How to Start a Corporation in California
To start a California corporation, you must file Articles of Incorporation with the California Secretary of State, pay a $100 filing fee, and obtain an EIN from the IRS. The complete steps to incorporating in California are as follows:
- File California Articles of Incorporation
- Pay the California Secretary of State $100
- Wait to receive your certified copy of your approved Articles
- Get a Federal EIN tax ID for the corporation
- Create California corporate bylaws
- Take these documents to the bank and get a California corporate bank account
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California Articles of Incorporation free download. When you're done filling out the form, submit it to your state.
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How to File California Articles of IncorporationTo form a California corporation, you file the Articles of Incorporation in the following steps:
What is the Cost of a California Corporation?
The base state filing fee for California Articles of Incorporation is $100. Any in-person filings incur an automatic $15 fee. Expedited filings must be submitted in-person, and expedite fees range from $350-$750.
Hire Northwest and get your Articles processed in as little as 1 day for a total, out-the-door cost of $750. Or, save some money and choose from other filing times: 14 days ($400) or 30 days ($350). All filing, expediting and courier fees are included.
How much does a corporation in California cost each year?
Every year, California corporations must submit a Statement of Information and pay the $25 filing fee. The first filing is due within 90 days of formation.Get Started
What is the California Statement of Information?
Within 90 days of formation and every year afterwards, your corporation has to pay a $25 filing fee and submit a California Statement of Information to update the state on your corporation’s ownership and contact information. The yearly report is due at the end of your anniversary month (the month you formed). If you file late, the penalty is huge: $250.
Worried you’ll forget? Northwest can help. When you sign up for our services, we’ll send you reminder notifications for your reports. For total peace of mind, you can even hire us to file your Statement of Information for you each year.Learn More
What are the taxes for a California corporation?
California taxes of one kind or another affect pretty much every entity, from LLCs to corporations. Plan on paying at least $800 a year in entity-level taxes, no matter what entity you have.
The California corporate net income tax is a flat rate of 8.84%. There’s a minimum tax of $800. S corporations pay a 1.5% tax on net income with a minimum tax of $800.
The state sales tax rate is 7.25%. Cities and counties typically tack on their own sales tax as well, making the average total sales tax rate 8.171%.
Is a Registered Agent Required for a California Corporation?
Yes, your California corporation needs a California registered agent. Registered agents go by a lot of different names in California: registered agent, resident agent, agent for service of process, statutory agent, etc. These are all just different names for the same thing: the person or business authorized to accept legal notifications for your corporation.
One option is to appoint an individual California resident. You can even appoint yourself—although you’d have to give up a good chunk of privacy and free time. Registered agents have to list their name and the address where they’ll be available in their Articles of Incorporation. Your Articles are a public document and part of the permanent record of your corporation. A publicly-listed address can mean a mailbox full of junk and unwanted visitors on your doorstep. Your agent also has to actually BE available at the address listed during business hours. Not in meetings. Not running errands. Not at the beach.
A better option is to appoint a registered corporate agent like Northwest. We list our address throughout your Articles to help you maintain your privacy. We’re ready and waiting to accept all your legal notices, and we even scan and send them to you the same day, so you can manage your business from anywhere you choose to be.Get Started
California Corporation Versus California LLC:
A California corporation will set you back a few dollars more in filing fees than an LLC. The filing fee to start a corporation is $100 versus $70 for an LLC. The Statement of Information is also $5 more for corporations than for LLCs.
Taxes at least are fairly evenhanded across the board. Thanks to the franchise tax, pretty much everyone owes an $800 minimum tax, no matter if you’re taxed as a disregarded entity, partnership, S corporation or C corporation. If your business is really reeling in income, you might think that a minimum tax of $800 for an LLC isn’t too bad, especially without any additional corporate net income tax. Well, California has considered that as well and charges high-earning LLCs an Annual LLC Fee that ranges from $900-$11,790. Basically, California is pretty non-discriminating when it comes to collecting taxes and fees from businesses.
With costs fairly similar, how do you know which business entity is right for you? Take into consideration the differences in how corporations and LLCs operate. Corporations have been around a long time, which gives them a few advantages: a long legal history (meaning few surprise rulings in the courtroom), prestige and familiarity. Their formal structure is also useful for managing large businesses. LLCs, on the other hand, are common for small businesses that don’t need a lot of formalities. Interested in an LLC? Here’s information on starting a California LLC.
Do I Need a Tax ID Number (EIN) for a California Corporation?
Yes, the IRS requires corporations to get a federal tax ID (also known as an EIN or FEIN). The IRS uses this number to identify your business on federal tax filings. Your EIN is useful for more than just taxes though. California has particularly stringent banking regulations for businesses, so you’ll almost certainly need your EIN just to open a bank account. You’ll typically need your EIN for local licenses and permits too. You may be able to use your personal social security number in some of these situations instead, but who wants to do that? You can get an EIN directly from the IRS at no cost. Want to skip the extra application? Hire Northwest to get your EIN for you. Just add on EIN service during checkout when you sign up for our services.
Does a California Corporation Need a Business License?
Yes, you are required to get a business license for your California corporation. Licenses aren’t issued by the state, however—they’re issued by the city or county where your corporation is registered. Fees and renewal times are all over the map. For example, a 1-year business license is a minimum of $38 in San Diego while a 3-year license in Sacramento starts at $149.
California Corporation Articles of Incorporation Requirements
Your name must include the word “Corporation,” “Company,” “Incorporated,” “Incorporation,” “Limited” or an abbreviation for one of these words like “Inc.”
This street address will become part of the permanent record of your California corporation. Hire Northwest as your registered agent and you can use our California address as your business address.
You can list an individual California resident (such as yourself) or a registered corporate agent (like Northwest). Personally, we’re fans of Northwest.
If you have an individual as your registered agent, you’ll need to list the address where they’ll be available (and which will become public record). Have a registered corporate agent like Northwest? No need to list our address—it’s already on file with the State of California.
List how many shares you’re creating. You must have at least one. You’ll distribute some or all of these shares later on at your organizational meeting. Want to have different classes or series of shares? You won’t be able to use the standard Articles of Incorporation form; you’ll have to draft your own Articles instead.
Someone has to sign your Articles of Incorporation, and that person is your incorporator. Your incorporator doesn’t have to be a director, officer or anyone in the corporation—just someone you authorize to sign the form. We’ll be your incorporator when you hire Northwest.