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How do you form a California corporation?
What are the requirements to incorporate a business entity?
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California Articles of Incorporation
To form a corporation (business entity) in California, you need to file your articles of incorporation with the Secretary of State.
California has its rules and processes with respect to the filing of a corporation’s articles.
There are many benefits in incorporating a business:
- The shareholder will have limited liability protection
- The business will look more credible to others
- Long-term possibility to attract investors and different types of financing
- Show clients and others that you are running a legitimate business
This article will look at what you should do before you file your CA articles of incorporation, how to file articles of incorporation in California, and what to do after.
We will try to help answer common questions like:
- How to find articles of incorporation
- Where to get articles of incorporation
Let’s dive right in.
Before Filing State of California Articles of Incorporation Filing
What should you do before filing your articles of incorporation in California?
Having good preparation is an excellent strategy to ensure you file your articles smoothly and have them processed successfully by the CA Secretary of State.
In light of your State of California articles of incorporation submission, here are some important links and forms:
- Articles of Incorporation General Stock Corporation (ARTS-GS Form)
- File articles of incorporation California online (CORP Formation)
- California corporate entity formation processing dates
- Online California corporation search (California Business Search)
- California business name reservation (CA Name Reservation)
- To get certificates, copies, status reports, or other business records (Business Entities Records Request)
- Cooperation filing tips
- California’s online business services (Bizfile California)
In California, your company “purpose” is already defined.
As you can see from the CA Articles of Incorporation Form, the purpose is stated as:
The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code.
You cannot alter or modify the statement of purpose.
Make sure that you have a California business address if you are looking to do business in California.
Companies that have a physical location in CA can quickly satisfy this condition.
However, web-based businesses and online companies doing business in California should consider working with companies like registered agents who offer a California business address to comply with this requirement.
Your articles must specify and list the number of shares your corporation is authorized to issue.
Typically, most companies will start off with “common stock” as their only class of shares.
Upon incorporation, if you already know that you need to have different classes of stock, you’ll need to ensure that you define them when filing articles of incorporation in California.
The incorporator is the person or entity signing the articles of incorporation for the corporation you are forming.
The incorporation does not necessarily need to be the company’s board member, director, or other.
It can be someone legally authorized to incorporate the company.
For example, if a registered agent or service company is mandated to handle the articles of incorporation filing for you, they may sign as the incorporator.
How To Get Articles of Incorporation
Let’s look at how to file your incorporation papers in California.
One of the first things many founders and entrepreneurs think about when looking to form a corporation is the corporate name.
It’s important to have a corporate name that complies with the California laws so the Secretary of State approves its registration.
For example, under California laws, your company name must have an identifier such as “INC”, “CO”, “CORP”, “INCORPORATED”, “CORPORATION”, or other.
The actual name you give your corporation must be distinguishable from other business names registered in California.
In other words, your business name must be unique.
Also, some terms are legally excluded as they can be misleading, such as “insurer”, “broker”, “commission” or other.
Corporate Name Availability
To make sure that you will file articles of incorporation without headache, you should verify that your name is available.
You can do a California Secretary of State Business Search to check the availability of the name.
It’s a helpful exercise as you don’t want to submit your paperwork and eventually see that your business name was rejected.
Filing of Articles
In California, you can file your corporation’s articles of incorporation by mail or online.
If you wish to submit your articles by mail, here are the important contact details you should take note of:
California Secretary of State
Business Entities Filings
PO Box 944228
Sacramento, CA 94244-2280
Secretary of State
1500 11th Street
Sacramento, CA 95814
If you are going to submit your articles online, you’ll need to access the California Secretary of State Business Entities website and go through the online filing process.
California state laws require that every corporation have a registered agent appointed.
A California registered against is a person or entity responsible for accepting legal documents, service of process, or tax documents on behalf of the company.
All CA registered agents must have a “physical” address in the state of California.
You’ll need to disclose your corporation’s registered agent in your article papers.
Corporate bylaws are important as they define the internal governing rules of the corporation.
Whether the bylaws are legally required or not, business founders and company owners need to set one up.
The corporate bylaws will define:
- The procedure for holding a meeting of the board of directors
- Procedure to handle votes
- Procedure to hold shareholder meetings
- Notification and notices to various stakeholders
- Procedure to the company to adopt resolutions and so on
Once the company is formally formed, the incorporator must appoint the company directors.
The directors are those who are responsible for the overall management and operations of the company.
The initial directors are appointed right after the incorporation and the appointment will remain in effect until the first shareholder meeting.
At the next shareholder meeting, the company shareholders will be the ones electing the corporate directors.
Corporate Meeting (Organizational Meeting)
Immediately following the legal formation and incorporation of the company, typically, you’ll need to hold your company’s organization meeting.
The organization meeting is a meeting where:
- The company directors are appointed
- The fiscal year of the company is defined
- Adopt the stock certificate form
- Choose bank account
- Adopt bylaws
- Adopt corporate seal
- Authorize share issuance
- The shares are issued to shareholders
The initial corporate meeting will deal with all the preliminary aspects about structuring the company to ensure that it complies with the applicable CA laws and regulations.
Stock certificates represent the proof that a person or entity is a stockholder in the company.
A typical stock certificate will contain key information about the stocks and the stockholder, such as:
- The stock certificate issue date
- The certificate number
- The name of the shareholder
- The name of the corporation issuing the shares
- The number of shares issued
- The class of shares or type of stock
- The signature of the company president, board member, or representative
Generally, once the stock certificates are issued, the company will maintain a stock ledger to maintain the detail of any stocks issued, transferred, or canceled.
The law considers stocks in a company as “securities”.
As a result, some companies will be required to comply with securities laws when issuing, transferring, or canceling corporate stocks.
The articles of incorporation CA filing fees are $100.
If you are hand-delivering the documents, you should expect to pay $115.
The CA SOS offers expedited processing services as needed:
- 24-hour service for $350
- 4-hour service for $500
- Same day service for $750
You can consult the processing dates to see how long it may take to complete your filing.
After Filing Articles of Incorporation In California
What should you know after your incorporation articles have been filed and the company formed?
Employer Identification Number (EIN)
Every corporation must have an Employer Identification Number (EIN).
The EIN (sometimes referred to as FEIN) is a unique identification number used by the tax authorities to identify your company.
You can apply for your EIN by going to the IRS website.
California Franchise Tax
Corporations in California are required to pay a Franchise Tax to the Franchise Tax Board.
The yearly Franchise Tax is $800.
For newly incorporated companies, the amount of Franchise Tax they’ll pay is determined based on their first-year income.
Companies that generate a high annual income will have to pay more in Franchise Tax.
To ensure you comply with the California laws, your company must keep a record of its activities, decisions, and overall management.
Most companies will have a corporate minute book where they organize and store all the important corporate documents, such as:
- Stock certificates
- Shareholder ledger
- Director and officer ledger
- Corporate resolutions
- Shareholder agreement
- Tax numbers
To ensure compliance with local laws, company founders should set up a minute book for your company and keep all Secretary of State documents along with your internal corporate legal documents.
California Business Licenses
Doing business in California requires that you comply with the corporate formation rules and any other applicable rules and regulations.
You need to verify if your California business will need a business license.
A business license may be needed in several situations:
- General business license
- Seller’s permit
- Professional license
- Food or alcohol license
- Building permit
- Zoning permit
- Signage permit
- Car dealer and remitter license
- Liquor license
- Occupational license
- Environmental license
There are many types of licenses and permits that your business may require.
Make sure you verify all state, county, and local government requirements.
Statement of Information
In California, corporations are required to file a Statement of Information.
A Statement of Information must be filed within 90 days of the filing of the articles of incorporation.
Domestic corporations will need to file Form SI-200 whereas foreign corporations will need to file Form SI-300.
S Corporation Election
A corporation that is formed will be considered a C-Corporation by default based on the tax laws.
A C-Corporation is a company that pays corporate income tax separately from its shareholders.
However, you can elect an S-Corporation tax status with the IRS whereby the corporation will be authorized to pass through its income directly to its shareholders.
There are specific requirements to be met to be eligible to be qualified as an S-Corporation.
The advantage of an S-Corp is that you can avoid double taxation.
Consider using Form 2553 for an S-Corp Election with the IRS.
Articles of Incorporation California: Takeaways
So, how do you get articles of incorporation in California?
What are the forms that you need?
Let’s look at a summary of our findings.
CA Articles of Incorporation
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