Articles of Incorporation California: Everything You Need to Know
Articles of incorporation in California are a set of legal documents required for business owners to establish their entity as a corporation in the state. 8 min read
2. Intro to Filing Articles of Incorporation in California
3. 10 Things to Know about Filing Articles of Incorporation in California
4. Important Changes in the Articles of Incorporation Requirements in California
5. Why You Should Have a Corporate Records Book
6. The Benefits of Corporate Bylaws
7. The Rules of Appointing Initial Corporate Directors
8. Hold the First Board of Directors Meeting
9. Understanding the Basics of Stock Issuance
10. California Tax Requirements for Corporations
11. The Basics of Complying With Other Tax and Regulatory Requirements
12. How to File a Statement of Information
13. Rules for Foreign Corporations Doing Business in California
Articles of incorporation in California are a set of legal documents required for business owners to establish their entity as a corporation in the state. After the document is filled out and filed with the state, your business will be officially incorporated.
Within the articles of incorporation, you will need to list the name of your corporation, describe the operations of the business, include an agent for service, and mention if your corporation will issue stock.
Once you have established your corporation with the state of California, you will be required to create corporate bylaws. This needs to be done because the legal document does not include information on how to run your corporation.
Articles of Incorporation in California: 2 Primary Uses
Articles of incorporation are needed when a small business owner in the state of California seeks to accomplish two things:
- To incorporate their California-based business without being financially dependent on investors.
- To keep incorporation information organized when the small business will operate outside of the state of California.
Intro to Filing Articles of Incorporation in California
Your articles of incorporation will need to be filed with the Secretary of State’s office in order to officially register your corporation in the state.
Once the required paperwork is completed and filed with the state, you will wait to hear whether or not your application has been approved or denied.
10 Things to Know about Filing Articles of Incorporation in California
- Before doing anything else, make sure that the name you wish to incorporate is available. So long as the name does not already exist in the Secretary of State’s records, you can use it for your new corporation.
- The name you pick should be one that is easily understood by the general public.
- Once you decide on a name that is available, you can reserve that name for up to 60 days.
- To find out if the name you wish to use for your corporation is available, fill out and mail a Name Availability Inquiry Letter to the Secretary of State’s office in Sacramento.
- Your corporation needs someone to act as the registered agent. This person is responsible for accepting service of process in the event that the corporation is sued.
- Only one person can be listed as the agent for your corporation. Other requirements for a registered agent include being a resident of California and accepting legal documents for the corporation. A separate corporation can act as a registered agent and be responsible for service of process.
- On the California Secretary of State’s website, you can find the articles of incorporation template to be downloaded. Because corporations have different structures, there are varying articles of incorporation forms. All of these can be found on the SOS’s website.
- The person incorporating the business needs to provide a signature on the form before it can be filed.
- The articles of incorporation form can be filed one of two ways: either by delivering the form to the SOS’s office in person or by sending it in the mail. Keep in mind that you might have to pay an extra service fee if you deliver the form in person.
- There is a filing fee that you pay when filing the articles of incorporation form and that fee will vary depending on the structure of your incorporation. The filing fee can be paid by money order or check.
Important Changes in the Articles of Incorporation Requirements in California
- As of January 1, 2013, anyone wishing to incorporate their business entity must include the official street address and mailing address of the business in the articles of incorporation when filing it with the state of California.
- Agents of the corporation are required to list the street address where any process will be serviced. A post office box address is not accepted by the Secretary of State in California.
- If the articles of incorporation document does not comply with these requirements, the SOS will reject the form.
- If a corporation wants a future file date, it needs to be stated on the document being submitted or attached with the document.
- Foreign corporations, when registering any document in the state of California, are required to list their business office street address if they have one in California.
- Any business entity in California should be aware of new policies and fees associated with receiving copies of documents from the SOS. According to the updated regulations, if your filing fee is $25 or more, your first uncertificated copy of a document is free. If you request a copy of a document at the time of filing, you can receive a certified copy after paying a $5 certification fee. All additional copies will include a $5 certification fee for every certified copy, a $1 fee for the first page of a copied document, and $.50 fee for every additional page.
Why You Should Have a Corporate Records Book
A corporate records books is necessary in order to organize all of the corporation’s documents including stock certificates and stock certificate stubs. This book is also used to track meetings conducted by the director and shareholders.
The Benefits of Corporate Bylaws
Although having corporate bylaws is not a legal requirement of incorporating a business, doing this comes with two important benefits:
- Bylaws set up the operating rules of your corporation
- They show the IRS, creditors, and banks that you have a legitimate corporation.
The Rules of Appointing Initial Corporate Directors
After signing the document, the person who incorporated the business must appoint corporate directors to serve on the board. Those appointed will serve until the first shareholder’s meeting. Once this meeting takes place, all corporate shareholders are responsible for electing the next round of board members for the new term.
The incorporator also needs to fill out an “Incorporator’s Statement,” a document that lists the names and addresses of the corporate directors. After listing names and addresses, the incorporator must provide a signature on the statement and keep a copy of the statement in the corporate records book. The “Incorporator’s Statement” does not need to be filed in California.
Hold the First Board of Directors Meeting
At the corporation’s first board meeting, the corporate directors should strive to accomplish the following tasks:
- Adopt bylaws
- Choose a corporate bank
- Adopt a corporate seal and stock certificate form
- Plan the fiscal year
- Appoint corporate officers
- Authorize shares of stock issuance
- Record the actions of the director in the corporate minutes (the corporate minutes can be prepared by either the incorporator or any other corporate director)
- Approve the election of the S corporation status (if the corporation is an S corporation)
- Within one to two weeks, the minutes should be prepared and sent to all of the corporate directors to be signed.
Understanding the Basics of Stock Issuance
- Each corporate shareholder is issued stock. Though many states do not require it, most small corporations issue stock in the form of paper certificates.
- In the corporation’s stock transfer ledger, include the names and contact information of each shareholder.
- According the both state and federal securities laws, any share of stock within your corporation is considered a security. Almost all small corporations are exempt from these laws on both the federal and state level.
California Tax Requirements for Corporations
When doing business in the state of California, both foreign corporations and California corporations are required to pay taxes to the FTB (Franchise Tax Board).
The amount of tax owed is based off of the income made in the first year, if the corporation is new or was incorporated with the SOS. After that, $800 is the annual minimum tax. Even if the corporation is not doing business, experiences a loss, or isn’t currently active, it is required to pay an $800 annual minimum tax during the first quarter of each accounting period.
Extra fees need to be paid by a corporation that has an annual income higher than certain levels.
After the close of a taxable year, regular corporations must file their California Form 100 (Income Tax Return or Corporate Franchise) by or before the 15th day of the third month. S corporations file the Form 100S (California S corporation Franchise or Income Tax Return).
The Basics of Complying With Other Tax and Regulatory Requirements
- You need a federal employer identification number for your incorporation. Fill out the online application on the IRS website to obtain an EIN.
- An S corporation is required to submit Form 2553 Election by a Small Business Corporation. This form needs to be signed by all of the corporation’s shareholders. Within two months and 15 days after the start of your corporation first tax year, the election must be filed. More information can be found by looking at the IRS S Corporation Fact Sheet.
- Certain local and state business licenses may be required for your corporation, depending on where the corporation is located and the structures of the corporation. More information on license requirements can be found by visiting the CalGold Business Permits Made Simple website.
- If a corporation in California pays more than $100 in wages in a calendar quarter, it is subject to state payroll tax requirements. Even if the corporation does not having any employees it is still subject to this regulation. Employer account numbers (also known as state employer identification numbers) are issued by The California Employment Development Department. This department also administers payroll taxes such as State Disability Insurance, California Personal Income Tax withholding, Employment Training Tax, and Unemployment Insurance.
How to File a Statement of Information
A Statement of Information needs to be filed with the SOS, whether you have a California operation or a foreign operation in the state. This must be done within 90 days of filing the articles of incorporation. A Form SI-200 needs to be filed by California corporations and a Form SI-360 must be filed by foreign corporations. Both of these forms can be filled out and submitted online. Forms can also be printed and mailed in or dropped off at the SOS’s office (there is a $25 filing fee for doing this).
Rules for Foreign Corporations Doing Business in California
- A corporation that exists outside of the state of California must register with the SOS if that corporation wishes to do business in California.
- For service of process, a foreign corporation needs a registered agent who is physically located in the state.
- Fill out and submit the Statement and Designation by Foreign Corporation form to register with the state. This form can be mailed into the SOS’s office or dropped off in person.
- As of January 1, 2013, if a foreign corporation has a business office in California, it must include the office’s street address when registering. There is a filing fee of $100 to do this.
- In the event that the foreign corporation’s name is not available in the state of California, the foreign corporation must use an assumed name (something other than the corporation’s original name). The assumed name must be included on the statement.
- Along with a completed form, the foreign corporation must include a certificate of good standing provided by the state in which the foreign corporation usually does business. This needs to be done within six months of filing the statement.
If you need help filing your articles of incorporation in California or have additional questions about the process, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.