Once a new company is registered with the California Secretary of State, the business address becomes public and easily accessible on the Secretary of State’s website. As a result, the entity will likely begin receiving solicitations from private companies trying to sell unnecessary corporate services or outright scams.
The California Franchise Tax Board, Board of Equalization, and Employment Development Department (EDD) are a few legitimate state government organizations that may send notices to a new entity and should not be ignored. Private companies, however, with names such as “Corporate Compliance Center,” “Compliance Document Services,” and “CBFS” do not have any enforcement authority and are simply trying to make money. These solicitations should be ignored for two main reasons:
- They ask you to pay them for services that you don’t need. For example, many of these companies offer to get a Certificate of Status for your entity, which is actually only needed in very limited situations and can be obtained by anyone for $5. Another company sends a “Labor Law Compliance Notice” selling employment posters for $84, when these posters are available online from the EDD for free.
- They are selling “corporate templates” that are not specific to your company. Often the private solicitations offer templates of documents that are necessary for a new entity, such as corporate bylaws or an LLC operating agreement. In order for your new business to run properly and for you to receive liability protection, you need governance documents that reflect the circumstances and needs of your specific business–not generic documents that are meant to apply to every business from software companies to restaurants to car mechanics. We highly recommend working with an attorney to draft these crucial documents, rather than paying $47.99 for documents that may not fit your situation and may subject you to personal liability.
By reading the fine print on documents addressed to your business, you can determine if these are legitimate notices with which you need to comply. All of these private solicitations will include that the organization is not a governmental agency, or that the product or service has not been endorsed or approved by any governmental agency. You are not required to give money to these private businesses.
These private solicitations come in many forms and are constantly changing, so consult with an attorney if you have questions about your company’s compliance with state or local regulations.
Disclaimer: This article discusses general legal issues and developments. Such materials are for informational purposes only and may not reflect the most current law in your jurisdiction. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction. Bend Law Group, PC expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article.