Here’s everything you need to know to incorporate in California.
To form a corporation in California, you need to take the steps set forth below .
You can besides use Nolo ‘s Online California Corporation serve, which will form a corporation for you, providing you with everything you need including a bodied name check, articles, bylaws, a bodied records record, an incorporator ‘s statement, minutes of the first meet of the board of directors, stock certificates, and a broth transfer ledger .
1. Choose a Corporate Name
Your pot ‘s name must not be the like as, or besides exchangeable to, an existing diagnose on the California Secretary of State ‘s records, or misleading to the populace. The corporation ‘s name may—but need not—include the words “ Corporation, ” “ Incorporated, ” or “ Limited ” ( or an abbreviation of one of those words ).
You can do a barren preliminary check on the handiness of a name through the Business Search database or you can mail a completed name Availability Inquiry Letter to the California Secretary of State ‘s office in Sacramento. Email or on-line inquiries are not accepted .
You can reserve a list for 60 days by filing a name Reservation Request Form with the Secretary of State. The class must be filed by chain mail or in person .
2. File Articles of Incorporation
Your corporation is legally created by filing Articles of Incorporation-General Stock ( Form ARTS-GS ) with the California Secretary of State. Your articles must include : the corporate name ; the corporation ‘s street address and mail address if different ; the name and street address of an agent for service of process ( not a mail agency box address ) ; and the count of shares the corporation is authorized to issue. The articles on the Secretary of State ‘s web site include a broad purpose instruction. You must include the Mail Submission Cover Sheet when you file your articles. Filings can entirely be done by postal mail or in person and there is a $ 100 filing tip .
3. Appoint a Registered Agent
Every California corporation must have an agent for service of process in the state of matter. This is an individual or corporation that agrees to accept legal papers on the corporation ‘s behalf if it is sued. A corporation may not service as its own agentive role for service of process. The agent should agree to accept service of summons on your pot ‘s behalf anterior to appointment .
The agent may be : ( 1 ) an individual who resides in California, or ( 2 ) a corporate agent that has filed a Registered Corporate Agent for Service of Process Certificate ( Form 1505 ) with the Secretary of State. The agent must have a physical street address in California, not a post position box. small corporations typically name a director or policeman to serve as the initial agent. A unlike agentive role can constantly be named former .
The Secretary of State maintains a list of private service companies that can act as the agent for service of march ; however, not all such companies are on the list .
4. Prepare Corporate Bylaws
Bylaws are an inner bodied document that set out the basic ground rules for operating your corporation. They are not filed with the submit. Your corporation is not legally required to have corporate bylaws, but you should adopt them because they ( 1 ) establish your corporation ‘s operate rules, and ( 2 ) help show banks, creditors, the IRS, and others that your corporation is legalize. For bodied bylaw forms, see Nolo ‘s web site or How to Form Your own California Corporation, by Anthony Mancuso ( Nolo ) .
besides, set up a bodied records book in which you keep all of your pot ‘s crucial papers, including minutes of film director and stockholder meetings. You can use a three-ring binder or you can order a special corporate records kit through a corporate kit supplier. Keep it at your pot ‘s book principal function .
5. Appoint Directors and Hold First Board Meeting
The incorporator—the person who signed the articles—must appoint the initial corporate directors who will serve on the board until the first annual confluence of shareholders ( when the board members who will serve for the adjacent terminus are elected by the shareholders ). The incorporator must fill in an “ Incorporator ‘s Statement ” showing the names and addresses of the initial directors. The incorporator must sign the statement and identify a transcript in the bodied records book. The argument need not be filed with the state .
The first base touch of the corporation ‘s board of directors should be held to appoint bodied officers, adopt bylaws, select a corporate bank, empower issue of shares of stock, set the pot ‘s fiscal year, and adopt an official broth certificate kind and bodied varnish. The directors ‘ actions must be recorded in corporate minutes prepared by the incorporator or any of the directors. additionally, if the pot will be an S pot, the directors should approve the election of S corporation status. For bodied meet hour forms or a sample Incorporator ‘s Statement, see Incorporate Your Business, by Anthony Mancuso ( Nolo ) .
6. Issue Stock
return stock to the shareholders in return for their capital contributions. Shareholders can contribute cash, property, services, or all three. Although not legally required in most states, belittled corporations normally issue paper stock certificates. Enter each stockholder ‘s name and contact information in the corporation ‘s stock transfer ledger. California corporations need not establish a par prize for their stock — a set sum below which the stock certificate can not be sold. The board sets the respect and number of the initial shares .
A share of neckcloth in your corporation is classified as a security system under state and federal securities laws that regulate the crack and sale of corporate neckcloth. however, federal jurisprudence exempts “ private offerings : ” a non-advertised sale to a limited number of people ( broadly 35 or fewer ). thus, if you ‘re issuing shares to 35 or fewer people, you do n’t have to worry about federal securities laws .
California has its own version of this federal exemption. To claim a limited offer exemption under state jurisprudence in California, you must file a section 25102 ( degree fahrenheit ) Notice Filing – express Offering Exemption Notice ( LOEN ) with the California Department of Business Oversight. You can file the notice on-line. There is a file fee of $ 25 to $ 300. You should file the notice within 15 days after your corporation issues stock. For more information, see the FAQ at the Department of Business Oversight .
7. File a Statement of Information
Every California pot and extraneous corporation registered in California must file a Statement of Information with the Secretary of State :
- within 90 days after filing the Articles of Incorporation, and
- every year thereafter during the applicable filing period (the filing period is the calendar month during which the original Articles of Incorporation were filed and the prior five calendar months).
California corporations ( domestic and foreign ) must file Form SI-550. It can be completed and filed on-line, or printed from your computer for mail or drop off submission. The filing fee is $ 25 .
8. Comply with Tax Requirements
All California corporations and alien corporations doing business in California must pay California taxes to the California Franchise Tax Board ( FTB ) .
Annual minimum tax: An $ 800 annual minimum tax must be paid during the first base quarter of each accountancy period whether the corporation is active voice, operates at a loss, or does not do business. For newfangled corporations that qualify or incorporate with the Secretary of State, the tax is measured based on their income for the beginning year and subject to estimate requirements. For all subsequent years, the minimal tax is $ 800 .
Additional taxes: Corporations with income over certain levels must pay an extra fee based on their sum annual income .
Filing procedures: regular corporations must file California Form 100, Corporation Franchise or Income Tax Return, by the fifteenth day of the one-third month after the conclude of their taxable year. Corporations that have elected to be taxed as S corporations file Form 100S, California S Corporation Franchise or Income Tax Return. For details and forms, see the California Franchise Tax Board web site .
EIN: Your pot must obtain a union employer identification phone number ( EIN ). You may obtain an EIN by completing an on-line application on the IRS web site. There is no file fee .
California Employment Development Department: A California corporation becomes subject to the country ‘s payroll tax requirements if it pays wages of over $ 100 in any calendar one-fourth. This convention applies even if a corporation operates without any employees except for the corporate president of the united states. The California Employment Development Department issues employer account numbers ( sometimes called state employer identification numbers or SEINs ) and administers California ‘s payroll taxes, including unemployment indemnity, Employment Training Tax, State Disability Insurance, and California Personal Income Tax withholding. For details, see the EDD web site .
How do I know if my California business name is available? You will need to make indisputable that the name you want to use for your pot is available. You can do a name search using the on the California Secretary of State web site. This will let you know if your proposed name is available and not already being used by another business .
How much does it cost to form a corporation in California?
- You can register your business name with the California Secretary of State for $10.
- To file your Articles of Incorporation, the California Secretary of State charges a $100 filing fee.
Do I need to create corporate bylaws in California? not all states require corporate bylaws but it ‘s a effective idea for every corporation to have them. Bylaws are an home corporate document that set out the basic ground rules for operating your corporation. They outline the circuit board of conductor ‘s procedures and policies and help show banks, creditors, the IRS, and others that your pot is legitimate .
How to register as an S Corporation? If the pot wants to elect S corporation condition for tax purposes, it must submit Form 2553 Election by a Small Business Corporation ( signed by all the shareholders ). The election should be filed within two months and 15 days after the beginning of the pot ‘s first tax year. See the IRS S Corporation Fact Sheet for details .
Does my corporation need a business license in California? Every California business must obtain a general business license from the city where it has its office. If your pot is in an unincorporated area, your county issues the license. Depending on its type of clientele and where it is located, your corporation may need to obtain other local and state business licenses. Visit the CalGold web site for more data .
How can I register a foreign corporation in California? To do business in California, all corporations organized outside of the state must register with the Secretary of State. Foreign corporations must appoint a registered agent for service of process physically located in California. To register, file the Statement and Designation by Foreign Corporation – stock shape. The form may be filed by chain mail or in person. The file fee is $ 100 .
If the name of the alien pot is not available for use in California, the pot must qualify under an assume name—a name early than the true corporate diagnose. List the assume name in the statement .
The completed form must be accompanied by a certificate of thoroughly standing from the foreign pot ‘s home state, dated not more than six months anterior to the charge of the statement.
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Do I need to form a professional corporation? In many states, professionals in sealed occupations ( for exercise, doctors, lawyers, and accountants ) who want to incorporate their commit must form a special type of corporation called a professional pot or professional avail corporation. You will need to check with your state ‘s corporate file agency ( normally the Secretary of State or pot commissioner ) to see which professions are required to form a professional pot in your state of matter .
How can I dissolve my California corporation? If you reach the point where it is fourth dimension to close your business and end all operations, then you will want to properly dissolve your pot to limit your indebtedness for lawsuits and government fees. Learn about the steps you will need to take in How to Dissolve a corporation .