Good morning mehtasachin and thank you for the question. I have tried
to put these steps in the appropriate order. I know it is a lot of
information to take in but I feel it is important information in order
to form your corporation correctly.
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1. Start with a business plan. Sales, marketing, advertising,
promotion and location are just some of the aspects of creating a
plan. A great place to visit for help with starting a plan is:
US Small Business Administration
( http://www.sba.gov/starting_business/planning/basic.html )
Additionally, determine your ?officers? ? president, chief financial
officer and secretary.
"A corporation is owned by its shareholders, governed by its Board of
Directors who are elected by the shareholders and managed by its
officers who are elected by the Board. A shareholder's involvement in
managing a corporation is usually limited to extraordinary matters.
Use of the corporate form of business does not require a large number
of people. In California, a corporation may have only one shareholder
and one director. All three required officer positions, president,
chief financial officer and secretary may be filled by one person.
When a California corporation has two shareholders, there must be at
least two Board members. When there are three or more shareholders,
there must be at least three persons on the Board. Since the Board is
the governing body of the corporation, when there are three
shareholders, a party owning the majority of the shares can still be
outvoted on the Board on such important matters such as sales of
additional stock and the election of officers. Removing a director
involves certain risks even when a founder has the votes to do so.
Thus, a founder's careful selection of an initial Board is essential."
Source: Guide to Starting a California Corporation
( http://biz.usatoday.findlaw.com/business_organizations/choosing/source/library/su_structures/articles/fw000020.html
)
This web page describes the different types of business; Sole
Proprietorship, Corporation, Limited Liability Company, Limited
Partnership,
General Partnership, and Limited Liability Partnership:
( http://www.ss.ca.gov/business/filings.htm )
Additional reading:
Which Legal Form Is Best for Your Business? Choosing the right form
has a lot to do with who will own your business and what its
activities will be.
( http://www.inc.com/articles/2000/06/19438.html )
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2. Though it is not required, it is suggested that you reserve a
corporate name prior to submitting documents to the Secretary of
State's office.
You can check the availability of a corporate name by mailing a Name
Availability Inquiry Letter to the Secretary of State's office in
Sacramento. The letter can be viewed at:
( http://www.ss.ca.gov/business/corp/pdf/naavinquiryform.pdf )
A request to reserve the corporate name can be made over the counter
at any Secretary of State office location or can be addressed in
writing to the Sacramento office. Fees and instructions for reserving
a corporate name are included on the Name Reservation Request Form,
found at:
( http://www.ss.ca.gov/business/corp/pdf/naavreservform.pdf )
When picking a name, remember the following:
a. The Secretary of State's office cannot file a document which
contains a name that is "likely to mislead the public or which is the
same as, or resembles so closely as to tend to deceive," the name of
a domestic or foreign (out of state or country) corporation that has
registered with this office or a name which is under reservation for
another corporation. (California Corporations Code sections 201(b) and
2106(b))
b. A corporation may adopt a name that is similar to, but not the same
as, the name of an existing domestic or foreign corporation if the
existing corporation consents in writing to the use of the name and
the Secretary of State's office finds that under the circumstances the
public is not likely to be misled. The consent letter should be
submitted on the letterhead of the consenting corporation, signed by
an authorized officer of that corporation. If a proposed name is
reserved utilizing consent, a currently dated consent must accompany
each renewal request.
c. The corporate name may not falsely imply governmental affiliation.
d. All names must use the English alphabet or Arabic numerals (0, 1,
2, 3, 4, 5, 6, 7, 8, 9) or a combination thereof. Roman numerals are
treated as letters and not translated into their numeric equivalent.
Symbols are not allowed in an entity name; except, an ampersand & may
be used in an entity name as a conjunction in place of the word "AND".
e. There is no distinction between upper and lower case letters, typeface or font.
f. The words "bank", "trust", "trustee" or related words may not be a
part of the corporate name of a domestic corporation unless a
Certificate of Approval from the Commissioner of Financial
Institutions (Commissioner) is attached to the Articles of
Incorporation. If the proposed corporation is subject to the Banking
Law, the articles must include the endorsement of approval from the
Commissioner. (California Corporations Code section 201 and Financial
Code section 400.)
g. The words "credit union" or related words may not be a part of the
corporate name of a domestic corporation unless a Certificate of
Approval from the Commissioner of Financial Institutions
(Commissioner) is attached to the Articles of Incorporation. If the
proposed corporation is subject to the Credit Union Law, the articles
must include the endorsement of approval from the Commissioner.
(Financial Code section 14100.)
h. If the business of the corporation is to be an insurer, a
Certificate of the California Insurance Commissioner approving the
corporate name must be attached to the Articles of Incorporation
(California corporation) or to the Statement and Designation by
Foreign Corporation form (out-of-state or country corporation) at the
time of filing. (California Corporations Code sections 201.5 and
2106.5.)
i. The word "cooperative", or any abbreviation or derivation thereof,
or a word similar thereto, may not be a part of a corporate name
unless the corporation is incorporated within the definition of
California Corporations Code section 12311(b). If the applicant is a
foreign corporation, documentation must be included indicating the
corporation is organized as a cooperative corporation under the laws
of the foreign jurisdiction.
j. The name of a close corporation subject to the provisions of
California Corporations Code section 158, must contain the word
"corporation", "incorporated" or "limited" or an abbreviation of one
of those words. (California Corporations Code section 202.)
k. The name of a corporation authorized to incorporate as a
professional corporation, pursuant to the Business and Professions
Code, must comply with the name style requirements of the regulatory
agency which has jurisdiction over the particular profession. Please
refer to the appropriate sections of the Business and Professions Code
and the regulatory agency for the specific type of profession
authorized.
l. Fictitious business names filed with the county cannot include
word(s) indicating corporate or limited liability company status
unless organized as such pursuant to the laws of the State of
California. (Business and Professions Code section 17910.5.)
Source: California Business Portal
( http://www.ss.ca.gov/business/corp/corp_naav2.htm#avail )
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3. File formal paperwork, usually called "articles of incorporation,"
(sometimes also known as a Certificate of Incorporation) and pay a
small filing fee (in CA, I believe the fee is $145.00).
"A corporation is created in California by filing articles of
incorporation with the Secretary of State. Its status is maintained by
compliance with statutory formalities."
Source: Guide to Starting a California Corporation
( http://biz.usatoday.findlaw.com/business_organizations/choosing/source/library/su_structures/articles/fw000020.html
)
Articles of Incorporation must be drafted to include all required
provisions and may include other provisions, such as the names and
addresses of the initial directors (though this is not required), if
those provisions are permitted under California law.
The document must be typed with letters in dark contrast to the paper.
Documents that would produce poor quality microfilm will be returned
unfiled.
The following at REQUIRED for Articles of Incorporation:
* * * * *
Article I ? NAME:
The Articles must include a statement of the name of the corporation,
which name must be exactly as you want it to appear on the records of
the Secretary of State.
EXAMPLE: The name of the corporation shall be _____________________
* * * * *
Article II ? This EXACT statement is required by the California
Corporations Code and cannot be modified.
"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 a statement as to the name and
California address of the initial agent for service of process. The
designated agent, whether an individual or a corporation, must agree
to accept service of process on behalf of the corporation prior to
designation. A corporation cannot designate itself as its own agent
for service of process. When designating another corporation as agent,
that other corporation must have previously filed a Certificate
Pursuant to Section 1505, California Corporations Code, with the
Secretary of State. When a corporate agent is used, the address of the
designated corporation must be omitted.
EXAMPLE: The name and address in the State of California of this
corporation's initial agent for service of process is:
Name: _____________________
Address: ___________________
City: ______________________
State: CALIFORNIA
Zip Code: __________________
* * * * *
Article IV ? The Articles must include a statement of the total number
of shares that the corporation will be authorized to issue.
EXAMPLE: The number of shares which this corporation shall have
authority to issue is 1,000 shares, having a par value of $10.00 each,
all of which shall be common stock.
OR
This corporation is authorized to issue only one class of shares of
stock; and the total number of shares which this corporation is
authorized to issue is _______.
* * * * *
The Articles of Incorporation must be signed by an incorporator, or by
directors, if initial directors have been named in the document. If
directors are named, each director must both sign and acknowledge the
articles. The names of incorporators or directors must be typed
beneath their signatures.
The original and at least two copies of the Articles of Incorporation,
together with the applicable fee, must be mailed or hand delivered to
the Secretary of State?s office in Sacramento:
Sacramento Office
1500 11th Street
Sacramento, CA 95814
(916) 657-5448
A self-addressed envelope and a letter referencing the corporate name
as well as your own name, return address and telephone number should
also be submitted.
You can also HAND DELIVERED the documents to the one of the regional
offices located in Fresno, Los Angeles, San Diego or San Francisco.
REGIONAL OFFICES DO NOT PROCESS MAILED IN DOCUMENTS.
Fresno Regional Office
1315 Van Ness Ave., Suite 203
Fresno, CA 93721-1729
(559) 445-6900
Los Angeles Regional Office
300 South Spring Street, Room 12513
Los Angeles, CA 90013-1233
(213) 897-3062
San Diego Regional Office
1350 Front Street, Suite 2060
San Diego, CA 92101-3609
(619) 525-4113
San Francisco Regional Office
455 Golden Gate Avenue, Suite 14500
San Francisco, CA 94102-7007
(415)557-8000
If documents are submitted to a regional office, a duplicate original
is also required.
An EXAMPLE of a California Article of Incorporation can be found on page 4 of:
( http://www.ss.ca.gov/business/corp/pdf/articles/corp_artsgen.pdf )
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4. The next step would be to file tax and employer identification documents.
The Franchise Tax Board (FTB) administers personal and corporate
income and franchise taxes for the State of California.
FTB For Businesses
( http://www.ftb.ca.gov/businesses/index.html )
Please visit ( http://www.taxes.ca.gov/CorpC.html ) for filing
requirements and other related questions.
If you have further questions, you can contact the Franchise Tax Board at:
(800) 852-5711
(916) 845-6500
* * * * *
The Internal Revenue Service (IRS) issues federal employer
identification numbers (FEIN) and administers federal payroll taxes,
including social security, Medicare, federal unemployment insurance
and federal income tax withholding.
Internal Revenue Service ? Businesses
( http://www.irs.ustreas.gov/businesses/index.html )
Please see ( http://www.irs.gov/businesses/small/article/0,,id=97860,00.html
) for information on how to apply for an FEIN.
"A California corporation may be an "S corporation" and not subject to
federal corporate tax if its shareholders unanimously elect S status
for the corporation on a timely basis. "S corporation" is a tax law
label; it is not a special type of corporation under California
corporate law. Like a partnership, an S corporation is merely a
conduit for profits and losses. Income is passed through to the
shareholders and is generally taxed only once. Losses are also passed
through to offset each shareholder's income to the extent of his basis
in his stock.
A corporation must meet certain conditions in order to be an S
corporation, including the following: (1) it must be a U.S.
corporation, (2) it must have no more than 75 shareholders, (3) each
shareholder must be an individual, estate, a specified type of trust,
or for tax years beginning after December 31, 1997, certain charitable
organizations, employee stock ownership plans or pension plans, (4) no
shareholder may be a nonresident alien, (5) it may not have any 80% or
more owned subsidiaries unless they are qualified Subchapter S
subsidiaries, and (6) it can have only one class of stock outstanding.
California now recognizes the S corporation for state tax purposes,
which can result in additional tax savings. Because of the one class
of stock limitation, however, a corporation contemplating a venture
capital financing in which preferred stock will be sold close to the
time of founding usually should not elect to be an S corporation.
Under federal tax law, the 50% exclusion from gain for certain small
business stock under Internal Revenue Code §1202 does not apply to
shares held in an S corporation. Another disadvantage of S status is
that undistributed earnings retained as working capital are taxed to a
shareholder."
Source: Guide to Starting a California Corporation
( http://biz.usatoday.findlaw.com/business_organizations/choosing/source/library/su_structures/articles/fw000020.html
)
* * * * *
The State Board of Equalization (BOE) issues seller's permits and is
responsible for the administration and collection of the states sales
and use, fuel, alcohol, tobacco, and other special taxes and fees.
For more information call:
1-800-400-7115.
State Board of Equalization
( http://www.boe.ca.gov/ )
* * * * *
The Employment Development Department (EDD) issues state employer
identification numbers and administers California's payroll taxes,
including Unemployment Insurance, Employment Training Tax, State
Disability Insurance, and California Personal Income Tax withholding.
"Generally, a business becomes subject to state payroll taxes upon
paying wages over $100 in a calendar quarter to one or more employees.
Wages consist of compensation for services performed, including cash
payments, commissions, bonuses, and the reasonable cash value of
noncash payments (like meals and lodging) for services. Once subject,
an employer must complete and submit a registration form to EDD within
15 days."
"A corporation operates without any employees except for the corporate
president. The corporation is an employer and is required to register
if the corporate president is paid wages of over $100 in a calendar
quarter."
Source: Employee Development Department
( http://www.edd.ca.gov/taxrep/taxreg.htm )
Please see ( http://www.edd.ca.gov/taxrep/taxform.htm#Forms ) to
select the form you need..
Include your federal employer identification number (FEIN) on the
registration form. Mail or fax your completed registration form to
the address or fax number below.
Employment Development Department
Account Services Group, MIC 28
PO Box 826880
Sacramento CA 94280-0001
Fax (916) 654-9211
Employment Development Department
( http://www.edd.ca.gov/taxind.htm )
Helpful Publications
( http://www.edd.ca.gov/formpub.htm )
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5. Every corporation must file Annual/Bi-Annual Statements. The type
of statement you file depends on the type of corporation you have. The
different types are:
A. Domestic Stock Corporations
B. Foreign Corporation
C. Publicly Traded Corporation
D. Domestic Nonprofit Corporations
E. Common Interest Development Association
You can view the different types of corporations and the proper forms for each at::
( http://www.ss.ca.gov/business/corp/corp_soinfo.htm )
Some general information regarding filling of your annual report:
Statement of Information or Corporate Disclosure Statements must be
filed with the Secretary of State within 90 days after filing the
original Articles of incorporation, and biennially thereafter. A blank
Statement of Information and a self-addressed envelope are provided to
the corporation at the time of filing the original Articles of
Incorporation.
Failure to file the required Statement of Information or Corporate
Disclosure Statements by the due date will result in the assessment of
a $50.00 penalty. (Corporations Code section 6810, 8810 or 9690;
Revenue and Taxation Code section 19141)
The applicable filing period is the calendar month during which its
original Articles of Incorporation were filed and the immediately
preceding five calendar months. A preprinted Statement of Information
and self-addressed envelope are mailed to each active corporation, to
the last address of record, prior to the applicable due date.
Filing fees vary by type of corporation. Please refer to the website
referenced about for the proper filing fee.
All documents must be mailed or hand delivered for over the counter
processing to the Sacramento office. The address is:
Sacramento Office
1500 11th Street
Sacramento, CA 95814
(916) 657-5448
Statements are NOT filed in regional offices.
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To ensure that you adhere to the California Code regarding
Corporations, please read the current code at:
Around the Capitol
(http://www.aroundthecapitol.com/code/contents.html?sec=corp )
BOOKS:
How to Form Your Own California Corporation (How to Form Your Own
California Corporation)
( http://www.amazon.com/exec/obidos/tg/detail/-/0873378261/002-4982708-3903242?v=glance
)
How to Start a Business in California: With Forms (How to Start a
Business in California)
( http://www.amazon.com/exec/obidos/tg/detail/-/1572481463/ref=pd_bxgy_text_1_cp/002-4982708-3903242?v=glance&s=ebooks&st=*
)
Small Business Start-Up Kit for California, The, 5th Edition
( http://www.amazon.com/exec/obidos/tg/detail/-/B0002MM6LW/ref=pd_sim_b_1/002-4982708-3903242?%5Fencoding=UTF8&v=glance
)
How to Form a California Professional Corporation, 7th Edition
( http://www.amazon.com/exec/obidos/tg/detail/-/B000219800/ref=pd_sim_b_6/002-4982708-3903242?%5Fencoding=UTF8&v=glance
)
I hope this answers your question. If you would like clarification
before rating my answer, please do not hesitate to ask!
Nenna-GA
Google Researcher
Sources:
Starting a Business in California
( http://www.ss.ca.gov/business/resources.htm )
California Department of Corporations
( http://www.corp.ca.gov/ )
Find Law
( http://smallbusiness.findlaw.com/business-structures/corporations/business-structures-articles-incorporation.html
)
NOLO
( http://www.nolo.com/article.cfm/objectID/EA3D3043-9A88-43F5-8DC869639F0F6E77/111/262/ART/
)
Source: Guide to Starting a California Corporation
( http://biz.usatoday.findlaw.com/business_organizations/choosing/source/library/su_structures/articles/fw000020.html
)
Google Search Terms:
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( ://www.google.com/search?hl=en&lr=&q=california+articles+incorporation+filing+instructions)
California tax and employer identification documents
( ://www.google.com/search?hl=en&lr=&q=california+tax+and+employer+identification+documents
)
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( ://www.google.com/search?hl=en&lr=&q=california+starting+corporation ) |
