If you’re forming a new California corporation or LLC—or doing business with one—it’s critical to begin with the
California Secretary of State’s Business Search tool, found at
https://bizfileonline.sos.ca.gov/search/business. This free online resource provides basic but vital information about entities registered in California. Whether you’re choosing a name for your new venture or conducting due diligence for a business transaction, understanding how to use this tool can help you avoid costly mistakes, save time and money or help direct you when looking into whether to do business with a company.
Choosing a Name: Avoiding Duplication and Confusion
When forming a new entity, one of the first steps is selecting a unique name. The Business Search tool helps you verify that your desired name isn’t already taken. Under California law, entity names must not be the same as or too similar to existing registered names. This rule is intended to prevent public confusion and potential legal disputes. If your proposed name is found to be duplicative or deceptively similar, the Secretary of State will reject your formation documents. If a name is taken then that may indicate that same or similar name might also be used for trademark purposes.
Even if a name appears to be available, it’s wise to avoid choosing one that is very similar to an existing entity, especially if that entity is in suspended status. A suspended company may have failed financially or failed to meet compliance requirements. Using a similar name could lead to confusion, misdirected communications, or even damage to your reputation due to mistaken associations.
Understanding Suspended Status
One of the most useful features of the Business Search is that it reveals whether an entity is “active” or “suspended.” This is more than a formality. An entity that is in suspended status is not legally permitted to do business in California. Depending on the type of suspension, the prohibitions may include entering into contracts, filing lawsuits, or defending itself in court.
There are a number of reasons an entity might be suspended. According to the Franchise Tax Board (FTB), suspensions can occur when a business fails to:
- File required tax returns
- Pay taxes or fees
- File the required Statement of Information with the Secretary of State
For more information from the Franchise Tax Board and how to revive a suspended entity, visit the FTB’s informational page here:
As noted by the FTB, “[w]hen your business has been suspended or forfeited, you cannot legally transact business, enforce contracts, or defend yourself in court until you revive your business and clear all past due tax balances.”
Suspension can also result from failing to file the Statement of Information, a simple form that provides the state with current information about your business. As the FTB states:
“The SOS will suspend/forfeit your business if you do not file a Statement of Information. Visit the SOS’s website for more information.”
Please note that the purpose of this blog is not to provide you definite citations or discussions of law. Like the Secretary of State’s business search page, this blog is only meant to help inform people of some easy to use and free resources.
What Else Can You Learn From the Business Search?
The Business Search tool doesn’t just tell you whether a name is available. It also provides insight into the operational history and compliance habits of existing businesses. Here are some examples:
- Filing History: Gaps between filed Statements of Information can indicate a business that is disorganized or neglecting its compliance obligations.
- Suspensions: Multiple suspensions can suggest chronic problems and may be a red flag during contract negotiations or potential M&A activity.
- Business Contacts: The Business Search often shows who is involved in the business, including officers, members, or managers, based on the most recently filed Statement of Information or Articles of Incorporation/Organization.
Because this data comes directly from filed documents, what you see reflects how up-to-date the company is in maintaining its public records. A business that has failed to file a Statement of Information for years—or shows a pattern of being suspended and revived repeatedly—may warrant deeper investigation before entering into a partnership, acquisition, or other financial relationship. For example, during due-diligence for the sale and purchase of a business or an asset sale, if the information in the Statement of Information does not match the information in the records produced by the selling business, then further inquiry is justified.
Final Thoughts
The California Secretary of State’s Business Search is a user-friendly tool for business owners, investors, and professionals. It can help you:
- Avoid name conflicts when forming a new entity
- Spot red flags in other businesses
- Better understand your own company’s public profile
Whether you’re just starting out or considering a major business transaction, taking a few minutes to run a search could save you from serious legal and financial headaches down the road.
