California Incorporation Frequently Asked Questions
Information about California franchise tax or income tax
Any corporation ‘doing business’ in California is subject to the minimum franchise tax even if it is not qualified with the California Secretary of State. ‘Doing Business’ means actively engaging in any transaction for the purpose of financial gain.
If you qualified with the Secretary of State, your corporation is subject to the franchise tax until you dissolve your corporation.
- What is the minimum California franchise tax? Minimum tax is the amount you must pay the first quarter of each accounting period whether the corporation is active, operates at a loss or does not do business. The current minimum tax is $800. For new corporations that qualify or incorporate with the Secretary of State after January 1, 2000, the tax is measured based on their income for the year and subject to estimate requirements. For subsequent years, the minimum tax $800.
- More information about California Franchise Tax.
Do I need to reserve a corporate name?
No. While not required, it is suggested that you reserve the proposed corporate name, prior to submitting documents, because documents are constantly being received and processed and the availability of a name can change at any time.
How do I reserve a corporate name?
The reservation of your corporate name will be handled by IncParadise and is included in the price of our service.
Do I have to renew my name registration?
How do I incorporate in California?
When using our service, IncParadise will file, on your behalf, the required administrative forms and articles of incorporation with the appropriate California agency.
Is a registered agent required?
Yes. The registered agent must either be (1) a natural person residing in California or (2) a corporation which has been approved to serve as a registered agent in the state. As part of our ongoing service, IncParadise does provide a registered agent service option that you can select during the online registration process.
How many Incorporators are required to form a corporation in California?
One or more are required.
How many Directors are required to start a corporation in California?
Three or more, subject to the following exceptions: (1) before shares are issued, the number may be one or two, (2) so long as the corporation has only one shareholder, the number may be one or two, (3) so long as the corporation has only two shareholders, the number may be two.
Are corporations in California required to file an Annual Report?
Yes. An initial statement of officers must be filed within 90 days after filing original articles, and every year thereafter in the applicable filing period.
CA Franchise Tax for LLC
If I am setting up an LLC, when do I have to pay the franchise tax and how much do I have to pay?
As on the CA Franchise Tax website:
LLCs classified as partnerships or disregarded entities are subject to an $800
annual tax if they are doing business in California, or the California Secretary of
State accepts their articles of organization or certificate of registration. The annual
tax is pre-paid for the privilege of doing business in California and is due on the
15th day of the fourth month after the beginning of the taxable year. LLCs must file
form FTB 3522, LLC Tax Voucher, to pay the annual tax.
Due date for first year annual tax:
• A domestic LLC has until the 15th day of the fourth month after filing its articles
of organization with the Secretary of State to pay the first year annual tax.
• If an existing foreign LLC registers or begins doing business in California after
the 15th day of the fourth month of its taxable year, the first year annual tax is
due immediately upon commencing business in California or registering with
the Secretary of State.
When is the Statement of Information due?
The Statement of Information (Initial List) is to be filed with the CA Secretary of State within 90 days after filing the original articles.
Are there any stock restrictions for CA?
California does not have maximum shares or maximum stock restrictions for your corporation.
What is the minimum number of directors for CA corporation?
The minimum number of directors for a CA corporation is 3 except
– Before shares are issued, the number may be 1 or 2
– So long as the corporation has only 1 shareholder, the number may be 1 or 2
– So long as the corporation has only 2 shareholders, the number may be 2
How long does it take to register a company in CA?
The normal processing time for California is 5 to 6 weeks. You can hire a Private Service that can reduce the time to 10 days.
Who can organize a CA LLC?
The minimum number of organizers can be 1. An organizer may be an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign and need not be members of the LLC.
What can I name my LLC?
The last words of the name must contain limited liability company, LLC, L.L.C., or Ltd.and Co. The name must not contain the words bank, trust, trustee, incorporated, inc.,corporation, corp, insurer, insurance company or any other words suggesting that it is in the business of issuing policies of insurance and assuming insurance risks.