What Are Steps to Incorporate a Business in California?
Your corporation's name must be unique. It can't be misleading, and it can't be the same as or too similar to any existing business names in the state.3 min read
The steps to incorporate a business in California are as follows:
- Choose an appropriate name that meets state guidelines.
- Appoint directors.
- File an Articles of Incorporation.
- Choose a registered agent.
- Create a records book.
- Hold an organizational meeting and create bylaws.
- Obtain a federal Employer Identification Number and open a corporate bank account.
- Obtain necessary business licenses and permits.
- Issue stock.
- Submit your Statement of Information.
Incorporating in California: Choosing a Name and Appointing Directors
Your corporation's name must be unique. It can't be misleading, and it can't be the same as or too similar to any existing business names in the state. Choosing a name can be a tough task, since you want a name that makes it easy for people to find you, remember you, and know what your company is about.
You can do a simple name check to make sure you have a unique name. You may also want to search for trademarks to ensure you're not infringing on anyone's mark. A domain name search will show you if your desired URL is available.
The name may need to include any of the following (or abbreviations of them):
You'll appoint directors, who make major decisions for the business. In California, all corporations must have a minimum of three directors, unless they have fewer than three shareholders. Include the number of directors in your bylaws or Articles of Incorporation. There are no minimum age or residency requirements for directors.
Important Documents and Positions
You can use a template for your Articles of Incorporation or draft your own. The Articles must include the following information:
- Company name
- Corporate purpose
- Registered agent name and address
- Corporation's address
- Number and class of shares to issue
- Number of shareholders (close corporations only)
- Incorporator signatures
Submit your Articles by mail or in person, along with a $100 filing fee. There's an additional $15 fee for hand delivery. Once the Secretary of State files your document, your corporation is officially created.
Your corporation must have an agent for service of process, also known as a registered agent, statutory agent, or resident agent. This is a person or company that accepts legal documents on behalf of your corporation. A corporation can't be its own agent. All agents must have a physical street address in the state.
Use a corporate records book to store all important corporate documents, such as the following:
- Director and shareholder meeting minutes
- Stock certificates
- Stock certificate stubs
You'll create bylaws, which are the rules that govern your corporation. You don't have to file bylaws with the state, but they are required. You'll keep them at your principal address.
Bylaws cover a variety of information, such as the following:
- Board of directors size
- Procedure for director elections
- Meeting protocols
- Functions of board of directors
At your initial organizational meeting, you may do the following:
- Appoint directors (if you haven't already)
- Appoint officers
- Adopt bylaws
- Issue stock
- Adopt a stock certificate form
- Other business
Your corporation needs a federal Employment Identification Number, also known as an Employer Identification Number, EIN, FEIN, or taxpayer ID. You can apply for this number, free of charge, at the IRS website. You'll need an EIN to open a corporate bank account. This keeps business finances separate from personal finances.
Before you can legally operate your corporation, you'll need any required licenses and permits. The types you'll need depend on your business and location. Check with your local Chamber of Commerce because general business licenses differ by city.
It's not a legal requirement in most states, but most small corporations issue paper stock certificates. Record shareholder information in your stock transfer ledger.
Finally, you must file a Statement of Information with the state within 90 days of registering your corporation. It costs $25 to file your Statement.
Forming a corporation involves a number of steps. You must make sure you adhere to all rules and requirements so that your business is legally formed. Because it's more complicated to start a corporation — compared to an LLC, for instance — you may want to consult with legal and tax professionals to ensure you do everything correctly.
If you need help with the steps to incorporate a business in California, 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.