California is one of the most popular states for LLC and Incorporation formation in the US. Having the largest population in the country, California is a thriving business hub for entrepreneurs and the business community.
California is home to one of the largest American companies including Apple and Countrywide Financials that maintain their headquarters in California. The state also services many small businesses in industries such as entertainment, technology and agriculture.
What you should know about California
The authority to Incorporate in the state of California is under the Business Entities Section of the California Secretary State. This is the government agency that is responsible for all the forms. Record keeping and filing. The DBA (Doing Business as) fictitious business names are usually filled at the county level and not the Secretary of State.
Other kinds of permits and licenses may be required at the county or even city level in California. The point of contact is usually at the County Treasurer’s Office.
The basic steps to incorporate a business in California
Before you begin these particular process, make sure that you seek the advice of an experienced attorney to assist you with the basic steps of incorporating a business in California. This will ensure that you do not miss anything along the way.
1. Do a proper search to ensure that your company is available.
Your lawyer can assist you through this process. Your particular corporate name in the state of California does not necessarily require any of the suffixes, Corporation (Corp), or Incorporated (Inc.) unless the business is a closed Corporation.
A closed corporation means a corporation whose articles contain, in addition to the provisions that are required by Section 202, that all corporations that issued shares in classes shall be held of record by not more than a specified number of persons exceeding 35, and a statement “This Corporation is a closed Corporation.”
You should also be aware that California does not restrict the names, and business individuals who would wish to incorporate in the banking business, trust business, or any other professional business are subject to the rules that regulate those specific areas.
2. The next step is getting to register your corporation or LLC with the Secretary of State of California.
Your lawyer can be able to get you the required filing of the Articles of Incorporation this is for corporate structures and for LLCs, the Articles of Organizations. One thing you need to note is that the Bylaws for the Corporations and the Operating agreements for the LLCs are not filled with the Secretary of State, but rather are kept at the corporate office.
3. You will need to hold your first official meeting for the corporation or LLC and then adopt the Bylaws in the case of Corporations, and for LLCs and Operating Agreement.
This is usually a legal meeting and should be recorded.
4. The next step will involve applying for an Employer Identification Number (EIN) or the Federal Employer Identification Number (EIN) under your corporate name.
In the State of California, You will also have to file with the Employment Development Department (EDD). This particular department issues the employer account numbers which is sometimes referred as the State Employer Identification Number, SEIN, or state ID numbers.
5. With the help of an attorney, obtain any specific licenses and permits that are required either by the state or the country that will assist you to do business.
Some of these permits include:
• Trucking licenses
• Electrician’s Licenses and permits
• Liquor licenses among others
You should also note that this specific licenses cannot be obtained at the Secretary of State but the Governor’s Office of Economic Development.
Officers and Documents
The directors in the corporation do not need to be named on the Articles of Incorporation, this can be filled by an incorporator. However, in case the director is named, then they will have to sign the document. Nonetheless, the incorporators do not have to be listed in the Articles of Incorporation.
What forms are required during the incorporation of a business?
A) Articles of Incorporation-There are usually five types and depending on whether the corporation is closed, professional, common interest or non-profit mutual benefit.
B) Corporation Disclosure Agreement-This form is filled annually for publically traded stock-issuing corporations.
C) Certificate under Corporations Code Section 1505-this particular form is usually issued to designate an agent of process.
D) Name Reservation Form– This form is usually used to verify and reserve a corporate name before the Articles are filled. It is usually valid for 60 days.
E) The Statement of Information– this form is to be filled within 90 days of the original incorporation and then annually. The form provides the state information about the corporate officers and the structure.
You should also note that there is a different structure for non-profits. The Statement of information form restates the original information of the business, such as the nature of the corporation and the contact information.
Costs for incorporation in California
The fees for incorporation in California are usually $100 for Article filling, plus an additional $15 over the counter handling fee. The cost to incorporate in the state of California will also involve filing an initial report that is known as the California Statement of Information within 90 days of your incorporation that costs a flat rate fee of $25 and a $75 service fee.
On an annual basis, the Secretary of State requires that all the corporations file an annual report by the end of the anniversary month that costs $25.
Lastly, while it is possible to file your own article so incorporation, it might be a smart move for entrepreneurs and new business owners to choose to look for an experienced lawyer or attorney to help ensure that you have completed all the necessary paperwork and requirement that are needed by law.
Mollaei Law is a law firm specializing in business law serving businesses and entrepreneurs. We provide legal expertise in all stages of business development by drafting and reviewing contracts and agreements, assisting transactions and negotiating, forming LLC’s and Corporations, registering trademarks and copyrights, business planning, and answering any legal questions you may have about your business.