C-Corp Formation In California

C Corp Formation in California
A corporation is not a little thing. It can do wonders if it’s operated properly such as protecting the shareholders from debts and liabilities, raising capital from investors, and much more. You can get business credibility and of course brand recognition as well. However, the question arises what state do you choose for your corporation formation

A Californian corporation could be the subtle answer. If a C-Corp is in the right hands, it can facilitate future sales for the company and can support transferable sales. Still, FastCorpUSA brings numerous reasons for you to choose the Californian state. 

Why Choose California?

The state of California is home to almost 4 million small startups. The number of employed people is almost 7 million. This shows the diverse population of well-educated people in the state. It is considered a hub of excellent skilled talent that you can source for creating a successful business. Some of the prestigious companies of the world like Disney, Apple, Intel, and Wells Fargo have their roots in this state. The state promises a prosperous creation of a C-Corp through its highly skilled workforce and robust business climate.

Form A C-Corp In California  

Are you looking for a guideline to strike right in the Golden State?  The detailed guideline is compiled for you to operate successfully in the state of California, including paperwork and requirements!

Californian Corporation Name 

You can’t choose a name that is already registered, or similar on record with the California Secretary of State (SOS). It mustn’t imply any other purpose or misleading the public in general. Your corporation can’t show any connection to any state or local government through its name. There shouldn’t be any abbreviations of ‘Corporation’, ‘Limited’, or ‘Incorporated’. 

Check out the SOS database for available names along with all rules and regulation guides! You must reserve the proposed business name for 60 days by filing a request for name reservation. 

Registered Agent Selection

A registered agent is a must-have in any American state you choose for expansion. Your corporation can’t act like its own agent and you need to outsource these services from some professional resource. That agent must work on your behalf for all legal matters of the corporation. In California, a registered agent must be someone who resides in California or an agent who’s filed a form 1505 with the SOS. There is already a list issued by the SOS of all private service companies from where you can outsource the agent services. 

File Articles of Incorporation 

Articles of incorporation are mandatory for creating your file legally with the SOS. You can submit these via mail and through your registered agent. You must include the submission cover while filing your articles. There is almost a $100 filing fee for these articles. 

Corporation Bylaws 

Corporate bylaws are important as these follow the layout of a corporation. These support the internal documentation and don’t need to be filed with the state. It’s highly advantageous to have these bylaws. It gives an agreed roadmap for shareholders, officers, investors, and directors. It’s must important to have a legitimate structure for a corporation in California state. 

Appoint Directors and Hold Meetings 

The first ever step is to appoint initial directors and conduct a meeting to decide the future of the corporation. The meeting minutes will include focusing on building business credit, especially in relevance to California’s contribution. The first meeting will also held for appointing corporate officers, selecting a corporate bank, adopting bylaws, authorizing the issuance of shares of stock, and setting the corporation’s fiscal year. 

Issue Stock 

Although this has already been decided in the meeting, your corporation now legally issues stock to the shareholders for their capital contributions. Shareholders are bound to contribute with property, cash, or services or all these three. Most corporations usually issue paper stock certificates although this is not a legal process in most of the states. In California, it’s good to go. Another reason to issue stock is for security. Federal and state security laws classify the stock. You need to consider all the applicable security laws for the corporation.

File Statement of Information 

Every foreign and California-registered corporation must file a statement of information with the SOS. The form SI-55 must be submitted within 90 days after filing the articles of incorporation. You can file it online or by dropping it off simply. The filing fee is almost $30. You also have to attach the form SI-550A along with the statement if your C-Corp has more than one director.

California Tax Requirements for Corporations 

 California taxes are not to be excluded when you are planning for a corporation journey. The US tax filing system is simple and the same goes for California. The corporations doing business in California must pay their taxes to FTB (California Franchise Tax Board). First, there is an annual minimum tax. This is almost $800 and this must be paid for doing any registered business in California. This could be paid during the first quarter of each accounting period. All taxes can also qualify for the cost of operating a C-Corp in the US. there is also a new corporation’s tax that is measured based on your C-Corp income. The minimum tax is $800 for all the subsequent years. 

Then, there are additional taxes. The additional fee must be paid based on the total annual income of the corporation. The filing procedure for the taxes is also simple to follow. Corporations must file a Form 100 which is an income tax return. This must be paid on the 15th day of the fourth month after the closing of the taxable year. Corporations must obtain an employer identification number (EIN). The US government allocates taxpayer identification numbers to businesses and California state is not an exception. The surprising fact is that there is no filing fee for it. 

Role of California Employment Development Department (EDD)

If a corporation in California pays more than $100 in wages in any calendar quarter then it is subjected to the payroll tax requirements. The rule applies to corporations with or without employees. The EDD is on roll for allocating payroll tax requirements to the corporations after noticing all their requirements. The department also issues SEINs or State employer identification numbers. The payroll taxes include employment training tax, unemployment insurance, personal income tax, and state disability insurance. 

Additional Guide About California Corporation Formation 

Out of all business structures, corporations need a significant amount of preparation. You need to know many things in detail such as how many shares your C-Corp will be allowed to issue. You should also prepare various documents such as meeting minutes, corporate bylaws, stock issuance paperwork along the shareholder’s agreement. Moreover, you need to consider securities laws as well before jumping into a legal pool. 

Talking to the right professional attorney will be of great help!

They can help you to prepare documents and to know about the California legal procedures in detail. They will also advise you on the language you need to include to stay compliant. 

You can visit our website or contact us at info@fastcorpusa.com. You will get everything you need to include for your corporate along with a detailed plan to follow. This includes all the necessary paperwork and state requirements.  

Author

  • Yusra Abid

    Yusra Abid writes SEO articles for businesses that want to see their Google search rankings grow. She has been working with writing challenged clients for over four years. She provides copywriting, ghost writing, coaching and blogpost services. Her educational background in Literature has given her a broad base from which to approach many topics. She enjoys preparing content for individuals who are facing challenges in professional dialects.

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About Fastcorp USA

Founded in 2012, FastCorpUSA is the largest company service providers for international entrepreneurs planning to set up bases in the United States. We help overseas entrepreneurs navigate the webs of governmental paperwork and ensure all members companies are compliant to the US laws.

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