California Incorporation

California incorporation is a simple process. It is fast too. You can either do your California incorporation by yourself or hire the services of a professional. Incorporation service is another less expensive way of incorporating your business.

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Such incorporation can be for an ongoing and existing business or for a new one too. The state government web site contains all details and necessary forms for incorporation.

The distinct features of California incorporation are -

1)  Normally, incorporations require you to have your company name with specific corporate ending like incorporated, corporation, or others. However, California does not insist on such a rule except in special cases like statutory close corporations. While deciding the company name, do not include restricted words and phrases in the name.

2)  Your company acquires legal existence in the state of California after filing of the articles of incorporation with the California Secretary of State. The articles of incorporation should contain details of one or more incorporators. If there are no directors of the company initially, incorporators can function as directors. They can formulate laws, amendments, bylaws and elect directors and other officers too. Articles of incorporation do not necessitate listing of incorporators. 

3)  California incorporation lays stress that your company can indulge only in specific lawful business as considered lawful by the general laws of the state. It should not conflict with the laws of the state.

4)  The number of directors of your company should be three or more. These directors should have the minimum eligibility requirements as stated in the bylaws or articles of incorporation. The number of directors could be less if there are only one or two shareholders of the company. There can be two directors before issuance of shares to shareholders.

5)  California incorporation requires listing of name and address of the registered agent of the company, total number of authorized shares the company can issue, and share numbers with designation and rights if company can issue many kinds of shares.

6)  Domestic corporations have to file with the Secretary of State within ninety days of California incorporation. You have to file annual statements each year as tax information. The present tax rate is $800 annually, although such rates keep changing often.  

7)  California incorporation requires you to have a business license. This licensing fee is necessary irrespective of any type of business or profession.

8)  Before filing for California incorporation, decide on the type of company you want to set. It could be a ‘C’ type of corporation with separate legal entity as different from your owner. An ‘S’ subchapter can enable you not to pay corporate income tax. You can make a separate filing of IRS form 2553 for availing special tax status under ‘S’ subchapter.

9)  The most important part of California incorporation is filing of Articles of Organization. This outlines the bylaws for running the company, distribution of profits, hiring of personnel, and professional handling of business affairs.

10) The total fees for California incorporation is $165. Normally, incorporation time is around one to two days, this indicates the estimated time for filing of documents. The state proceedings can take a longer time.