How to Incorporate a Business in California (CA)
Articles of Incorporation
The name must not be likely to mislead the public, be the same as, or resemble so closely as to lead to deception, the name of a domestic or qualified foreign corporation, a name under reservation, or the registered or assumed name of a foreign corporation. The name would need Superintendent of Bank’s approval if it contained the words “bank” “trust,” or “trustee.”
Minimum Number – Three. However, if the company has less than three shareholders, the number of directors may be less than three, but not less than the number of shareholders.
Residence Requirements – no provisions. However, the entity must have a Californian address.
Age Requirements – None.
Directors are not required to be listed in the articles of incorporation.
The officers are not required to be listed in the articles of incorporation.
An increase in shares or par value does not effect initial filing fees.
An original or a copy of bylaws must be kept at the principal executive office or principal business office in state of California. The minutes of directors’ and shareholders’ meetings must be kept at the principal office.
Taxes and Fees
Domestic corporations must file with the secretary of state within 90 days after filing the articles or incorporation. A statement of domestic stock corporation must be filed annually by the end of the calendar month during which the original articles of incorporation were filed. The cost is $20.
Income Tax Rate
California imposes a franchise tax on both California corporations (domestic) and non-California corporations (foreign) for the privilege of doing business in the state. The franchise tax is actually a tax of net income; the rate is 8.84% of net income for corporations. S corporations still must pay the franchise tax; the rate is 1.5% of net income.
California imposes a minimum franchise tax of $800. So, even if your corporation does not have net income, it still must pay this minimum tax. The minimum tax does not have to paid during the corporation’s first year; however, taxes based on income must be paid during this first year.
S Corporation status is recognized by the State of California, however, the corporation is still required to pay franchise tax at a rate of 1.5% of net income. A separate state election is required.
California may require that you obtain a business license and pay a licensing fee based on your business type or profession. Please check with the state to make sure your business is complying with the license requirements for your particular profession.
For more information on taxes, visit www.ftb.ca.gov
Cost of Incorporating in California
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