for over the counter processing to one of the regional offices (Sacramento, LA, San Francisco, Fresno, San Diego) from 8 am - 4:30 pm. Call 916-657-5448 for complete current addresses. If a document is hand delivered there is an additional $15 counter fee and must be remitted separately. All offices accept checks or money orders made out to California Secretary of State.

The main office at the capitol is:

Business Entities Section (For hand deliveries)1500 11^th St – 3^rd Floor, Sacramento, CA 95814, 916-657-5448

Mailing Address:

Document Filling Support Unit, PO 944260, Sacramento, CA 94424-2600

To facilitate the processing of documents sent to Sacramento, please attached a self addressed envelope and a letter referencing the corporate name as well as your name, return address, and phone should also be submitted.

California Taxes

Step 1:
Know that, since you are choosing to take advantage of all the rights and amenities of the state in which you are operating as a foreign corporation, you will be obligated to contribute to the health and wealth of that state. This may mean filing taxes and paying other fees within that state.

All California tax forms : http://www.ftb.ca.gov/forms/index.shtml

Corporations

Corporations that organize in California, register in California, conduct business in California, or receive California source income, must file California Form 100.

The California Estimated Tax Form 100 (ES100) http://www.ftb.ca.gov/forms/2008/08_100es.pdf

The return due date is the 15th day of the third month after the close of the taxable year.

A Corporation is taxed on its net income at a rate of 8.84 percent, with a minimum tax of $800. The minimum franchise tax ($800) is due the first quarter of each accounting period and must be paid whether the corporation is active, inactive, operates at a loss, or files a return for a short period of less than 12 months. The minimum tax is waived on newly formed or qualified corporations filing an initial return for their first taxable year.

LLCs

All LLCs classified as corporations that organize in California, register in California, conduct business in California, or receive California source income, must file California Form 100. The California Form 100 must be filed by the 15th day of the third month after the close of the LLC’s taxable year.

The LLC will be taxed at the corporate tax rate of 8.84 percent and will be subject to a minimum tax of $800.

All LLCs classified as partnerships or disregarded entities that organize in California, register in California, or conduct business in California, must file California Form 568 Limited Liability Company Return of Income. California Form 568 must be filed by the 15th day of the fourth month after the close of the LLC’s taxable year.

An LLC required to file Form 568 pays an annual tax of $800, and may be subject to a fee based on total annual gross worldwide income. The annual tax is due by the 15th day of the fourth month of the taxable year, and is paid using CA Form 3522.

http://www.ftb.ca.gov/forms/2008/08_3522.pdf CA Form 3522

In addition, an LLC filing Form 568 that has members that are not residents of California must file the agreements of those non-resident members acknowledging that California may tax them and may collect tax from them, agreeing to file a California return and pay tax on the members’ share of California source income of the LLC. For any non-residents that do not sign an agreement, the LLC must pay tax on the nonresidents’ share of LLC income.

Tax General Information

http://www.sos.ca.gov/business/tax.htm

Franchise Tax Board

http://www.ftb.ca.gov/

Corp Taxes

http://www.ftb.ca.gov/businesses/bus_structures/cCorp.shtml

Corp Tax Forms

http://www.ftb.ca.gov/forms/07_forms/07_100toc.shtml

LLC Taxes

http://www.ftb.ca.gov/businesses/bus_structures/LLcompany.shtml

LLC Tax Forms

http://www.ftb.ca.gov/forms/07_forms/07_568toc.shtml

Step 2:
Contact an attorney or firm who helps corporations register in foreign states to ensure that you are strictly adhering to the registration procedure.

Tips & Warnings

Plan to spend several hours gathering and filling out the paperwork necessary to qualify as a foreign corporation. If you want to do business in many states, you will need to fill out separate forms for each one. Many people delegate this work to a corporate attorney or a firm that specializes in the registering of corporations.

Private firms that will assist you in registering your entities in California

http://www.sos.ca.gov/business/bpd_service_companies.htm

If you are not registered in a state, you may not have the right to sue, which can limit your ability to collect debts and pursue your rights as a business.
If the state in which you do business requires out-of-state companies to register as foreign corporations and you neglect to do so, you may have to pay weighty penalties.
If you are doing business in your home state and you have not qualified as a foreign corporation in that state, you may be unable to pursue legal rights until you qualify. By that time, the statute of limitations may have run out.
Don't be daunted by the foreign filing process. As with becoming incorporated, it's simply a matter of correctly filling out the appropriate forms and paying the filing fees.

PLEASE SEE YOUR TAX ADVISOR.

Aged shelf corporations and LLC's offer no tax advantages. We're not attorneys. We're not tax advisors.

CALIFORNIA QUICK REFERENCE

California Department of Corporations

CALIFORNIA

MAIN STATE WEBSITE

Corporations & LLC’s

California Corp Web site

Check for name availability for Corporations or LLC's

State Laws concerning corporations

Laws concerning LLC – Sec 17000 et seq

http://www.leginfo.ca.gov/cgi-bin/calawquery?codesection=corp&codebody=&hits=All

Forms, Samples, & Fees

List of Filing Fees

Online filing of statements -$25 fee

Annual/Biennial Statements

Corporations– Forms Fees Instructions

Articles of Incorporation Domestic - $100 most types

Articles of Incorporation Domestic Non Profit - $30

Statement and Designation of Foreign Stock Corporation - $100

LLC – Forms Fees Instructions

LLC Articles of Organization Domestic - $70

LLC Registration Foreign - $70

PRIVATE SERVICE COMPANIES

that file forms and interface with state

Tax Information

Franchise Tax Board

California Corporation Taxes

California Corporation Tax Forms

LLC Taxes

LLC Tax Forms

BUILDING CORPORATE CREDIT

Preparation for the building of corporate credit:

Lenders require full transparency. This means your name is listed on the public record.
Don't use a nominee officer/contract officer if you're applying for corporate credit.
Lenders prefer companies that are at least two years old.
File the WY company in your home state as a foreign corporation
Obtain a commercial address where you intend to do business
Obtain the phone number, using the commercial address as the billing address
Register the phone number with 411 information services
Be honest on all applications for credit
You're ready! Start building corporate credit. Call 307.237.2580 for a referral.