Starting your own business can be a challenging yet liberating experience. You may finally be ready to be your own boss, or simply want to pursue a childhood dream. No matter the reason for the move, after you have finalized the business plan and other initial preparatory steps, you need to consider what type of business you will have under the law. If you want to start a corporation in California, then you should consider the following information about what the process may look like.

What is a corporation?

This is a business form that stands alone from its owners or founders. Because it is a separate entity, it is taxed as an entity, and the owners are taxed separately. The corporation’s shareholders, those who own a stake in the company, also pay taxes on any money they make off stocks owned. The advantage to this lies in that there is often no personal liability to the owners of the corporation unless there is some wrongdoing on their part.

What do you need to form a corporation in California?

Name. Initially, you need to choose a name that is not currently used by another company, and is not confusing or misleading to the public. You can check if the name you want is already taken by mailing an inquiry form to the California Secretary of State’s office. This form has to be mailed in, as there is no way to make this inquiry by telephone or email.

Articles of Incorporation. To start a corporation in California, you first need to write and file articles of incorporation with the Secretary of State. You can look at examples of form versions of these documents here, along with information on filing fees. If you need help completing the form documents, or drafting your own articles of incorporation, contact A People’s Choice for quality non-attorney assistance.  The articles need to include the following important information: the corporation’s name and street address; the name and address of the corporation’s registered agent; and the purpose of the corporation. There is a $100 filing fee to file the articles of incorporation.

Statement of Information. Within 90 days of filing the articles, you have to file a statement of information with the Secretary of State. There are forms to help with this on the Secretary of State’s website. You have to file this statement each year the corporation is in existence.

Registered Agent. You will also need to register an agent to receive service of process, that is, accept court papers in case your corporation is ever sued. The agent must live or have an office in California and can be a person or a corporation. However, a corporation cannot serve as its own registered agent. There are corporations that can be hired for this purpose and A People’s Choice can serve as your corporation’s registered agent for an annual fee.  The corporation that is registered as the agent has to have filed a certificate with the California Secretary of State.

Directors. The person who incorporates the business must also appoint the initial directors of the company. They can serve as directors until the first shareholder meeting, to be held within a year of incorporation, where the directors moving forward will be elected.

Tax considerations. The corporation must comply with both state and federal tax requirements, such as getting an Employee Identification Number and paying California’s $800 franchise tax.

Stock Issuance. Finally, the corporation must issue stock to the initial shareholders.

Other Considerations When Starting a Corporation in California

You are required to have bylaws when starting a corporation in California, although the bylaws are not required to be filed with the Secretary of State. Bylaws are guidelines for your corporation detailing how it is to be run. The corporation is required to keep a copy of the bylaws at its principal office.

If you would like to start a corporation in California, contact A People’s Choice.

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