Rejection Prevention
Sierra Express is here to propel you forward into your new business venture. As the company’s Organizer the power and responsibility rejection prevention lies with you. Since approval of business filings are subject to the State Examiner’s discretion, we want to empower you with our knowledge to project against rejection. The following are some steps you can take to decrease the likelihood of a rejected filing.
1. Check the Revision Date of the Form
The Secretary of State periodically issues new versions of their forms for business entity filings. This includes Formation forms, Statements of Information and Records Request forms. In order to avoid a rejected submission, even if all content is completed correctly, be sure that your filing request is on the most current form.
If you’re unsure, check the form you’re using against the current form available at the Secretary of State’s website.
2. Service of Process Section of the Form
When you submit formation documents for a new corporation or LLC to the Secretary of State, be sure to fill out the Service of Process section correctly. If you’re using an individual as your Registered Agent you’ll need to include that individual’s address – even if it’s the same as an address previously listed.
However, you’re using a company to act as your agent, you must not list said company’s address. If you do, the State will consider this a cause for rejection. Regardless of if the address matches the one the State has on file. You must use the company’s full name without abbreviations and the correct punctuation.
We recommend that you read all instructions carefully before completing and submitting a filing, as with any State document.
3. Company Address Section of the Form
Most State forms require you to provide both a street and mailing address for your business entity. In many cases they can be the same, but incorrectly listing an address is grounds for State rejection. To avoid this be sure to include the City and Zip Code for both the addresses and any secondary information (e.g. suite #, apt #). The State Examiner will reject any filing that lists a P.O. Box in the Street Address section.
4. Pick Your Entity Name
Selecting a name for your new entity is a critical part of the formation process. Once you’ve settled on one (or more) possible names that suit your business, you’ll need to see if they’re available before submitting your filing to the State. If the name is already being used by, or too similar to, an existing entity, the State will reject it. If you are the owner of the existing entity, you may provide a letter of consent to use the name, which will prevent a rejection due to name similarity.
You can check for availability with the Secretary of State’s Business Search. Although it is not 100% accurate, it can give a good idea of what is out there.
After checking the website, if you’re still unsure if your name is available, there are options. We have a direct line with the State’s name availability department, which provides real time answers for name availability. For an extra level of security we can request a name check, and in some cases reserve the name for your use.
Be sure to include the appropriate corporate ending to the name of your company on your documents. Any non-regulation conforming name is cause for a rejection.
- Limited Liability Company must include “LLC”, “L.L.C.”, “Limited Liability Company”, “Limited Liability Co.”, “Ltd. Liability Company”, or “Ltd. Liability Co.” at the end of their company name.
- Close Corporations must include “corporation,” “incorporated” or “limited” or an abbreviation of one of those terms.
- Professional Corporations must meet the name-style requirements of the law governing the profession in which the corporation is engaged. For a list of appropriate name-styles, visit the State agency responsible for your profession.
5. Confirm the Number of Shares
Even if a form is otherwise filled out and signed correctly, rejection can happen because of an error in the “Shares” section.
- Domestic stock corporations formed in California are required to divulge the maximum number of shares, and in some cases the number of shareholders, within their company.
- General Stock and Professional Corporations must include the number of shares.
- Close corporations must include both the number of shares and the number of shareholders (not to exceed 35).
- A corporation may not list zero as the number of shares/shareholders.
Non-profit corporations and those headquartered outside of California may not be required to provide share/shareholder information on their initial filing. As always, be sure to follow the form instructions specific to your entity type and review the State’s official filing tips.
6. Certificate of Status – Requirement
Corporations and LLCs formed out of state must include a Certificate of Status, or equivalent, when they apply to register their company in California. The certificate must be issued from the company’s state of origin within the past six months and list the entity in “Active Status” and/or “Good Standing”. If you attempt to file a “Foreign” company without one, the lack of required documents will cause rejection. Secretary of State filings for registration of international companies formed outside the US are subject to additional regulations.
7. Don’t E-Sign the Form!
A large number of rejected filings are denied due to errors in the signature block. The State will reject a document that is missing signatures, use an electronically generated signature, or includes signatures of an unauthorized party. A photocopy or scan with your signature is okay, but signature stamps are not.
State approval is always subject to the examiner’s discretion, but we recommend that each document have a wet signature to prevent rejection. Be sure that you include a printed version of the individual’s name with their business title, if applicable.