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CALIFORNIA

Why Form a corporation in California.


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California Corporation Form, Filing and Permit Requirements

If you want to form a corporation in California, there are certain forms, requirements and legalities you must get in place.

Below is a rundown of what you’ll need to do, together with information on the requirements for your California corporation. Some of these forms you only need to submit once, while others must be filed on a regular basis.

You will need to set reminders in your calendar to file forms regularly if you're filing yourself. At Incfile, we provide an optional, paid renewal service and can take care of certain renewals for you when you instruct us to do so.

Articles of Incorporation

The Articles of Incorporation are the formal documents filed with the California Secretary of State to create your corporation. It provides certain information about your business. Once the document is filed with the Secretary of State, it legally creates your business as a corporation in California. Here’s what’s typically included:

  • The corporation’s name
  • The corporation’s purpose
  • The corporation’s mailing address and street address
  • The corporation's Registered Agent and their address
  • The corporation’s capital structure — number of shares to be issued, who owns them, pricing, etc.
  • How long the corporation will exist (this can be perpetual)
  • The name and address of the incorporator

Here at Incfile, we automatically create and file your Certificate of Formation/Articles of Incorporation on your behalf when you start your business with us. You only need to file your certificate once. There is a fee levied by the Secretary of State of California to cover your filing, which is currently $100.

California Corporations for Professional Services

In California, certain professions are restricted from forming LLCs. These are professionals providing defined services, and they typically need to be specially licensed. In California, businesses engaged in the following activities are considered professional service organizations — this means that they must be formed as solo practitioners, partnerships or professional corporations (S Corporations or C Corporations).

These professions include:

  • Accountant
  • Acupuncturist
  • Architects
  • Audiologists
  • Clinical Social Workers
  • Chiropractors
  • Court Reporters
  • Doctors
  • Dentists
  • Engineers
  • General Contractors
  • Marriage and Family Therapists
  • Nurses
  • Optometrists
  • Pharmacists
  • Psychologists
  • Physical Therapists
  • Physician Assistant
  • Real Estate Brokers
  • Securities Brokers
  • Speech Pathologists
  • Veterinarians

Note that three types of professional services — law, public accounting and architecture can be formed as Limited Liability Partnerships (LLPs), however these do not provide the same protections as a corporation.

Incfile provides a complete Business License Research Package that will tell you all of the licenses and permits necessary for your new professional LLC.

Business Licenses and Permits for Your California Corporation

Depending on the type of California business you’re running, you will need to obtain various business licenses and permits. These are not required to form your corporation, but you must have them to legally carry out business. It’s vital to understand the permits and licenses required for your business to operate in compliance in your jurisdiction.

A Local Business Permit or License From Your City

Various cities in California have slightly different rules and fees for permits and licenses. Check with your local California city administration to see what their rules are. You will need a separate permit or license for each city your California corporation operates in.

Additional Local Business Permits and Licenses

Depending on the type of business you are running, you may need to get additional permits and licenses from the county or state of California. You can get an idea of the types of permits and licenses you might need from the CalGold or State of California website.

Federal Licenses and Permits

Depending on the type of California business you are running, you may need to get licenses and permits from the federal government and various national agencies. You can find a complete list on the U.S. Small Business Administration website.

Incfile Business License Research Package

Because permits do vary depending on the type of business you are operating and where you are located, we provide a comprehensive Business License Research Package. It’s designed to tell you all of the licenses and permits necessary for your new corporation. It includes:

  • A comprehensive package of all the licenses, permits and tax registrations required for your business
  • The application forms to file with the appropriate licensing authorities

Your customized Business License Research Package will be emailed to you within two days of your company being filed by the state. Remember that operating your business without the required licenses can expose you to compliance risks and fines from state and local governments.

Special California Corporation Requirements

Because you’re forming a corporation, there are certain other legal, regulatory and compliance areas you need to meet.

Create Bylaws for Your California Corporation

Bylaws are the formal, internal rules that your corporation must follow to stay active. You will need to create and agree to bylaws in certain areas.

  • Defining your Registered Office and Registered Agent.
  • Stating details of the Annual General Meeting (AGM) date, place, time and other relevant details
  • Other details for the AGM including the order of business, notice, voting record, quorum, proxies, shareholder actions and more
  • Stating when a special shareholders meeting may be held and the circumstances that could lead to it
  • Details of stock certificates, ownership, issuing and transfer
  • Details on the board of directors including how they are elected and appointed, their number and the powers they have, how they can be removed, regular meetings and agendas, executive committees, remuneration and other areas
  • Details on the various officers in the corporation including how they are chosen and appointed
  • Designations of officers in the California corporation including President, Vice Presidents, Secretary, Assistant Secretaries and Treasurer
  • Rules around dividends, declarations and reserves
  • Any other formalities the corporation believes need to be documented

Issue Stock to Shareholders

Ownership in a corporation is expressed through the issuance of shares. You must create stock certificates and formally issue stock to any agreed initial shareholders in the corporation.

Appoint a Board of Directors

You must appoint directors to all positions in line with the agreed corporation bylaws. The board of directors is responsible for the strategic direction and overall management of the corporation. The board selects officers who will manage the day-to-day activities of the corporation.

Assign Officers to the Corporation

Officers are the individuals who manage the corporation on a day-to-day basis. At a minimum a corporation should have a President, Secretary and Treasurer. Theoretically, one person could hold more than one position.

Get a Corporate Records Book

You should acquire a new corporate records book. You will use this to capture all of the important information for the corporation. This includes your Articles of Incorporation, corporate bylaws, meeting minutes, AGM details, directors, officers, stock certificate information, transfer documents and more.

Hire Employees

You may need to hire additional employees for your California corporation. You will need an Employer Identification Number (EIN). You may also need to get Worker’s Compensation Insurance and General Liability Insurance.

Hold an Annual General Meeting for Your California Corporation

You must hold a yearly meeting that all directors, officers and shareholders of the corporation are invited to. The purpose of an AGM is generally to:

  • Discuss and decide important information
  • Make strategic decisions
  • Understand opportunities, risks and issues
  • Vote on important resolutions and other matters

California Corporation Tax Registration

You will need to register for certain taxes when you form your corporation. These include:

  • Federal income tax
  • Corporation tax
  • State tax
  • Sales and Use Tax
  • Employment taxes
  • State payroll taxes including Unemployment Insurance (UI) Tax, Employment Training Tax (ETT), State Disability Insurance (SDI) Tax and California Personal Income Tax (PIT)
  • C Corporations, or traditional corporations, pay corporate tax or Annual Minimum Tax depending on whether they claim net taxable income

You can find full details on the California Department of Revenue website.

Annual Report for your California Corporation

You must file an annual report with the California Secretary of State on an annual basis, by CAX. The cost is currently $25. If you do not file your annual report within 90 days of your date of incorporation each year, you will be charged a late fee and your corporation may be dissolved. Here at Incfile, we can file your annual report on your behalf.

As you can see, there are several forms and permits you need to submit to conduct business, both initially and on an annual basis.

Certificate of Good Standing for Your California Corporation

You may need a Certificate of Good Standing for certain business-related services like opening a bank account. You can order one from us, and we will also send you courtesy emails when your compliance due date nears.

Ready to Start Your California Corporation?

Incfile provides a cost-effective service to help you create your California corporation. We guide you through the process and handle most of the administrative steps, such as filing the necessary forms on your behalf.

Our basic package also provides a free Registered Agent service for the first year. If you're looking for help to start a corporation, our comprehensive services provide outstanding value whether you’re looking to start an S Corporation or a C Corporation.

Only $49 + State Fee To Launch Your Business

Clear Pricing. No Contracts. No Surprise.

What are the fees and requirements to form a business in California?

Filing Time and Price

The state charges this amount to file a new business entity. This fee goes directly to the Secretary of State.

State Fee State Filing Time Expedited Filing Time
$100 15 Business Days 5 Business Days

Compliance Requirements

This report is mandatory and must be filed within the specified time frame in order for the entity to remain in good standing with the state. Failure to file this report can lead to the company being revoked or administratively dissolved.

Statement of Information

Frequency: Biennially

Due Date: During six-month period ending on last day of anniversary month of incorporation or qualification.

Filing Fee: $20

Important:The initial Statement of Information filing is due within 90 days of the entity formation date.

 

California Franchise Tax

Frequency: Annually

Franchise Tax Fee: $800 (minimum)
$800 payment for the LLC Franchise Tax is due by 15th day of the 4th month after your LLC is filed. The month your LLC is filed counts as Month 1, regardless if you file on the 1st of the month, the last of the month, or any day of the month, really. This means that if you were to file your LLC on March 22nd, then you must pay the $800 fee no later than June 15th (in this example, March is Month 1, April is Month 2, May is Month 3, and June is Month 4). Then, every year after your first payment $800 LLC Franchise Tax will be due by April 15th. You pay the $800 LLC Franchise Tax using Form 3522 called the LLC Tax Voucher.
(We do not assist in the filing of the Franchise Tax Report)

Learn more about starting a business in California

Additional resources, guides, and articles for better decision making.

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