Everything You Need to Know About California Corporations:
California Incorporation Options
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How to Incorporate in California
To start a corporation in California, you’ll need to do three things: appoint a registered agent, choose a name for your business, and file Articles of Incorporation with the California Secretary of State. You can file this document online, by mail, or in person. The articles currently cost $0 to file (this state fee slash will last until June 30, 2023!). Once filed with the state, this document formally creates your California corporation.
Per CA Corp Code § 1502, every California corporation must appoint a registered agent (also called an “agent for service of process”). You don’t need to hire a registered agent, but if you do, make sure your registered agent will list their address on your articles wherever possible to ensure maximum privacy.
If you’re starting a new business, you probably already know what you want to name your corporation. But you’ll need to know if your preferred name is available. To find out, visit the California SOS business entity database and search until you find the perfect name for your corporation.
Once you know who your registered agent will be and what your corporation name is, you’re ready to file your California Articles of Incorporation. Follow along with our filing instructions below:
Filing the California Articles of Incorporation
Learn more about each Articles of Incorporation requirement below. Note that the information you provide becomes part of the public record—permanently.
Better yet, skip the form entirely and hire us to incorporate your California business. We provide a free business address to list whenever possible throughout the filing to better keep your personal address private.
1. Corporation Name
The name of your corporation must be distinguishable from any other existing corporate name registered in California and cannot contain any words or phrases likely to mislead the public about the nature of your business. The names of close corporations must include a business entity identifier, such as “corporation,” “incorporated,” or “limited,” or an abbreviation of one of those words. If you form a professional corporation, you must follow the naming rules set forth by the agency in charge of regulating your field within the state.
2. Business Address
This street address will become part of the permanent record of your California corporation. (A different mailing address can also be included.) Hire Northwest as your registered agent and you can maintain address privacy by using our California address as your business address.
3. Agent for Service of Process
Your California registered agent (called an “agent for service of process” in California) can be an individual California resident or a registered corporate agent such as Northwest. If you appoint an individual as your agent, you’ll need to include their name, as well as the street address where they’ll be available during regular business hours to accept legal notices on behalf of your business. If you appoint a corporate agent, you’ll just need to include the business name. No need to list the address—it’s already on file with the state of California. Hire Northwest, and we’ll be your agent.
Enter the number of shares the corporation is authorized to issue. (Aka: how many shares are you initially creating?) You must create at least one share. 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.
5. Purpose Statement
Though a purpose statement is required, California has taken the liberty of writing the statement for you, and it cannot be altered. So, you can skip this step. (On the online form, the purpose statement appears in the first section, along with your corporation name.)
6. File Date
On the online form, you have the option of choosing to have your articles filed immediately or on a future date (up to 90 days in the future). Most businesses will want to start right away, but one common reason for delaying the process is if you’re close to the next tax year.
7. Incorporator Signature
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. On the online form, you’ll need to include an email address as well. When you hire Northwest, we’ll be your incorporator.
Why Have a Registered Agent Form Your California Corporation?
Professionals in California hire registered agent services like Northwest Registered Agent for incorporation—but why?
Standard filing companies don’t have employees or offices in every state. But as a national registered agent, it’s a requirement for us, which is a benefit for our clients. We own our own building in Sacramento, CA. We’re on a first name basis with the people who work in the Secretary of State’s office.
As your registered agent, we list our Sacramento registered office address on your corporation’s formation documents. Why? If you’re starting a business from your apartment in San Francisco, do you really want your apartment address as your business address? (Hint: the answer is no.) We’ll list our address, so you don’t have to list yours. Plus, we never sell your data. We don’t list your personal information on filings if we don’t have to. It’s all standard and part of our commitment to Privacy by Default®.
Free Mail Forwarding & Business Address
At Northwest, we do everything a registered agent should do and more. You can list our address as your business address on your state filings. We include limited digital mail forwarding with registered agent service (up to 10 pieces of regular mail per year; $15 a doc after that).
We know the in’s and out’s of each state—and we use this knowledge to help you when you need it most. Our team of Corporate Guides® has over 200 local business experts. You can call or email us for answers to all your questions about your corporation in California. Our Corporate Guides are dedicated solely to helping you with your business—not selling you services or meeting quotas.
What Do I Do After My California Corporation Is Formed?
After your California Articles of Incorporation are approved, you still have a few more important steps to take, including getting an EIN, drafting bylaws, holding your first meeting, opening a bank account, and learning about state reporting and tax requirements.
Get an EIN
Your federal employer identification number (commonly known as an EIN or FEIN) is similar to a social security number for your business. The IRS assigns these numbers and uses them to easily identify individual corporations on tax filings, including federal corporate income tax returns.
Why does my California corporation need an EIN?
The IRS requires corporations to get an EIN for their federal tax filings. You may also be asked for your EIN when opening a bank account, securing a loan, or applying for local business permits and licenses.
How do I get an EIN for my corporation?
You can get an EIN directly from the IRS. The application is free, and most businesses can apply online. However, if you don’t have a social security number, you’ll need to submit a paper application form. Can’t bear to fill out yet another application? Hire Northwest to get your EIN for you. Just add on EIN service during checkout when you sign up for our incorporation service.
Write Corporate Bylaws
Bylaws are the internal rules you set for your business. They put into writing how decisions will be made and who gets to make those decisions. All the major organizational processes and procedures for your corporation will go in your bylaws.
For more on California Corporate Bylaws (including free California Corporate Bylaws templates), see our California Corporate Bylaws resource.
Do I need bylaws for my California corporation?
There is not a specific state statute that says a California corporation must have bylaws. An exception to this can be found in CA Corp Code § 212, which says that if the number of directors is not stated in the articles of incorporation, then that information needs to be included in bylaws.
However, bylaws shouldn’t be ignored just because the law generally allows it. Corporate bylaws are one of your most important internal documents. Without bylaws, the operating rules of your corporation will default to whatever the state statutes declare. Do you really want the ins and outs of your corporation to be dictated by the state? (Hint: no, you don’t.)
What should bylaws include?
Corporate bylaws cover basic policies and procedures for issues such as company finances and management. Bylaws should cover a range of topics, answering key questions like those below:
Meetings: When and where will meetings for shareholders and directors be held? How many attendees are required to transact business? What are the procedures for voting or proxy voting? How do you call a special meeting? What actions can be taken without a meeting?
Stock: How are stock certificates issued and transferred? How is voting affected by issues such as corporate stock owners or fractional shares?
Directors and officers: How many directors must there be? Which officer positions are required? What powers do they have? How do you fill a vacancy or remove a director or officer?
Finances: What are the procedures for retaining profits, issuing dividends, and paying bills? Who can withdraw money from the corporate bank account or sign checks?
Records: Where is the corporate book to be kept? What information will be maintained? How are requests for review or access honored? Can records or copies be kept or distributed digitally?
Amendments and emergencies: Who can amend bylaws and how? Can emergency bylaws be adopted in the case of disaster?
California bylaws can also make other provisions and go into more detail on the above topics, assuming additions are in accordance with state law. For example, CA Corp Code § 212 states that California bylaws can determine the qualifications, duties, and compensation of directors.
How do I write bylaws?
Creating bylaws can be overwhelming—where do you start? Northwest can help. We give you free corporate bylaws when you hire us to form your California corporation. We know what kinds of topics and questions corporations need to address, and we’ve spent years refining and improving our forms. We offer many other free corporate forms as well, including templates for resolutions and meeting minutes.
Hold an Organizational Meeting
An organizational meeting is the first official meeting of the corporation after the business is legally formed with the state. At this meeting, bylaws are adopted, officers are appointed, and any other initial business is conducted. The first meeting minutes should also be recorded and added to your corporate record book.
Are there any special rules for California organizational meetings?
If shareholder voting will take place at a meeting, written notice of the meeting must be given at least 10—but not more than 60—days prior to the meeting. The meeting doesn’t have to be held in California, unless the bylaws say otherwise.
Open a Corporate Bank Account
Businesses that mix personal and business finances together risk losing their liability protections, so your corporation will need its own bank account. In addition, a corporate bank account is essential for easily accepting payments, paying bills and holding funds.
How do I open a bank account for my California corporation?
To open a corporate bank account in California, you’ll need to bring the following with you to the bank:
A copy of the California corporation’s Articles of Incorporation
The corporation’s bylaws
The corporation’s EIN
If your bylaws don’t specifically assign the power to open a bank account, you may also want to bring a corporate resolution to open a bank account. The resolution would state that the person going to the bank is authorized by the business to open the account in the name of the corporation. At Northwest, we provide free corporate bank resolutions, along with many other free corporate forms, to help you get started fast.
File California Reports & Taxes
In California, corporations file a statement of information each year. The state also has a franchise tax, which both S corporations and C corporations are responsible for paying.
What is the California Statement of Information?
The California Statement of Information is an annual report that updates the state on your corporation’s ownership and contact information.
How much is the California Statement of Information?
The California Statement of Information filing fee is $20, plus a $5 disclosure fee ($25 total). If you file late, you receive a 60-day grace period before you’re hit with a $250 late fee.
When is the California Statement of Information due?
Your initial statement of information is due within 90 days of your corporation’s formation. When you hire Northwest Registered Agent to form your corporation, we will file your initial statement of information for you!
In subsequent years, the statement is due by the last day of your anniversary month (the month your corporation formed).
These filings can be easy to forget—which is why we send our clients automatic reminders. Or better yet, let us file for you. With our business renewal service, we can complete and submit your annual report for you for $100 plus the state fee.
What should I know about California taxes?
Regardless of whether your corporation is taxed as an S corp or C corp, plan on paying at least $800 a year in entity-level taxes.
S corps in California are responsible for paying the state’s franchise tax, which is essentially a tax for the privilege of doing business in the state. The franchise tax rate for S corps is 1.5%, with a minimum payment of $800. The tax return and payment are due by the 15th day of the 3rd month after the close of your corporation’s taxable year. (For example, if your corporation’s tax year ends in February, your tax return would be due by April 15.)
C corps are also responsible for paying the state’s franchise tax (alternatively referred to as corporate income tax). The minimum tax owed is still $800, though the rate is significantly higher than for S corps—8.84%. The tax return and payment are due by the 15th day of the 4th month after the close of your corporation’s taxable year. (For example, if your corporation’s tax year ends in February, your tax return would be due by May 15.)
An exemption to the franchise tax occurs if your corporation’s tax year is 15 days or less, and if no business was conducted during that time.
California corporations should also be aware of the state’s sales tax, which is 6%. City, county and specialty sales taxes can be tacked on as well. The highest sales tax rate in the state can be found in Santa Fe Springs, at 10.5%, though the state’s average is 8.258%.
Do corporations have to register with the California Franchise Tax Board?
Yes. All businesses are required to file returns with the Franchise Tax Board. You can register by creating an account with MyFTB.
California Corporation FAQs
How can I submit the California Articles of Incorporation?
You can file California articles online, by mail, or in person. Mailed filings must be submitted to the following address:
Secretary of State
Business Entities Filings Unit
PO Box 944260
Sacramento, CA 94244-2600
In-person filings can generally be delivered to 1500 11th St., 3rd Floor, Sacramento, CA 95814. However, during the COVID-19 pandemic, drop-off boxes are available in the office’s lobby.
How much does it cost to start a California corporation?
The filing fee for Articles of Incorporation is currently $0 (until June 30, 2023!). Within 90 days of filing, the initial statement of information is due and costs $25 ($20 for the statement of information + a $5 disclosure fee). So, the minimum grand total for forming a California corporation is $25.
Expedited processing can be yours if you’re willing to dig into some deep pockets—same-day processing is $750 and 24-hour processing is $350. (Expedited service is suspended during the COVID-19 pandemic.)
How long does it take to start a California corporation?
Processing times vary based on your filing method. If your articles are dropped off or mailed, it could take as long as 4 weeks for them to process. If filed online, it may take up to two weeks during busy periods, but is usually much faster.
Does a California corporation need a business license?
Yes. California corporations are required to have a business license, but the state doesn’t actually issue licenses itself. Instead, licenses are issued at the local level. You’ll have to apply for your necessary license(s) from the city and/or county where your LLC is registered. For example, Santa Monica requires all those conducting business within the city limits to obtain a general business license. The same is true in San Jose, though the license is called a Business Tax Certificate.
For some license applications you may need an EIN or a certified copy of your Articles of Incorporation. At Northwest, we can streamline the process and get these for you—simply add on these items during checkout.
What is a foreign California corporation?
A corporation formed outside of California—but which conducts business in the state—is considered a foreign California corporation. For example, if you incorporated in Oregon but decide to open a storefront in California, you would be a foreign California corporation. This also means you would need to register with the state by filing a Statement and Designation by Foreign Corporation with the California Secretary of State. Foreign corporations are required to file the California Statement of Information each year as well.
Can Northwest help me form a nonprofit corporation?
Absolutely! We’re happy to start a nonprofit corporation for you. Note that incorporating a California nonprofit requires a different form and the filing fee is lower. California nonprofits may not need to file the state’s franchise tax but must file a statement of information every two years ($20).
How can I get a California phone number for my corporation?
It’s a conundrum: you need a local number to display on your website and give to customers, but you don’t want to make your personal number quite so…public. We get it. And we’ve got you covered with Northwest Phone Service. We can provide you with a virtual phone number in any state—plus unlimited call forwarding and tons of easy-to-use features. You can try Phone Service free for 60 days when you hire us to form your corporation, and maintaining service is just $9 monthly after that. No contract required.
How to Order California Incorporation Service
Our California incorporation service is designed to be fast and easy—signing up takes just a couple minutes. Here’s how it works:
We’ll form your California corporation for $250 total and include one year of registered agent service, a secure online account filled with business maintenance tools and all the state forms you’ll need, and the lifetime support of our expert Corporate Guides. Just choose Hire Us below, answer a few easy questions about your business, and submit your payment.
Next, we’ll prepare and submit your California Articles of Incorporation to the Secretary of State, Business Entities Filing Unit. In the meantime, you’ll have immediate access to your online account, where you can find useful state forms, pre-populated with your business information.
Once the California Secretary of State has approved your filing, we notify you that your California corporation has been legally formed. You can now move on to next steps, like holding your organizational meeting and opening a bank account.