Incorporating in California is becoming more and more popular with entrepreneurs and business-minded individuals looking to increase their company’s worth and ability to attract investors while decreasing their exposure to liability. Incorporating in California offers shareholders protection from business debts and lawsuits, potential taxation benefits, and increased confidentiality. There are a number of factors that must be considered before deciding that a California corporation is the best suited for your company. If these factors are applicable to you and your business, then California Incorporation can offer a substantial advantage to you and your company.
Advantages of incorporating in California
We have all of the organizational documents to incorporate, form or organize any legal entity in the state of California. These are part of the document package that is required by the California Secretary of State to form a new business entity
- For additional California legal documents for new business formation, amendments and corporate maintenance, you can call a representative at the number on this web page or complete an inquiry form.
California Filing Requirements and Tips
- Initial directors list is not required, however if the directors are listed on the articles of incorporation, all directors must sign and acknowledge the articles.
- Initial directors of the corporation do not have to be named and the articles of incorporation can be executed by an incorporator.
- Every new business incorporation in California must include an initial agent for service of process. Companies Incorporated offers this service for free with every complete incorporation package.
- Corporations that are authorized to issue only one class of shares must identify the total amount of shares authorized to be issued in the articles of incorporation.
California business entity filing fees shown here are standard state filing fees that do not include expedited or faster service options.
|Entity Type||Details||CA Fee||Last Changed|
|Corporation||Domestic Stock Corporation||$100||01/2008|
|Corporation||Domestic Nonprofit Corporation||$30||01/2008|
|Limited Liability Company (LLC)||Articles of Organization||$70||04/2007|
|Limited Partnership (LP)||Certificate of Limited Partnership||$70||01/2008|
|General Partnership||Statement of Partnership Authority||$70||11/2006|
|Limited Liability Partnership (LLP)||Registered Limited Liability Partnership Registration||$70||01/2007|
California Incorporation – Factors to Consider
The decision to incorporate yourself or your company in California should be based on the business goals for your company, where you intend to conduct the business, and where you intend to bank and establish financial/credit footholds. If the vast majority of your business is to be conducted within the state, and you intend to open an account and establish lines of credit with a California bank, then it is easy to determine that this is the state you should incorporate in. The reason for this is that some states (like California) are now a bit more aggressive about digging into a corporation’s transaction and banking history, especially if all of the business is conducted in that state, yet the company is incorporated in a separate, low-taxation and regulation state. These states are becoming more aware of the tax revenue they are relinquishing to “foreign” corporations and are finding it financially feasible to dig deeper. Further, incorporating in the state you will ultimately conduct the most business in will save your corporation from having to pay excessive franchise fees in more than one state.
While California may not necessarily be a taxation haven (with state corporate tax at about 9% versus federal corporate tax of 35%) because it does charge a “corporate tax,” incorporating here can still offer considerable income and taxation benefits for your company if the proper formation decisions are made.
It is also imperative to remember that you observe the general corporate formalities once your corporation is formed. This will help ensure the integrity of your “corporate veil” and provide you and your corporation with the liability, asset, and tax protection and benefits that incorporating in California can offer.
Assuming that you indeed intend to conduct business in California, establish a financial foothold there, and observe the formalities, then it makes perfect sense to incorporate in California.
Advantages of Incorporating in California
- Asset Protection from Liability. Incorporating in California offers protection for Officers and Directors from personal liability against any lawsuits or business debts arising from the operation of the corporation or by actions committed on behalf of the corporation. The extent of liability exposure is limited to the amount of initial investment.
- Stock Flexibility. California corporations may sell, transfer, gift, or purchase shares of it’s own corporate stock. A corporation may issue stock for cash, property and services. Directors can determine the worth or value of the stock, and the stock can be in any quantifiable form: property, capital value, liquid funds, etc.
- Credibility. California Incorporation will increase the “credibility” of your company, and will increase the amount of investor interest in your company. It speaks of “serious business” when your company is incorporated.
- Management Flexibility. California only requires three officer positions: president, chief financial officer and secretary. These three positions may be filled by one person. If a California corporation has two shareholders, there must be at least two Board members. If there are at least three shareholders, then there must be at least three members on the Board.
- Confidentiality. Only the director and the resident agents are disclosed as a matter of public record in California. Stockholders’ names are not a matter of public record. Further, depending on the type of formation (LLC, etc.), a corporation can hold shares of stock.
- Tax Advantages. California corporation taxes are only 9%, with sizable advantages available depending upon the type of corporation formed.
California has the highest amount of individuals filing self-employed income tax returns in the nation, it has the third highest population of Corporations and is number one when it comes to Limited Liability Companies formed. Incorporating in California can be completed in as little as 4 hours with Class A expedited services or you can choose to incorporate in California in 24 hours with Class B expedited filing. Please note that Companies Incorporated performs all of the necessary documentation and delivery for you as part of our service and extends all state expedited options to our customers.
You can incorporate domestic Stock (General For Profit), Professional, Non-profit and Foreign corporations in California. Some more information on Corporation Types. Companies Incorporated can prepare and file your documents with the state for any type of California Corporation, however our automated online process caters to domestic stock corporations, the most common form of corporation. To incorporate in California, forming a business corporation of any kind, Articles of Incorporation and minimum 2 copies of the articles are submitted to the appropriate state branch office. Both copies will be certified by the Secretary of State for no additional charge, additional copies should be submitted along with an $8 certified copy fee. The Sacramento branch office will file and record mailed in or hand delivered documents, otherwise your documents MUST BE hand delivered to any other branch office. Pre-clearance and special handing is only available in Sacramento, not the regional offices.
Companies Incorporated handles all of your document creation, delivery and filing with the state office for all of our customers. We will hand deliver your articles to the state with the filing fees and any additional state fees. Our system enables us to communicate directly to the state offices. We are the fastest and easiest way for incorporating in California.
Please note: When you form a California Corporation, it is subject to franchise tax requirements until it is formally dissolved. You can find more information regarding California Franchise Tax at the Franchise Tax Board website.
LLC — Limited Liability Company Formation
Forming a Limited Liability Company (LLC) is becoming increasingly popular, a relatively new business entity with outstanding flexibility. You can incorporate in California, forming an LLC or corporation in much the same manner. There are some different organizational matters for LLC’s, as well as additional tax classifications available. If your LLC is not taxed as a corporation there are Franchise Tax Board obligations annually, the minimum being $800 and a fee based on the total yearly income of the company. More information on LLC Tax Classifications.
Additional Resources to Incorporate in California
Some of these state and government offices maybe be useful if you are incorporating in California, depending on what type of entity you form, where you incorporated and the nature of your business.
- Franchise Tax Board – information regarding franchise tax requirements.
- Board of Equalization – information regarding sales tax and use tax liability.
- Department of Corporations – information regarding issuance and the sale of securities in California, Franchise Investment Legal Requirements, Personal Property Brokers Law and Escrow Law requirements.
- Department of Insurance – information regarding insurance provider and insurer requirements.
- Division of Financial Institutions – information regarding the organization of financial institutions, banks and corporate name style requirements.
- Department of Consumer Affairs – information regarding specific licensing requirements.
- Employment Development Department – information regarding disability and unemployment insurance tax.
- Department of Industrial Relations, Division of Worker’s Compensation – information regarding corporate workman’s compensation requirements.
- City and/or county clerk and/or recorder where the principal place of business is located – for information regarding business licenses, fictitious business names (if doing business under a name other than the corporate name), and for specific requirements regarding zoning, building permits, etc. based on the business activities of the California corporation.
- Internal Revenue Service (IRS) – information regarding FEIN, or Federal Employer Identification Numbers, Tax ID’s for business entities.
California Expedited Filing Services
When you incorporate in California, you can choose standard processing which can be up to 4-6 weeks in just the state office turn around time. There is a simple expedite upgrade that can have the state turn around your filing in as little as 2 weeks. There are 2 additional methods to have your articles processed by the state in either 24 or 4 hours. Class A and B expedited service.
|Expedite Level||Processing Time||Fee||Description|
REQUIRES PRE CLEARANCE
|4 Hours||$500||Articles submitted by 10:00AM, you will have filing response or confirmation by 2:00PM|
|Class B||24 Hours||$350||Articles submitted by 11:00AM, you will have filing response or confirmation the next business day by 11:00AM|
PLEASE NOTE: Class A requires a pre clearance approval with additional state fees and acceptance periods, so Companies Incorporated does not offer this class. Class B is for corporations only. There is no 24 hour for LLC’s unless the incorporator submits a letter to the state as to reason for expediting. Where the state will either approve or deny the request based on their opinion.
It should be apparent that incorporating in California offers a tremendous amount of benefits in the form of protection from liability, asset protection, taxation, and business flexibility. If you incorporate in California you will make your company more credible, and the increased credibility will be an excellent way to attract investors all the while safeguarding shareholders’ personal assets from liability. With a diligent implementation and business development strategy, you can build your business into a highly competitive, investment-attracting entity.
California Articles of Incorporation
|Article I:||The articles must include a statement of the name of the corporation.|
|Note: The name must be exactly as you want it to appear on the records of the California Secretary of State.|
|Article II:||This exact statement is required by the California Corporations Code and should not be altered.|
|The purpose of the corporation is to engage in any lawful act or activity for which a
corporation may be organized under the General Corporation Law of California other
than the banking business, the trust company business or the practice of a profession
permitted to be incorporated by the California Corporations Code.
|Article III:||The articles must include the name of the initial agent for service of process.|
Note: Before another corporation may be designated as agent, that corporation must
|Article IV:||The articles must include a statement of the total number of shares the corporation will
be authorized to issue.
|Note: Before shares of stock are sold or issued the corporation must comply with the
Corporate Securities Law administered by the California Department of Business Oversight. Information regarding authorization to issue shares can be obtained from their website at http://www.dbo.ca.gov/Licensees/Corporate_Securities_Law/ or by calling the California Department of Business Oversight at (916) 327-7585.
|Execution:||The articles must be signed by each incorporator, or by each initial director named in
the articles. If initial directors are named, each director must both sign and
acknowledge the articles. Note: If initial directors are not named in the articles, the
individual(s) executing the document is the incorporator(s) of the corporation. The
name of each incorporator or initial director should be typed beneath their signatures.
California Secretary of State Regional Offices
1500 11th Street
Sacramento, CA 95814
|San Francisco Regional Office
455 Golden Gate Avenue, Suite 14500
San Francisco, CA 94102
|Fresno Regional Office
1315 Van Ness Avenue, Suite 203
Fresno, CA 93721
|Los Angeles Regional Office
300 South Spring Street, Room 12513
Los Angeles, CA 90013
|San Diego Regional Office
1350 Front Street, Suite 2060
San Diego, CA 92101