Where do you begin?
You need to file articles of incorporation at the California Secretary of State’s office. Make sure you find the Corporations division. Becoming a corporation in California isn’t cheap. According to one website, if you figure application fees, legal consultation, etc., it may cost around $2500.
Below are just a few of the requirements you need to have before filing for incorporation. As you can, you need to do most of the work prior to filing.
- Preferred name and alternate choices for your corporation, as well as company logo.
- Shareholders and board of directors should already be named. If you file to become a corporation in California, you may have as little as one shareholder and one board member.
- Bank accounts in the business’ name should also be set up.
- You must decide what type of corporation you want to be (e.g. S corporation).
How else can I incorporate?
Business owners today now have an option: the Internet. Many websites provide information and resources regarding incorporation. There are also websites that will incorporate you, for a fee. Once you have incorporated, you should head to Sacramento and file for incorporation. If you cannot travel to the state capital, you may file online. The “papers” will be sent to the Secretary of State.
Do I really want a corporation in California?
Some people innocently confuse a corporation with a limited liability company or a “LLC.” A limited liability company is harder to form than a corporation, but it comes complete with tax breaks like a partnership with fewer legal restrictions than an S corporation. This sounds great, but remember, you cannot publicly trade any stock. This type of company is available in California, as well as most of the United States.
What if I want to conduct business out of state?
If you want to incorporate in another state, it should be in close proximity to your initial incorporation state. A state-by-state incorporation will probably cost around $1000 in each state in which you want to incorporate.
Can I incorporate a non-profit venture?
You sure can. Under California’s corporations code (section 5000), you may incorporate religious, recreational, or even charitable ventures. You need to file for incorporation, just like a normal business. Be sure to make a check payable to California’s Secretary of State in the amount of $30 for all non-profit and non-stock business ventures.
I’m still confused about forming a corporation in California.
In addition to helpful websites, you can also find books on the subject. There is even a publication out there for incorporation specifically in California. Go to the library, read everything about California incorporation. Incorporations vary by state.
Is it hard to do?
If you have worked for years trying to incorporate, then it shouldn’t be hard. You need drive and determination in order to incorporate a business. You need the same qualities in order to run the business. If you don’t have a fire in your belly, you may not be successful anyway.
By Michelle Presbury