There are three ways to incorporate your business in California:
- Hire a lawyer to do the job for you (the most expensive option)
- Walk in to the Secretary of State office and do it by yourself
- Use a professional incorporation company, like Active Filings.
Articles of Incorporation
The Articles of Incorporation is the formation document you file with the California Secretary of State to register your corporation with the state (LLCs file Articles of Organization). In California, LLCs can submit formation documents online, but corporations must submit their Articles of Incorporation by mail or in person. It will take the SOS around 14 business days to process your mailed filing, but you can speed up the process if you hand deliver your articles and pay an additional $15 counter drop-off fee to speed things up. If you hire Active Filings to incorporate your business, we can either submit your articles by mail or in person. For in-person filings, we hire a courier service, for an additional fee, to deliver your corporation’s Articles of Incorporation directly to the California Secretary of State’s office in Sacramento.
To complete your California Articles of Incorporation, you’ll need to include the following information:
|Company Name||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.”|
|Company Purpose||List the reason for forming the corporation or the business/activity which the corporation will engage in.|
|Authorized Shares||List the number of shares of corporate stock you are currently authorizing. Technically, this is when you “create” your stock (more can always be authorized later), and that stock will be issued to your shareholders at your first shareholder meeting.|
|Registered Agent Information||In California, a registered agent (also known as a resident agent) is an individual or business that serves as your company’s official point of contact for lawsuits and legal notices. As part of Active Filings’ incorporation service, we include a year of registered agent service when you hire us to incorporate your business in California.|
|Names and Addresses of the Incorporators||The incorporator is the person or company authorized to form the corporation. For example, if you hired us, we would list ourselves as the incorporator. The incorporator does not have any stake in or claim to the corporation being formed.|
|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.|
|Articles of Incorporation||Directors are not required to be listed|
|Articles of Incorporation||Officers are not required to be listed|
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
When you hire Active Filings to incorporate your business in California, you’ll receive everything you need to track and maintain your company, this includes:
- Free expedited service
- One year of registered agent service
- An online account where you can add additional services, track orders, maintenance requirements and digital notifications.
Learn More About Incorporation Requirements In Your State
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia