How to Form a California Corporation in Nine Steps

You must first choose an available name for your business that differs from any other business name registered in California. You can search for available names with the California Business Search tool. You should also be familiar with California’s business name rules. For example, a California business name must not mislead the public and have a business entity identifier or abbreviation such as:

• Corporation
• Company
• Incorporated
• Incorporation
• Limited
• Corp
• Co
• Inc
• Ltd
• PC
• Professional Corporation

Once you have decided upon a suitable name, you can submit a name reservation online with the California Secretary of State for 60 days.

You should also determine that your name is available as a domain name on the Internet. To do this, you can look for the name on the ICANN domain registry website. Finally, you should verify that a trademark does not already protect the name. Search the United States Patent and Trademark Office (USPTO)’s trademark database for registered names.

A corporation needs a registered agent and registered office in the state. A registered agent is a person or entity that receives legal documents (known as service of process) on behalf of the corporation. Your registered agent must have a physical address in California. You can serve as your own registered agent if you are a California resident or have another California business entity.

Some entrepreneurs use a professional registered agent, such as our trusted partner, LegalZoom, to satisfy this requirement and keep their corporation in good standing.

You file articles of incorporation with the California Secretary of State’s office. To file online, you must set up a bizfile Online account. In the articles of incorporation, you will set forth the following:

• The corporation name
• The purpose of the corporation, such as “Any lawful act or activity for which corporations may be organized under the General Corporation Law of California.”
• The registered office address and the registered agent’s name
• The number of shares of stock the company can issue and the stock’s par value (per share).
• The name and mailing address of the incorporator.

Once the Secretary of State accepts the articles of incorporation, it will issue a business entity number unique to your corporation. Use this number in any subsequent filings, including the Statement of Information. Typically, the processing time for articles of incorporation filed online is within 24 hours or the next business day.

If you are in a profession requiring a license to practice, such as a lawyer or accountant, you must form a professional corporation in California.

California has an additional requirement for new corporations. A corporation must file a Statement of Information form with the Secretary of State within 90 days of filing the articles of incorporation. The statement asks for the corporation’s business address, officers, and registered agent. You can file the Statement of Information online with the Secretary of State. The filing fee is $25.

While California state law does not require corporate bylaws, they are critical to set forth your company’s rules and procedures. In your bylaws, you might include the following:

• Your company’s name and purpose.
• The roles of your directors and officers.
• When you hold scheduled meetings
• How many people are needed for voting on critical matters
• The number of corporate stock shares the company can issue
• The rule for amending bylaws, if necessary
• The rule for addressing conflicts of interest

The board approves the bylaws at the initial board meeting.

At your first board meeting, the directors hold an initial meeting to do the following:

• Approve the actions of the incorporators
• Adopt your corporate bylaws
• Elect the company officers (i.e., President, Secretary, Treasurer)
• Authorize first business steps, such as opening bank accounts and applying for licenses

The secretary should record notes of this meeting, known as “minutes,” as an important corporate record. Not keeping corporate minutes may raise questions about the legitimacy of your corporation, which is called “piercing the corporate veil.”

Stock represents the percentage of ownership of a corporation. If you hold 100% of the stock, you are the sole owner. When issuing stock, you assign “par value” (the minimum price the company can sell). The par value is not the actual market value. Typically, business owners assign “no par” value (meaning no minimum price) to their stock for simpler record keeping.

You will also want to open a business bank account for your corporation and transact all your business activities from that account to keep your business separate from your personal finances.

You will need to apply for an EIN (Employer Identification Number) from the IRS website. Your EIN is a federal identification number for a business. You use your EIN on corporate bank accounts, tax and employment accounts, and other transactions. There is no fee for the EIN if you apply directly. You can typically receive the EIN immediately if filing online.

To run your business, you must register for business, tax, and employment accounts. Check with your local county or town office for business registration requirements, such as business permits, licenses, or zoning permits.