Should you form your corporation in California? We’ve collected the relevant information that will help you make this decision.
- Popular destination for young professionals
- Large and wealthy population base
- Minimal disclosure of owners
- High cost of living
- High corporate tax rates and annual minimal fees
- High competition for skilled workers
- Possible stringent regulations at city and state levels
Cost of doing business
- $100 filing fee / $25 annual statement
- 8.84% corporate tax rate
- Director names in annual report
Forming your corporation in California
Your official name for your corporation will need to end with one of the following signifiers (or a relevant abbreviation): “incorporated”, “Company”, or “corporation.” In addition, it is required that the name of your business is not intentionally misleading to consumers, for any reason. Your company’s new name must also be completely unique, and not deceptively similar to any other organizations name or trademarks. There are also some naming restrictions placed on certain financial institutions. Do a FREE name search now.
You will need to form an official board of directors when incorporating in California.
- Required number of directors
California corporations must have at least three directors listed in their incorporation documents. However, if there are no ownership shares being issued, this requirement is waived. However, if a company has less than three directors, and has two or more shareholders, all of these individuals must be listed as directors
- Age restrictions
Directors of corporations located in California can be of any age.
- Residence restrictions
There are no residency restrictions imposed on the directors of C corporations in California. However, S corporations are only allowed to have directors located in the United States.
- What information needs to be included in the articles of incorporation?
California does not require the names or addresses of directors to be disclosed in incorporation documents.
Requirements for the articles of incorporation
The articles of incorporation is a document that must be filed to form your corporation in California. It must include:
California requires the number of initial shares outstanding, and their par value, to be disclosed during the incorporation process. The number of outstanding shares does not affect initial state filing fees.
The State of California does not require officer information to be disclosed during the filing process.
Registered agent information
All California corporations must have a registered agent on file and submit their name and physical California address (which cannot be a P.O. Box). This agent will be required to be accessible during standard business hours and acts as the state’s point of contact with the company. Learn more about California registered agents.
Additional California filing requirements
Professional service companies are permitted to form as PCs, or professional corporations in California.
Initial report deadlines
All corporations in California must file an initial report within 90 days of incorporating. Learn more about initial reports.
Corporate record keeping requirements
Corporations are required to keep formal documentation regarding several of their operations including:
- A copy of the company bylaws, and their amendments. Learn more about corporate bylaws.
- Meeting minutes for all shareholder and director meetings.
California corporation taxation and fee requirements
There are several tax and fee requirements that must be addressed by corporations in California. They are as follows:
All states have complex taxation requirements. Generally, the California corporate income tax rate is 8.84%. For more information regarding taxes in California, it is advised that you visit the state’s official business related website.
Annual report requirements
Corporations in California are required to file a biannual report (referred to as a Statement of Information) every other year during the five months preceding the company’s anniversary month. The cost of this filing is currently $20. The State of California also imposes a franchise tax, which carries a $900 minimum, which corporations are exempt from in their first year. Learn more about annual reports.
Tax identification numbers
California requires an EIN (Employer Identification Number) for all corporations that will have employees, and most banks will require one to open accounts. California does not require corporations to obtain state tax ID numbers. Learn more about EINs.
Business license requirements
The business licenses and permits required in California vary wildly depending on the county or municipality where your new corporation is located. If you would like to see more in-depth information on licenses and permits, please feel free to visit the content in our learning library that covers business licenses and permits.