COMPANY REGISTRATION (INCORPORATION)
In 2ServiceU Inc. we help you and guide you to the entire process to create your own Company, if you are thinking to register in California to do business. We are here to help you. You will need to accomplish certain requirements from City, State and Federal agencies that is our goal help you to understand and simplify you the complex steps to create your Corporation and keep in good standing.
Incorporating a business means turning your sole proprietorship or general partnership into a company formally recognized by California Secretary of State. When a company incorporates, it becomes its own legal business structure set apart from the individuals who founded the business. Through incorporation, the company’s owner or owners create a separate legal entity to transact business.
At the time of incorporation, California requires you to take the following additional steps:
- Articles of Incorporation.The document is required to form a corporation in California. C corporations are required to have a minimum of three directors listed in the documentation unless (1) shares have not been issued, then the number can be one or two, (2) the corporation has one shareholder, then the number can be one or two, (3) the corporation has two shareholders, then the number can be two. Additionally, there is a business name requirement if the corporation is being filed as a professional corporation (doctor, lawyer, etc.), or close corporation, or if it is using a person’s name. In such cases the business name must end with “Corporation,” “Company,” “Incorporated,” “Limited” or an abbreviation thereof. The name needs Superintendent of Bank’s approval if it contained the words “Bank,” “Banc,” “Trust” or “Trustee.”
- Authorized shares and par value (minimum stated value) must be listed in the Articles of Incorporation. An increase in the number of shares or par value does not affect initial filing fees.
- Initial Report.C corporations are required to file an initial report with the state within 90 days of incorporating.
- Registered Agent.C corporations must list the name and address of a registered agent with a physical address (no post office boxes allowed) in California. The registered agent must be available during normal business hours to accept important legal and tax documents for the business.
- Federal Tax Identification Number (EIN).An EIN is required for corporations that will have employees. Additionally, most banks require an EIN in order to open a business bank account.
After incorporating California also has the following ongoing requirements:
- Statement of Information and Franchise Tax. California requires corporations to file a Statement of Information annually during the first six-month period ending the last day of the anniversary month of the incorporation. The fee for the Statement of Information is $25. California also has a minimum annual franchise tax of $800 due the 15th day of the third month after the close of the year, but corporations are exempt from this tax for the first year.
- Corporate Records.California requires corporations to keep extensive records at the principal place of business.
Why choose a C corporation?
C corporations offer more flexibility than S corporations when it comes to the number of owners (shareholders) they can have as well as who can be an owner. Plus, the owners can hold different types of stock interests (such as preferred versus common stock.) This is one reason why venture capitalists choose C corporations when they offer funding to a business. Investors are drawn with the prospect of dividends if the corporation makes a profit. A C corporation can also retain and accumulate earnings (within reasonable limits) from year to year.
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