When a business begins, it typically will look to form a legal entity such as a corporation in order to protect its owners from personal liability for the company’s obligations. A Certificate of Incorporation (or articles of incorporation) is the legal document used to form a corporation in the state of California. It is filed with California’s Secretary of State and includes basic information about a business such as its name, address, contact information, and the number of shares of stock authorized.

Given the importance of a Certificate of Incorporation in laying the initial foundation for a new business, below are five key considerations that those in the Los Angeles area should be aware of when forming a business.

1. Understand the Different Types of Corporations

Before preparing and filing the Certificate of Incorporation, business owners should first understand and decide the type of corporation they will establish. Generally, they can choose between a C Corporation and an S Corporation. The major difference between the two is the way in which a business is taxed. A C Corporation pays taxes on its profits and is generally the way to go for larger businesses or more complex businesses, while an S Corporation may provide owners with certain tax benefits, and typically works well for smaller and simpler business models. Business owners should consult counsel to ensure that the type of corporation chosen is the most appropriate one based on the business’s goals.

2. Select the Articles of Incorporation Carefully

The Articles of Incorporation contain information required by the state of California about the corporation, such as its name, address, contact information, and the number and type of shares it is authorized to issue. It is important that the Articles of Incorporation are completed accurately and reflect the exact name that the corporation will be using. It is also important to indicate the number and type of stock authorized. Supervising counsel specialised in LA local structures should be consulted to ensure that all necessary information is included and that the Articles are drafted correctly.

3. File the Certificate of Incorporation

Once the Articles of Incorporation have been completed, the corporation must file them with the California Secretary of State in order to legally become incorporated. This can be done via the Secretary of State’s online filing system, or in person at their office in Sacramento or their office in Los Angeles. Once the filing is complete, the Secretary of State will issue a Certificate of Incorporation, generally within 7-10 business days.

4. Draft the Bylaws

After the Certificate of Incorporation has been approved, the next step is for the Board of Directors to draft the Corporations Bylaws. The Bylaws are a set of rules and regulations that will govern the actions of the corporation and the relationship between the directors and shareholders. They should be drafted with and reviewed by a business lawyer who understands the unique structure of LA businesses, as itensures that they comply with California’s corporate laws and that the interests of the shareholders are properly protected.

5. Getting Assistance from Experienced Business Lawyers

It is also a good idea to consult with experienced legal counsel prior to completing and filing the Certificate of Incorporation. Having an experienced lawyer review the Certificate and the underlying legal documents can help ensure that there are no potential issues down the line. And utilizing a lawyer experienced in the local regulations of Los Angeles can offer additional peace of mind that the necessary steps have been taken to comply with local regulations.

Topics:

Certificate of Incorporation,

Business Lawyers,

Los Angeles