California & Multi-State Nexus Evaluator
Under California Revenue and Taxation Code § 23101, an out-of-state company is “doing business” in California if it has physical employees or exceeds indexed factor-based economic thresholds. Test your risk profile below.
Cross-Border Nexus & Doing Business Detector
Test whether remote workers, sales volume, or physical presence trigger mandatory state registration and franchise taxes.
1. Physical Presence & Remote Workforce
2. Factor-Based Economic Nexus Thresholds
Registration required: your entity has nexus in California. File a foreign registration ($70 fee) and budget $800 a year. Until you register, you can't sue in that state's courts and penalties accrue.
Nexus verdict in hand? Do this next
How to Cure Nexus: The 5-Step California Foreign Qualification Process
Good Standing Certificate
Obtain a recent Certificate of Good Standing from your home state (Delaware Division of Corporations or Wyoming SOS).
File Registration Form
File Form LLC-5 (Application to Register a Foreign LLC) or Form S&DC-S (Corporation) with CA Secretary of State ($70 filing fee).
Designate CA Agent
Appoint a registered corporate agent with a physical street address within California to accept service of process.
Pay $800 Annual Tax
Submit FTB Form 3522 along with the initial $800 minimum franchise tax voucher to the California Franchise Tax Board.
Initial Statement (SI)
File your initial Statement of Information (Form LLC-12 or SI-550) within 90 days of registration ($20 state filing fee).
What happens if you do business in California without registering
Contracts entered into by an unregistered out-of-state entity during periods of non-compliance are voidable at the option of the other contracting party!
Under Cal. Corp. Code § 2203, an unregistered foreign entity cannot maintain any lawsuit or legal proceeding in California state courts.
The FTB assesses retroactively: $800/yr minimum tax for all prior years, plus a 25% non-filing penalty and compounding statutory interest.
Nexus & Foreign Registration FAQs
Answers on remote workers, contractor safe harbors, and retroactive curing.
Yes, if you have remote employees, an office, inventory, or over $757,070 in sales in California (2025 FTB threshold).
Under California Revenue & Taxation Code § 23101, an out-of-state entity has "doing business" nexus in California if it has a physical presence (including remote W-2 workers or leased offices) or meets California factor-based economic thresholds ($757,070 sales, $75,707 payroll, or $75,707 property — latest FTB-published 2025 figures; verify 2026 before filing). Meeting any of these makes you a California taxpayer owing at least the $800 annual tax; a physical presence such as an office or employees usually also requires registering with the Secretary of State.
Yes. A single resident W-2 employee creates physical payroll nexus for an out-of-state company.
California Franchise Tax Board guidance and legal precedent establish that an employee working from home in California constitutes a physical presence of the employer. This triggers the requirement to register with the California Secretary of State ($70 for an LLC, $100 for a corporation) and pay the annual $800 minimum franchise tax.
For the latest FTB-published year (2025): $757,070 sales, $75,707 property, $75,707 payroll, or 25% of your totals.
Under Cal. Rev. & Tax Code § 23101(b), the FTB indexes doing-business thresholds annually. The 2025 published figures are $757,070 in California sales, $75,707 in California real/tangible property, and $75,707 in California payroll compensation, or more than 25% of total sales, property, or payroll. Verify the current year on the FTB doing-business page before relying on a near-the-line number.
Yes. Under the $2.65M threshold (2026–2027 reports) you owe $0 and skip the tax report, but the Public Information Report is still due May 15.
Texas requires every taxable entity to file annually even at $0 tax: at or below the indexed no-tax-due threshold ($2.65M for 2026–2027 reports) no tax report is filed, the No Tax Due Report (05-163) was retired in 2024, but Form 05-102 (Public Information Report, listing officers/directors) or 05-167 (Ownership Information Report) is still required. Missing the May 15 deadline risks a $50 late penalty and charter forfeiture. Above the threshold, entities with up to $20M in revenue may use the EZ computation (0.331% of apportioned revenue); otherwise the long form applies at 0.75%, or 0.375% for retailers and wholesalers.
No. It shields only net-income taxes on solicited tangible-goods sales, not the $800 minimum tax or the LLC gross-receipts fee.
Public Law 86-272 is a narrow federal shield for state net-income taxes when the only in-state activity is soliciting orders for tangible personal property. California's $800 minimum franchise tax (a privilege tax for doing business) and the LLC gross-receipts fee fall outside that shield, as do activities beyond mere solicitation (employees, offices, inventory, services). Do not rely on it for entity-level California compliance.