How to Form a Corporation in California

Looking to strike gold in the Golden State? Learn the steps to incorporate your business in California, including filing registration and tax paperwork, drafting corporate documents, and issuing stock.

By , J.D., USC Gould School of Law
Updated by Amanda Hayes, Attorney (University of North Carolina School of Law)

If you want to start a company and incorporate it in California, then you'll need to take some steps to officially register your corporation with the state. In addition to filing paperwork, you'll be responsible for creating internal corporate documents, issuing stock, and complying with federal and state tax laws.

Follow these eight steps to create your corporation in California.

1. Choose a Corporate Name

Your corporation's name can't be the same as, or too similar to, an existing name on record with the California Secretary of State (SOS). Your name also can't be misleading to the public, such as implying a connection with a state or local government or using the word "bank" when your company isn't an authorized financial institution.

The corporation's name can—but doesn't need to—include the words (or an abbreviation of them):

  • "Corporation"
  • "Incorporated," or
  • "Limited."

(Cal. Corp. Code § 201 (2023).)

The SOS provides a business entity name regulations guide that provides an explanation of the various rules and laws related to naming your corporation.

You can do a free preliminary check on the availability of a proposed name through the SOS's business search database. Before registering your corporation, you can reserve a name for 60 days by filing a Name Reservation Request Form with the SOS. You can mail in the completed form or file the form online using bizfile Online.

2. Appoint a Registered Agent for Your Corporation

Every California corporation must have an agent for service of process in the state. A registered agent is an individual or company that agrees to accept legal papers on the corporation's behalf if the corporation is sued. A corporation can't serve as its own agent for service of process. Your agent should agree to accept papers on behalf of your company and understand their name and address will be public information before they accept the designation.

Your corporation's registered agent can be:

  1. an individual who resides in California, or
  2. a corporate agent that's filed a Registered Corporate Agent for Service of Process Certificate (Form 1505) with the SOS.

The agent must have a physical street address in California, not a post office box. Small corporations typically name a director or officer to serve as the initial agent. A different agent can always be named later.

The SOS maintains a list of private service companies that can act as the agent for service of process; however, not all such companies are on the list.

3. File Articles of Incorporation

Your corporation is legally created by filing Articles of Incorporation - General Stock (Form ARTS-GS) with the SOS. You must include the submission cover sheet when you file your articles. You can submit your articles by mail or online with bizfile Online. As of 2023, there's a $100 filing fee to submit your articles of incorporation.

Your articles must include:

  • the corporation's name
  • the street address of the corporation's principal office
  • the name and street address of an agent for service of process (not a post office box address)
  • the corporation's mailing address if different from its principal office address, and
  • the number of shares the corporation is authorized to issue.

(Cal. Corp. Code § 201 (2023).)

The articles on the SOS website include a broad purpose statement. If your corporation will issue different classes or series of shares, you should specify the designation of each series or class and list how many shares can be issued under each class or series. If a class or series has special rights, privileges, preferences, or restrictions, you should include this information as well.

4. Prepare Corporate Bylaws

Every corporation has a set of rules that it must follow that lays out how the corporation will operate. These rules are outlined in a corporation's bylaws. Bylaws are an internal corporate document and don't need to be filed with the state.

Your corporation isn't required to have bylaws but it's highly advantageous to have them. This document gives officers, directors, shareholders, and outside investors an agreed-upon roadmap for how your corporation will be run and how decisions will be made. Having bylaws also shows banks, creditors, the IRS, and others (like investors) that your corporation is legitimate. This document can also help demonstrate that your corporation is its own entity separate from its officers, directors, and shareholders—preventing others from piercing the corporate veil and holding individuals in the corporation liable for corporate debts.

Also, set up a corporate records book where you can keep all of your corporation's important papers, including minutes of director and shareholder meetings. You can use a three-ring binder or you can order a special corporate records kit through a corporate kit supplier. Keep it at your corporation's book principal office.

5. Appoint Directors and Hold the First Board Meeting

The incorporator (the person who signed the articles) must appoint the corporation's initial corporate directors. These directors will serve on the board until the first annual meeting of shareholders when the shareholders will elect new board members (or elect the current board members for a new term).

The incorporator should complete an "Incorporator's Statement" showing the names and addresses of the initial directors. The incorporator must sign the statement and place a copy in the corporate records book. You don't need to file the statement with the state.

The first meeting of the corporation's board of directors should be held to:

  • appoint corporate officers
  • adopt bylaws
  • select a corporate bank
  • authorize the issuance of shares of stock
  • set the corporation's fiscal year, and
  • adopt an official stock certificate form and corporate seal.

Record all decisions made and actions taken by the directors in corporate minutes. If you want your corporation to be taxed as an S corporation, the directors should approve the election of S corporation status at the first meeting as well.

6. Issue Corporate Stock

After all the initial matters have been decided at the first directors' meeting, you should issue stock to the shareholders in return for their capital contributions. Shareholders can contribute cash, property, services, or all three.

Although not legally required in most states, small corporations usually issue paper stock certificates. Log each shareholder's name and contact information in the corporation's stock transfer ledger. California corporations don't need to establish a par value for their stock—a set amount below which the stock can't be sold. The board sets the value and number of the initial shares.

Federal and state securities laws classify shares of corporate stock as a security. So, you'll need to keep in mind applicable securities laws as you issue stock for your corporation. However, federal law exempts "private offerings": a non-advertised sale to a limited number of people (generally 35 or fewer). Thus, if you're issuing shares to 35 or fewer people, you don't have to worry about federal securities laws.

California has its own version of this federal exemption. To claim a limited offering exemption under state law in California, you must file a Section 25102(f) Notice Filing - Limited Offering Exemption Notice (LOEN) with the California Department of Business Oversight. You should file the notice within 15 days after your corporation issues stock.

You can file the notice online. As of 2023, there's a filing fee of $25 to $300. For more information, see the securities FAQ page on the Department of Financial Protection and Innovation website.

7. File a Statement of Information

Every California corporation and foreign corporation registered in California must file a Statement of Information (Form SI-55) with the SOS:

  • within 90 days after filing the articles of incorporation, and
  • every year thereafter during the applicable filing period (the filing period is between the calendar month during which the original articles of incorporation were filed and the previous five calendar months).

The form can be completed and filed online, or printed from your computer for mail or drop-off submission. As of 2023, the filing fee is $25. If your corporation has more than one director, you'll need to attach Form SI-550A as well.

8. Comply with Tax Requirements

All California corporations and foreign corporations doing business in California must pay California taxes to the California Franchise Tax Board (FTB).

Annual minimum tax: Every corporation that's registered or doing business in California must pay an $800 annual minimum franchise tax during the first quarter of each accounting period. The minimum tax applies to corporations regardless of whether they conducted business in California (unless the corporation's tax year was 15 days or less). For new corporations that qualify or incorporate with the SOS, the minimum tax doesn't apply. Instead, a new corporation's tax is measured based on its income for the first year and subject to estimate requirements. For all subsequent years, the minimum tax is $800.

Additional taxes: Corporations with income over certain levels must pay an additional fee based on their total annual income.

Filing procedures: Regular corporations must file a California Franchise or Income Tax Return (Form 100) by the 15th day of the fourth month after the close of their taxable year. Corporations that have elected to be taxed as S corporations file California S Corporation Franchise or Income Tax Return (Form 100S). For details and forms, see the FTB website.

EIN: Your corporation must obtain a federal employer identification number (EIN). You may obtain an EIN by completing an online application on the IRS website. There's no filing fee.

California Employment Development Department (EDD): A California corporation becomes subject to the state's payroll tax requirements if it pays more than $100 in wages in any calendar quarter. This rule applies even if a corporation operates without any employees except for the corporate president. The EDD issues employer account numbers (sometimes called "state employer identification numbers" or "SEINs") and administers California's payroll taxes, including Unemployment Insurance, Employment Training Tax, State Disability Insurance, and California Personal Income Tax withholding. For details, see the EDD website.

For more information, read our article about California state business income taxes.

Additional Guidance About Forming Your California Corporation

Corporations, as opposed to other business structures, require a relatively significant amount of initial preparation. To form your corporation, you'll need to know how many shares your corporation will be allowed to issue. After incorporation, you should prepare various documents, such as bylaws, an incorporator's statement, meeting minutes, and a shareholders' agreement. You'll also need to consider securities laws when you do issue stock. During this process, you might find it helpful to talk to a business attorney. They can help you prepare these documents or advise you on the language you need to include to stay compliant.

You can also use our online California corporation service, which will form a corporation for you, providing you with everything you need, including a corporate name check, articles, bylaws, a corporate records book, an incorporator's statement, minutes of the first meeting of the board of directors, stock certificates, and a stock transfer ledger.

For further education, check out Incorporate Your Business: A Step-by-Step Guide to Forming a Corporation in Any State, by Anthony Mancuso (Nolo). This book provides you with many corporate forms and explains the benefits of incorporating your business.

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