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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?
No.
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.
Didn’t find answer to your question? Email as at info@incparadise.com
Incorporate in California
Incorporate in California
The economy in California is one of the strongest in the country with health, education, and business services sectors being the most enterprising in recent times. New business incorporation in California has been taking place quite rapidly with Los Angeles County being quite the favorite for small and medium enterprises (SMEs).
Whether it is favorable business climate or privacy that you seek, the state of California offers lucrative business opportunities. This is probably the reason why the state is considered as one of the fastest for spawning new businesses. According to the U.S. Census Bureau, Beacon, business creation rate in California is a good 11.4% as compared to the rest of the U.S, which is at 10.1%.
Why Choose California for Incorporation?
There are several reasons why there has been a rise in company incorporation in California and one of these reasons is the advantages that businesses enjoy. Some of the advantages include:
Asset Protection
Incorporation in California will provide protection to Directors and officers of an organization from personal liability against any business debts or even lawsuits that may arise during the operational phase of their corporation. Such a situation could also arise from the actions committed on behalf of your corporation.
Note: The extent of personal liability exposure will be limited to the amount of initial capital investment.
Flexibility in Management
When you set up a company in California, your corporation will require only three positions to start with and they are: president, secretary, and chief financial officer (CFO). The above mentioned positions can be filled by a single individual. If your California Corporation consists of 2 shareholders then there has to be a minimum of 2 board members.
Tax in California
Corporations in California are taxed at only 9% and other tax benefits are available depending on specific types of corporation being formed.
Flexibility in Stock
One of the remarkable advantages of company incorporation in California is that corporations can sell, gift, transfer, or even purchase shares of their own corporate stock. A California Corporation can also issue stock for property, cash, and other services. Directors have the flexibility of determining the value or net worth of stock, and this stock can exist in a quantifiable form like capital value, property, and liquid funds among others.
Credibility
Company incorporation in California will help in increasing the overall “credibility” of your business, which will further develop investor interest in your organization.
How do you incorporate in California?
If you are planning to set up a company in California then you will be required to follow certain procedures that will aid in the formation of your Corporation or LLC. We at incparadise.net have specialists on our team who can guide you towards setting up or forming LLC, California C Corporation, and California S Corporation in the shortest possible period.
Here is a step by step procedure towards incorporation in California:
Type of Business
You need to identify the type of business you want to start with. You can choose from a general stock corporation, a non-profit mutual benefit corporation, close corporation, LLC, Limited Partnership (LP), General Partnership (GP), or Limited Liability Partnerships (LLP).
Business Name
The second step is to identify a name for your business along with the required suffix, which will indicate the type of business entity you have formed. If you opt for company incorporation in California then it is essential to check up a corporate name and reserve it with the Secretary of State prior to filing your Articles of Incorporation. You can find detailed information on checking names here.
Note: It is important to check because if the chosen name is not available after the submission of the Articles of Incorporation then your incorporation documents will be rejected.
Registered Agent
You will need to name a registered agent who will be responsible for initiating the processing of your Articles of Incorporation. As a California registered agent like incparadise.net, we can receive any and all legal and business related paperwork on your behalf.
Articles of incorporation
You will need to file articles of incorporation, which we can always file on your behalf through the standard process or online or through expedited process.
Date Stamped Copies
As a part of the process of company incorporation in California, we will ensure, you receive date-stamped and filed copies that verify that the state has filed as well as formed your corporation.
Costs and Fees associated with California Incorporation
What would it cost to set up a company in California? Is it expensive? Is it time consuming and exhaustive? All we can say is that “You are in good hands!”
California LLC and Corporation Registration and Formation
California LLC and Corporation Registration and Formation
The Gross State Product of California is $2,459 billion and its $2.46 trillion economy is the 6th biggest in the world today. It offers just the kind of profitable business environment that you have been searching for. You can harness the existing infrastructure and benefits of forming an LLC or corporation and experience tremendous growth from a long-term perspective. Are you ready to form a business in California?
If you have decided on company formation in California then it is probably one of the best business decisions you can ever make. The decision is the easy part but the registration and formation can be time consuming. Whether you are thinking of forming an LLC or incorporating in California, here’s some information that will definitely guide through the process.
Where do you begin? The process for California LLC and Corporation registration and formation may seem like an exhausting one but once you have hired a California registered agent like us, we will ensure, the entire process is simple and quick.
Let’s take a look at how to form a California business corporation or LLC.
California LLC Registration and Formation
If you are planning to form an LLC in the state of California then it comes with limited liability and several other benefits. The procedure for registration and formation of LLC is as follows:
Step 1 – Hire a registered agent
According to California law, every business is required to maintain a Registered Agent. The agent should have the authorization to work as a registered agent in the State of California. We would use this opportunity to share with you the fact that we are one of the top registered agents in the state of California and have been responsible for over 11,494 companies formed in California.
We are in compliance with all regulations in the State of California.
Step 2 – Choose a Name
LLC name requirements in California are quite stringent and your LLC name should be distinguishable from any other LLCs that exist in the state. You will need to fill the “Name Reservation Request Form” available here and request reservation of limited liability company name. You can mail it to the Secretary of State or drop off in person at the Secretary of State’s office in Sacramento.
Step 3 – Articles of Organization
If you are planning to form a California business LLC then the most important step is to prepare and file the Articles of Organization. The Articles of Organization (Form LLC-1) has to be filed with the California Secretary of State along with the filing fee. We can file the form on your behalf as your registered agent in the state and provide you with certified copies of this filed Articles of Organization.
Should, you have any questions, feel free to call us at 702-871-8678.
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California Corporation Registration and Formation
If you are planning to form a Corporation in California then the procedure for registration and formation is as follows:
Step 1 – Hire a registered agent
According to California law, every business is required to maintain a Registered Agent. The agent should have the authorization to work as a registered agent in the State of California. We would use this opportunity to share with you the fact that we are one of the top registered agents in the state and have been responsible for over 11,494 companies formed in California.
We are in compliance with all regulations in the State of California.
Step 2 – Choose a Name
If you are planning to form a Corporation in California, you will need to identify and check name availability of your business. You can reserve your business name for a period of 60 days by filling and submitting the “Name Reservation Request Form”. You can download the form from here and submit to the Secretary of State along with the filing fee. It can be submitted by mail or in person at the Secretary of State’s office in Sacramento. The request for reserving a corporation name can also be submitted in person at the Los Angeles regional office.
Step 3 – Certificate of Formation
Successful company formation in California is possible only after your Articles of Incorporation has been submitted with the Secretary of State along with the necessary filing fee. The Articles of Incorporation (Form ARTS–GS, ARTS–CL or ARTS–PC) will be different for different types of corporations just like the form for general stock corporations is different from professional corporations. Once you make a decision regarding the type of corporation, we as your registered agent will file the applicable forms.
If you have any questions regarding California incorporation or LLC formation, you can simply visit the California Business formation page.
Advantages of Incorporating a Business in California
Advantages of Incorporating a Business in California
California’s economy is stronger and bigger than ever before and has a GDP of $2.3 trillion. The state is home to 20 of the top 130 companies in South and North America. Hence, if you have thought of forming a startup company California then it is the best choice you can ever make.
The economic and growth prospects that the state of California offers are just some of the advantages. Once you register a new business in California, you will be able to benefit from some of the flexibility in regulations and taxes that the state provides. Here’s a list of some of the advantages of a California corporation.
Advantages that drive New Business Formation
There are several advantages that you can enjoy when we help you register a new business in California. Some of them include:
Advantage#1 – Tax Flexibility
Whether you set-up a closed corporation or a general stock corporation, you can leverage on the significant tax advantages like:
Capital Gains Exemption
The capital gains exemption is applicable for shares of small business corporations only when they qualify for the same.
Small business tax
After you register a new Company in California or post incorporation, you will be able to access corporate small business tax rates. Different provinces in the state also offer low corporate tax rates especially on small business income.
Advantage#2 – Multiple Benefits
When you register a new company in California, you can benefit from the following advantages:
- Shareholders of a California corporation enjoy limited liability for the debts or any judgments against the corporation.
- Shareholders of a California corporation can only be held accountable if they have investment in stock of the corporation.
- A California corporation will always be able to raise any additional funds if required through the process of sales of stock.
- Once you register a new Company in California, it is in the form of a C Corporation. You can change it to an S Corporation if specific requirements are met. This shift to S corporation will enable your company enjoy the same tax rates as a partnership does.
- A California corporation provides anonymity to the owner.
- The LLC as well as incorporation filing fee in California is lesser than that of Connecticut, District of Columbia, and even Delaware.
There are several other advantages that vary according to the type of startup company in California you want to establish like partnership firms, foreign corporations, LLC etc.
Are there any Disadvantages of Incorporating in California?
If you want to register a new business in California, it is one of the best decisions you can take. There are several advantages and a handful of disadvantages. One of the disadvantages is that the state charges a minimum of $800 as “franchise tax” for any business. Since, Corporations in California are monitored by the state, local, and federal agencies, there is more paperwork to be done and it has to be ensured that all documents are in compliance with state regulations.
The only thing that really matters when it comes to incorporating a startup company in California is that the advantages outweigh the disadvantages. California is a state that promotes long-term business growth and that is one of the greatest benefits for any corporation.
California Business License
California Business License
Now that you have formed a corporation or LLC in the state of California, it’s important to know that you will require a business license to make your business operational. It’s often referred to as a general business license and you will be unable to conduct business in the state without an appropriate business license for the city or county you are planning to operate from.
The requirements for a general business license in California are governed by the business regulations for each city or county. They have different names as well; for instance, it’s known as California business tax certificate in some cities. Let’s take a look at an example to understand this better.
If you have started a restaurant in Santa Ana, Orange County then you will require a general business license. However, if you start another restaurant in Chula Vista, San Diego County then you will require a business tax certificate. Essentially, they are both the same.
How to Obtain California State Business License
How and where can you get your California company license from? You can obtain your California state business license by completing an online registration here. This is a service that will not only allow you to apply for a license but also renew it.
It’s the department of consumer affairs that is responsible for issuing a California company license. The California Department of Consumer Affairs (DCA) offers the “BreEZe” online services, which is a fairly new licensing system. You can submit applications for a new business license, for the renewal of an existing license, request for a duplicate license and apply for other services including change of address. You will need to register here in order to download license form and submit.
The time taken and the fee to process business license in California varies from one county to the other as the forms and methods of submission are different.
Types of Business License in California
There are different requirements for business license in California and it varies according to the type of business and business activity being conducted by you. The licenses are broadly categorized under two headings, which are:
General business licenses
This is the basic form of business license and is often referred to as a business tax certificate in different counties. Depending on the county, you are going to operate from; you can submit your license application online or through the post office or even in person. The fees for the license vary according to the county; for example the fee for general business license in Sacramento County is $146 and it’s valid for 3 years. Normally, a flat fee rate is charged or a gross sales percentage is taken into account. In some counties a combination of flat fee and gross sales percentage is mandatory.
The general business license in California form is different for different counties. You will be required to provide your business name, name of owner, address and other contact as well as business information, predicted yearly sales information, and Federal tax ID number.
License for regulated profession and industries
This is a type of California company license that is in addition to the general business license. it’s mostly required for fulfilling compliance with other regulatory, environmental, licensing, and administrative laws. You can search for a database pertaining to regulated professions and industries at CalGOLD. If you are planning to lease or sell merchandise then you will require a seller’s permit as well.
Note: The review and processing of the license application form varies from one county to another but as a norm it can take anywhere from 2-3 weeks for general business license. The maximum processing time though is 45 days.