A corporation is a business structure that provides a legal distinction between the company and its owners, who are known as shareholders. This separation means the business is responsible for its own debts and legal obligations. For entrepreneurs in California, creating a corporation involves a sequence of actions with state agencies. This process establishes the company as a formal entity, granting it the ability to enter contracts, own assets, and conduct business under its own name.
Choose a Corporate Name
The first step in forming a California corporation is selecting a name that complies with state law. The name must include a word such as “Corporation,” “Incorporated,” or an abbreviation like “Inc.” or “Corp.” to signify its corporate status. The chosen name must be unique and not misleadingly similar to any existing entity registered with the state.
To verify that a desired name is available, founders can use the online business search tool provided by the California Secretary of State. This database allows for a preliminary check to see if the name is already in use. This is a preventative measure to avoid the rejection of formation documents due to a name conflict.
If founders have a name but are not yet ready to incorporate, they can file a Name Reservation Request with the Secretary of State’s office. This action holds the name for the applicant’s exclusive use for 60 days. This provides time to finalize the remaining incorporation steps without another business claiming the name.
Appoint an Agent for Service of Process
Every corporation in California is required to designate an Agent for Service of Process. This appointee is the official point of contact for receiving legal documents, such as lawsuits, subpoenas, and other government correspondence. The agent ensures these communications are received and relayed to the company’s leadership in a timely manner.
There are two options for this requirement. The corporation can appoint an individual who is a resident of California. Alternatively, it can hire a registered corporate agent service, a company that specializes in this function. The agent must have a physical street address in California, as Post Office boxes are not permissible.
The agent’s information becomes part of the public record and is accessible through the Secretary of State’s office. Selecting a reliable agent is a compliance step, as failure to maintain a valid agent can have serious legal consequences for the corporation.
File the Articles of Incorporation
The legal creation of a California corporation is formalized by filing the Articles of Incorporation with the Secretary of State. This document, Form ARTS-GS for a general stock corporation, serves as the corporation’s charter and establishes its legal existence. Compiling the information for this form requires careful attention to detail.
The form requires several pieces of information, including:
- The exact corporate name that was previously selected and verified for availability.
- A statement of business purpose; this can be a general statement to engage in any lawful act or a more specific one.
- The street address of the corporation’s principal office.
- The name and California street address of the appointed Agent for Service of Process.
- The total number of shares the corporation is authorized to issue. This number represents the maximum shares the company can sell and does not need to be the number immediately issued.
Once completed, the Articles of Incorporation can be filed with the California Secretary of State online, by mail, or in person. As of 2025, the standard filing fee is $100. Upon successful filing and approval, the state officially recognizes the corporation’s existence, allowing it to begin operations.
Establish Corporate Bylaws and Hold Initial Meetings
After the Articles of Incorporation are approved, the focus shifts to internal governance. The next step is to create corporate bylaws, which are the internal rules that dictate how the corporation is managed. These bylaws are not filed with the state but are a legally significant internal document. They provide a framework for operations, covering procedures for board and shareholder meetings, voting, and the duties of officers.
With the bylaws drafted, the corporation must hold the first meeting of its board of directors. During this foundational meeting, several actions are formally documented. The directors will officially adopt the bylaws, making them the governing rules of the corporation.
During this meeting, the board also appoints the corporation’s officers to manage day-to-day affairs, such as a CEO, CFO, and a Secretary. Another action is authorizing the issuance of stock to the initial shareholders. All decisions from this meeting must be recorded in official documents known as meeting minutes, which serve as the legal record of the board’s proceedings.
Fulfill Post-Formation Federal and State Requirements
Once the corporation is formed, there are several compliance tasks to complete with federal and state agencies. A primary requirement is to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The EIN is a unique nine-digit number that functions like a Social Security number for the business and is necessary for filing federal tax returns, opening a bank account, and hiring employees.
Within 90 days of filing the Articles of Incorporation, the corporation must submit an initial Statement of Information (Form SI-550) to the California Secretary of State. This statement requires disclosing the addresses of the principal office and the names and addresses of the directors and officers. After this initial filing, the statement must be filed biennially to keep state records current.
The corporation must also address its tax obligations with the California Franchise Tax Board (FTB). This includes paying the minimum annual franchise tax, which is $800 for most corporations. This tax is due even if the corporation is not actively conducting business or operates at a loss.
Regular corporations are required to file a California Franchise or Income Tax Return (Form 100). If being taxed as an S corporation is advantageous, founders must file Form 2553 with the IRS to elect this tax status after the corporation is formed.