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Doing business in California with Delaware LLC

Asked by: King  — 22 June, 2011

I run a limited company (similar to C Corp) in India and have to start a C Corp in US. My employees will be residing in California, though the customers will be paying online – basically from all over the world. I might also need to relocate a few Managers from India to US once the model kicks off. I would also need to raise Venture Capital shortly.

Here’s what I have planned for the corporation in US:
1. Incorporate in Delaware since that seems to be preferred by VCs.
2. Appoint the Managers I want to relocate as Directors (foreign residents as of now)
3. Once local director will be residing in California

My questions are:
a. Are there any constraints in L1 holders moving to California, if my company is incorporated in Delaware?
b. If I keep all my bank accounts, addresses etc in Delaware, will I still attract FT in California because I have employees and a Director there?

Answered by: admin  — 22 June, 2011

Let me try to answer those two questions:

1. I think the complexity of this question would be better addressed by an immigration professional. Each type of immigration visa has its constrains, and as far as I know very few actually permit employment, or often restrict it.

Your L-1 employees would have no problem with moving between states or working in a state other than the state of formation but as far as I know they first have to work for a year or more for your company in India before they are legible to obtain L-1 status (again, this is a questions to be addressed by immigration specialist).

2. This is a pretty gray area, since having employees often means maintaining and office, payroll etc. which as far as California authorities goes is considered doing business in California. Generally speaking if you plan on having a serious business then you should register the Delaware company as Foreign Entity in California and follow all the necessary rules. However, until you have established all that activity in California you could do business just as a Delaware LLC.

I hope that answer helps.

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