Abby,

It can, provided you follow the California laws carefully. Here is what I know about doing business in California:

1) If your company is based and registered outside of California, but sells physical products to California clients at “relatively low volume” it is probably not required to register in California.

2) Same scenario as (1) but the volume of sales is high – you will probably be required to register for sales tax in California as “out-of-state” entity (called “reseller permit”).

3) Same scenario as (1) but your products ship to California buyers from California based location – you will be required to register for sales tax in California.

4) The business is registered outside of California but has physical presence in California – it needs to be registered as Foreign entity in California, and register for sales tax.

Gray area lies in whether running the business from one’s home in California while registered in a different state would constitute “physical presence” in California, and require registration with Secretary of State (either domestic or foreign) – and I would say it is more like “yes” (especially since we are talking about California).

I hope this analysis is enough to give you an idea what to do in your case 🙂