How to Form a California Corporation

Preparing your articles of incorporation

In California, a corporation is established by filing articles of incorporation with the Secretary of State. To incorporate, you will need to file articles of incorporation and pay a fee. The articles of incorporation must contain the following:

• Name of the corporation
• Corporate purpose
• Agent for service of process
• Street address of the corporation (cannot be a post office box)
• Number of shares being authorized in the corporation
• Signature of each incorporator

When defining the shares for the corporation, your articles of incorporation must meet the following requirements:

• If the corporation will have only one class of shares, the articles of incorporation must list the total number of shares the corporation is authorized to issue.

If the corporation will have more than one class of shares, or if any class of shares has two or more series, the articles need to specify the following:

• The total number of shares authorized in each class and each series
• The designation of each class or series
• The rights and restrictions that apply to each class or series. Alternatively, the articles can state that the board will determine these matters.

Naming your corporation

Before you incorporate your business, you can check the availability of your proposed business name by writing to the Secretary of State, or by using an online entity name check service. You can also reserve the name for up to 60 days by filing a Name Reservation Request Form with the Secretary of State and paying a small fee or by using an online entity name reservation service.

Your corporation’s name must also meet the following requirements:

• General stock corporation names do not need to include the words “corporation,” “incorporated” or “limited,” or their abbreviations.
• The name of your corporation cannot be the same as or deceptively similar to the name of an existing California corporation unless the existing corporation gives you written permission to use the name. The name also cannot be misleading.

Specifying incorporators

California requires new corporations to list the people or entities who are applying to form the corporation. California law provides that one or more natural persons, partnerships, associations, or corporations may form a corporation.

Incorporators are responsible for filing the articles of incorporation. If the articles do not name the initial directors, the incorporators can do whatever is necessary to finish setting up the corporation in California, including approving bylaws and electing officers and directors. Once directors are chosen, the incorporators have no further responsibilities.

Requirements for specifying incorporators are as follows:

• Only one incorporator is needed.
• The names and signatures of all incorporators must be listed on the articles of incorporation.

Specifying directors

Directors have the responsibility of setting and implementing corporate policy. Directors also have a fiduciary duty to the corporation and its shareholders, which means that they must always act in the corporation’s and shareholders’ best interests.

The requirements for specifying directors for your California corporation are as follows:

• A California corporation with three or more shareholders must have at least three directors. If a corporation has only one shareholder, it can have one or more directors. If a corporation has only two shareholders, it can have two or more directors.
• There is no maximum number of directors.
• California does not specify any eligibility requirements for directors.

Specifying a registered agent

The articles of incorporation must include the name of the corporation’s registered agent, also known as the agent for service of process or statutory agent. The registered agent is the person or corporation that will receive lawsuits or other legal documents that are served on your corporation.

A registered agent must be a person who lives in California or a company that has registered with the Secretary of State as a corporate agent.

Stating a corporate purpose

California law requires you to use the following language to state your corporate purpose. Most corporations use generic language that leaves open all possibilities within the bounds of the law. For example: “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.”

Determining incorporation bylaws

A corporation’s bylaws describe how the company will operate. Bylaws can also contain other rules for the operation of the company, including the way officers and directors are selected, their duties, and the way meetings are to be called and conducted.

The requirements for incorporation bylaws in the state of California are as follows:

• A California corporation is required to keep bylaws at its principal place of business in California. They are not filed with the Secretary of State.
• The bylaws must either specify the number of directors or set a minimum and maximum number of directors and state that the exact number will be decided by the board or the shareholders.
• Bylaws cannot include anything that is illegal or that conflicts with the articles of incorporation.

Costs of incorporating in California

The California Secretary of State requires a fee when filing articles of incorporation or reserving a corporation name. Corporations are also required to pay state and federal income taxes. Certain state tax exemptions apply.

California corporation formation FAQs

How much does it cost to form a corporation in California?

It costs $100 to file your articles of incorporation with the California Secretary of State. This is the basic fee that everyone pays to start a corporation in California. However, you'll have additional costs beyond this filing fee. You'll need a registered agent, which can cost $100-$300 per year if you hire a service.

You'll also pay an annual franchise tax of at least $800 to California, even if your business doesn't make any money. If your business makes more than $250,000 in gross receipts, you'll pay additional fees ranging from $900 to $11,790 per year. Think of it like getting a driver's license—you pay the initial fee to get it, but then you have ongoing costs to keep it valid.

What is a registered agent, and do I need one in California?

Yes, California law requires every corporation to have a registered agent. A registered agent is a person or company that receives important legal documents and official mail for your business. Your registered agent must have a physical address in California (not a P.O. box) and be available during normal business hours from 9 a.m. to 5 p.m.

They'll receive things like tax notices, legal papers, and government correspondence on behalf of your corporation. You can serve as your own registered agent if you live in California, or you can hire a professional service to do it for you. Many business owners choose to hire a registered agent service because it keeps their personal address private and ensures someone is always available to receive important documents.

What information do I need to include in my articles of incorporation?

Your articles of incorporation must include five key pieces of information required by California law. You need your corporation's official name, the physical address where your business is located, and your registered agent's name and address. You also need to describe your business purpose (most people use "any lawful act or activity" to keep it broad) and specify how many shares of stock your corporation can issue.

Finally, the person filing the documents (called the incorporator) must sign the articles. The California Secretary of State provides templates you can use, or you can create custom articles. Think of these articles like your corporation's birth certificate—they officially create your business as a separate legal entity.

How do I choose a name for my California corporation?

Your corporation name must be unique and not already used by another business registered in California. You can check if a name is available by searching the Secretary of State's business database online. Your name must include a corporate designation like "Corporation," "Corp.," "Incorporated," or "Inc." at the end.

You also can't use misleading words like "Bank" unless you're actually authorized to operate as a bank. Avoid names that are too similar to existing businesses, as this could cause legal problems later. You can reserve a name for 60 days if you're not ready to file immediately. This is helpful if you want to secure a specific name while you prepare your other documents.

What happens after I file my articles of incorporation?

Once California approves your articles of incorporation, your corporation legally exists, but you still have several important steps to complete. You need to hold your first board of directors meeting to adopt bylaws, appoint officers, and issue stock certificates to shareholders. You'll also need to get an employer identification number (EIN) from the IRS for tax purposes and to open a business bank account.

Within 90 days of filing, you must submit a Statement of Information to California with details about your directors and officers. Don't forget to get any required business licenses or permits for your specific industry. These steps transform your corporation from just paperwork into a functioning business that can legally operate and protect your personal assets.

What are bylaws, and do I need them for my California corporation?

Bylaws are internal rules that explain how your corporation will operate day-to-day. While California doesn't require you to file bylaws with the state, every corporation needs them to function properly. Your bylaws should cover how directors and officers are chosen, when and how meetings are held, and how important decisions are made.

They also explain voting procedures, record-keeping requirements, and other operational details. Think of bylaws as your corporation's instruction manual. You must keep your bylaws at your corporation's main California office, and they can't contradict your articles of incorporation or state law. Many business owners create bylaws during their first board meeting after incorporation.

Can I form a corporation myself, or should I use a service?

You can definitely form a corporation yourself by filing the Articles of Incorporation directly with the California Secretary of State. The process is straightforward if you use their templates and follow the instructions carefully. However, many people choose to use online legal formation services like LegalZoom because they handle the paperwork, provide registered agent services, and help with follow-up requirements like getting your EIN.

These services typically cost $79-$300 plus state fees, but they can save you time and reduce mistakes. Consider hiring an attorney if your situation is complex, such as having multiple shareholders, special stock arrangements, or a regulated industry. The key is making sure all requirements are met correctly to protect your personal assets and maintain your corporation's legal status.