How do I form a corporation in California?

In California, you create a corporation by filing "articles of incorporation_desktop" with the Secretary of State's office and paying a filing fee. You'll also need corporate bylaws and resolutions signed by the board of directors, though these documents don't need to be filed with the Secretary of State. Your bylaws explicitly state the rights and responsibilities of the shareholders and directors and govern how your corporation will be run.

After your articles of incorporation have been filed and you sign corporate bylaws, your corporation is official, but you will still need to obtain the licenses and permits that all new businesses must have to operate. These may include a business license (sometimes also referred to as a "tax registration certificate_desktop"), a federal employer identification number, a sellers' permit, or a zoning permit. Forming a corporation does not exempt you from any of these requirements that apply to all businesses.

For more information, see the Licenses & Permits for Your Business area of Nolo's website.

To begin creating your California corporation, visit the Online California Corporation page at the Nolo website.

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How much will it cost to form my California corporation?

The price of Nolo's Online California Corporation formation service varies depending on your needs.

Nolo's Basic Service. The price starts as low as $99.00 for Nolo's Basic Service, which includes preparation and filing of the articles of incorporation, preparation of personalized bylaws, resolution forms, and standard filing and shipping, which can take anywhere from three to four weeks.

Nolo's Express Premiere Service. Includes Nolo's Basic Service plus Priority Rush Filing, expedited shipping of your final documents, a personalized corporate record book that is foil-stamped with your company name, 20 personalized stock certificates, and a personalized corporation seal, for $299.00. With Priority Rush Filing, your corporation will be formed within five to ten business days (15 days if the Secretary of State is experiencing delays), and you'll receive your final corporate documents three to four business days later. Your corporate records kit will be sent to you directly from the manufacturer.

Note that filing fees charged by the state are not included in our package prices. The Secretary of State charges $124 in state fees (includes a name check and a certified copy of the articles of incorporation). This filing fee will be added to your total when you check out.

In addition, within 90 days of your formation, you will need to submit a statement of information along with a $25 filing fee. (You can file it online here.)

To compare Nolo's California corporate packages, see the package and pricing details. Please note that coupon codes are not applicable to corporate packages.

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How long will it take to form my California corporation?

With the Priority Rush Filing that comes with Nolo's Express Premiere Service, your corporation will be formed within five to ten business days (15 days if the Secretary of State is experiencing delays) and you'll receive your final corporate documents three to four business days later. Your corporate records kit will be sent to you directly from the manufacturer.

With the Basic Service, your corporation will be formed, and you will receive your final corporate documents, within three to four weeks.

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Will I have to pay taxes on my California corporation?

California state taxes. Every corporation doing business in California is taxed on its net income at a rate of 8.84%. You must pay an annual corporate tax to California's Franchise Tax Board (FTB) within 3-1/2 months of formation. The minimum tax is currently $800 per year. The tax is waived for the first tax year of newly formed corporations, although any first-year net income is still subject to the 8.84% tax rate. After the year of formation, the minimum tax is due by April 15 each year, assuming your corporation has a calendar tax year. This tax must be sent to the Franchise Tax Board with FTB Form 3586, Payment Voucher for Corporations, available at http://ftb.ca.gov.

All corporations must file Form 100, California Corporation Franchise or Income Tax Return. Like individual tax returns, your corporation tax return is due by April 15 of each year (assuming a calendar tax year). You can find Form 100 on the Franchise Tax Board's website at http://ftb.ca.gov.

Federal income tax on C corporations. The Tax Cuts and Job Act of 2017 established a new single flat tax rate of 21% for corporations. This replaces the corporate tax rates ranging from 15% to 35% that corporations paid under prior law.

Federal income tax on S corporations. The IRS does not impose taxes on S corporations; S corporation income is reported on the shareholders' individual tax returns.

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Do I need a lawyer to form a corporation in California?

You can form your own corporation online by using Nolo's Online California Corporation. We will walk you through the information needed to form a corporation. If you have a complex question, you may want to consult a business lawyer or tax expert. Our website features an online lawyer directory as a free resource to our customers. Comprehensive profiles of business attorneys in your state can be found at www.nolo.com.

If you are trying to convert an LLC or partnership into a corporation, you should consult an attorney. There are some legal and tax ramifications to closing down an existing business and starting a new one that are beyond the scope of our service.

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Does California require that corporations have bylaws?

California's Secretary of State does not require you to file written bylaws, but our service provides customized bylaws that help ensure that courts will respect the shareholders' personal liability protection, help to avert misunderstandings among the shareholders over finances and management, lay out the procedures for handling the departure and addition of shareholders, and more. Every corporation needs bylaws to outline the corporate structure and establish the powers of directors, officers, and shareholders.

Learn more about bylaws in the Corporations section of Nolo's website.

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Can I form a corporation in a different state if my business will operate in California?

Unlike LLCs, corporations formed in California are not required to have a designated office in California. But if you were to form a corporation out of state, say in Delaware, you would still need to qualify your corporation to do business in California—and this means you'll have to file additional paperwork and pay additional fees. For more information on whether you'll need to qualify to do business in certain states, read Nolo's article Qualifying to Do Business Outside Your State on Nolo's website. Note that if you don't register to do business in another state when required, you won't be able to enforce contracts in that state.

Also, be ready for some state tax complications if you form your corporation in a state that's different from the state where all of its shareholders live. For one thing, the shareholders might have to pay personal income taxes in the other state on corporation income. (At best, you might get credit for those taxes in your home state and not have to pay twice. At worst, you might have to pay taxes you wouldn't have had to pay at home.) Other state taxes vary from state to state, and might influence your choice of location for a corporation. A corporation—like any business—has to pay franchise taxes, sales and use taxes, other transaction and excise taxes, and employment, property, and transfer taxes.

In addition, you need to maintain a registered agent in the state in which you incorporate (in California, the registered agent is called an agent for service of process).

To avoid these hassles, most smaller corporations that will operate only in California form their corporation in California.

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Does California consider shares in a small corporation to be considered securities?

A share of stock in your corporation is classified as a security under both California and federal securities laws that regulate the offer and sale of corporate stock. However, California and the federal government exempt most small corporations from these laws. Federal law exempts "private offerings_desktop": non-advertised sales to a limited number of people (generally 35 or fewer). And, similarly, California law provides the Limited Offering Exemption under Corporations Code section 25102(f) where:

• sales of securities are limited to no more than 35 unaccredited investors, including those located outside California
• each investor is required to have a pre-existing business or personal relationship with the corporation, or, in the alternative, can be demonstrated to be a sophisticated investor
• advertising of the securities is prohibited, and
• at the time of purchase, the investor must not intend to resell the securities.

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Does forming a corporation mean I don't need California business licenses or permits?

Forming a corporation does not take the place of obtaining a business license, tax registration certificate, and other required business permits. A corporation merely creates an ownership setup that limits the owners' personal liability. For more information on required licenses and permits, see the Licenses & Permits for Your Business area of Nolo's website.

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Can I form a corporation in California for cannabis-related activities?

Yes, the California Secretary of State accepts articles of incorporation for corporations that will perform cannabis-related business activities, due to a new law legalizing recreational marijuana in California effective January 1, 2018. Filing articles of incorporation with the Secretary of State alone, however, does not provide a corporation with the necessary licenses to conduct cannabis-related activities. After submitting articles of incorporation, you'll need to submit a licensing application to either the Bureau of Cannabis Control, the Manufactured Cannabis Safety Branch, and/or CalCannabis Cultivation Licensing, depending on whether your corporation will be involved in growing, selling, testing, or manufacturing cannabis-related products. You'll also need to work with the city and/or county where the cannabis-related activities will take place. More information can be found at the Secretary of State's California Cannabis Portal at www.sos.ca.gov/business-programs/cannabizfile/.

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How can a California corporation be ended after it has been formed?

Your corporation will exist—and incur taxes and fees, whether or not you are actively operating a business—until you take legal steps to dissolve it. If you decide to discontinue business as a corporation, you must file a certificate of dissolution with the California Secretary of State. For specifics, read the Frequently Asked Questions on the Secretary of State's website.

In addition, certain franchise tax requirements must be met before you are off the hook for your business. For more information, see FTB Publication 1038, Guide to Dissolve, Surrender, or Cancel a California Business Entity on the Franchise Tax Board's website at http://ftb.ca.gov.

For general information on closing a business, read the article Closing Your Business: What You Need to Do on Nolo's website.

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How long do I have to work on my corporate order?

You have as long as you like to work on your corporate formation without purchasing it. Every time you work on your corporation order on Nolo.com, your answers are automatically saved.

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What happens after I pay?

Note: You will receive a confirmation email that includes the following information.

Your articles of incorporation will be generated and sent to the Secretary of State. With the Priority Rush Filing that comes with the Express Premiere Service, your corporation will be formed within five to ten business days (depending upon the Secretary of State's processing times) and you'll receive your final corporate documents three to four business days later. With the Basic Service, your corporation will be formed and you will receive your corporate documents within three to four weeks.

If you ordered Nolo's Express Premiere Service, your corporate records binder and company seal will be sent to you independently, directly from the manufacturer.

When you receive your final corporate documents, you will receive instructions on a few more steps you need to take, which include holding an initial meeting of your directors and shareholders (who are likely the same persons), sending a statement of information to the Secretary of State, and filing a notice of stock transaction form online.

After completing your purchase, you may no longer go back and change your answers because your order is being processed. You may, however, view your answers by signing in to your Nolo account at www.nolo.com/products/customer/account/login, clicking on My Account, and clicking on California corporation.

Once we send your documents to the Secretary of State, we cannot refund your state filing fees and other third-party costs, such as courier and delivery services, should you decide to cancel your order. If you have a question after submitting your order, you may contact our filings specialists by going to https://www.nolo.com/customer-support/filing-support.

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What if I want to change the information I gave you for my new corporation?

You can take as much time as you like to work on your corporation answer choices. Every time you add or edit an answer, your work is automatically saved.

After completing your purchase, you may no longer go back and change your answers because your order is being processed. You may, however, view your answers by signing in to your Nolo account at www.nolo.com/products/customer/account/login, clicking on My Account, and clicking on California corporation.

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Where can I learn more about California corporations?

To learn more about corporations, visit the Corporations area of Nolo's website or read How to Form Your Own California Corporation, by Anthony Mancuso.

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