How to Incorporate a Small Business in California

How to Incorporate a Small Business in California

California has the highest population in the United States and houses a thriving business community. As a result, many companies have decided to incorporate their businesses in California, from the largest American companies such as Apple to the smallest family-run establishments. The major reason business owners decide to incorporate is to protect their personal assets. When you incorporate in California, your business becomes its own entity and isolated from your personal assets. Thus, if the business falters, your personal assets will not be dragged into the issue. Hathaway Law Attorney Daniel A. Higson can show you How to Incorporate a Small Business in California.

In California, the Secretary of State Business Entities Section processes and maintains records of all business entities, including partnerships, sole proprietorships, corporations, and limited liability companies (LLCs). To begin the process of incorporation, you must file the Articles of Incorporation, choosing between flexible purpose corporations and benefit corporations. Benefit corporations are more restrictive and document-intensive, because they hold companies to high standards that generate high quality impacts on society and the environment. Flexible purpose corporations allow for more relaxed requirements. Articles of Incorporation include basic facts about the corporation, such as the name of the business, the location, the number of stock shares the company is authorized to issue, and details about the management team and board of directors.

Filing the Articles of Incorporation requires a $100 filing fee that goes to the state, plus a $15 over-the-counter handling fee. You also must file an initial report, called the California Statement of Information, within 90 days of incorporation. This also includes a state fee of $25 (or $20 for non-profit) and a $75 service fee. Corporations must then file an annual report by the end of each anniversary month, which costs an additional $25 each time.

Similar to filing for taxes, you can file the Articles of Incorporation yourself, but many people find it useful to hire incorporation services to help make sure they have filed all the paperwork and requirements correctly. Also, California requires that a Registered Agent be hired to ensure that all official state and legal paperwork is received. If you want to file as a non-profit organization, similar paperwork is involved.

Below is an overview of the process of incorporating in the State of California:

  1. Make sure your business name is available (check California’s rules and regulations)

  2. File California’s Articles of Incorporation

  3. Hold an organizational meeting to establish your company’s bylaws

  4. Get a Federal Employer Identification Number (FEIN) and open a company bank account

  5. Get business licenses for the counties/cities where you will do business

  6. Submit your Statement of Information within 90 days of filing

If you have any questions or concerns about How to Incorporate a Small Business in California, the legal team at Hathaway Law would be happy to help you through the process. Call today!

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