California Corporation | How to Incorporate in California | Learn About Incorporating in California

Choosing a Corporation Name

Your California corporation‘s name must be different from any other authorized business entity on file with the state Secretary of State. This applies to entities formed in the state, as well as those originally formed elsewhere but authorized to conduct business in California.

The corporation’s name may include “Corporation,” “Incorporated,” or “Limited” (or an abbreviation thereof), but doesn’t have to do so, unless the name of the corporation is an individual’s name-for instance, “John Jones, Inc.” The name may not, however, include the words “bank,” “trust,” or “trustee.”

You can apply to the California Secretary of State to reserve a proposed corporate name for 60 days for $20.

Articles of Incorporation

California state law requires that articles of incorporation be filed with the California Secretary of State; filing fees start at $100. The articles must also include information on the incorporators, of which there must be at least one. If initial directors are not named in the articles, the state allows California corporations to do whatever they believe “necessary and proper” to improve the corporation’s organization, including adopting and/or amending bylaws and electing directors and officers.

California allows a corporation to be formed for any lawful business activity, but requires a specific statement to be included: “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 not permitted to be incorporated by the California Corporations Code.”

The articles should also specify the number of shares to be authorized for later issuance to shareholders-the standard articles form creates only one class of common shares with equal dividend, liquidation, and voting rights, and no special restrictions-as well as additional information about share numbers, class designation, and rights if the corporation is authorized to issue more than one class of shares.

California also allows other, optional provisions to be integrated into the articles of incorporation for those corporations wishing to formalize additional criteria, such as the names and addresses of the initial directors, special qualifications of shareholders, limits on the duration of the corporation’s existence, limits on the liability of a director in specific circumstances, and the like.

Registered Agent and Office

The articles of incorporation should also include the name and address of your corporation’s initial agent for service of process-the person you designate to receive legal papers on behalf of your corporation-who must be a California resident. Usually, one of the corporation’s initial directors or officers serves as its initial agent. You can list the agent’s business or residence address, but be sure to use a California street address and not a post office box.

Bylaws

A corporation is required to keep a copy of its bylaws at its main executive office, but is not required to file them with the state. At its initial meeting, the board of directors should adopt corporate bylaws, and then keep them updated as time goes on. Bylaws describe the corporation’s basic managerial and legal operating principles, including information on:

Shareholders and directors meetings
The authority, number, and tenure of directors in the board of directors
Voting procedures
The duties, responsibilities, and tenure of officers
How stock is issued
How and when annual financial information is provided to shareholders

Directors

The corporation’s business is managed by its board of directors. The board must consist of one or more members as specified by the bylaws or by action of the shareholders. Directors are generally elected at each annual shareholder meeting to hold office until the next annual meeting.

Corporate officers may either be listed in the bylaws or elected by the board in compliance with the corporation’s bylaws. A corporation must have a chairman of the board or a president (or both), a secretary, a chief financial officer, and whatever other officers with titles and duties as listed in the bylaws or determined by the board.

The president, or, if there is no president, the chairman of the board, is the general manager and chief executive officer of the California corporation, unless otherwise provided in the articles or bylaws. Any number of offices may be held by the same person unless the articles or bylaws require otherwise.

Requiment Reports

An initial statement of officers must be filed with the California Secretary of State no more than 90 days after the original articles of incorporation are filed, and every year following in the applicable filing period. This report must include information on directors and officers and the corporation’s general business activities, as well as additional information regarding corporations which are traded publicly.

Taxes

The California state income tax rate is currently 8.84 percent of net income. The minimum tax is $800, but this is waived during the first fiscal year. This means that for the corporation’s first tax year, it estimates and pays only what it owes based on the current corporate franchise tax rate.

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