When do I have to qualify my company to do business in California or New York?

If you incorporated your business in a state other than California or New York, but have some contact with either of those states, it can be tricky figuring out whether you have to qualify your company to do business there. We apply a three-part analysis to determine whether a company must qualify in California or New York. First, if someone is requesting evidence that your company is qualified to do business in the state (e.g., a landlord, state film commission, or bank), then, as a practical matter, your company needs to qualify if it wants to sign the lease, obtain the film tax credit, open the bank account, etc. Second, in California and in New York, there are safe harbors that tell us what activities do not obligate a company to qualify to do business, such as maintaining or defending a legal proceeding or holding meetings of the company’s shareholders or board of directors in the state. If the company’s activities fall squarely into the safe harbors, then there’s no obligation to qualify. However, if your company carries on some activities in California or New York other than, or in addition to, the safe harbors, then the third part of the analysis involves taking a detailed factual look at the activities to see if they constitute “entering into repeated and successive transactions” in California, or engaging in a “regular and continuous course of conduct” in New York. In general, however, if your company is engaging in multiple intrastate transactions in California or New York, then qualification will probably be required. For more detailed information, see our articles about when qualification is required in California and New York.