Setting up a California corporation is easier than you might think. The state requires that you file Articles of Incorporation with the Secretary of State and pay the filing fee. This can be done in 6 simple steps.
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Choose a corporate name.
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Provide an official corporation address.
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Appoint a Registered Agent (agent of SOP).
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File Articles of Incorporation.
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Prepare corporate by-laws.
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Appoint company directors & hold a first board meeting.
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Choose a corporate name
The California Business Search website can assist in a preliminary search to check the availability of a name. The chosen name must not be the same or similar to an existing name and it may or may not include the words “Corporation”, “Limited” or “Incorporated”.
The name can’t include misleading words (bank, trust) or include any government entities (FBI, Treasury & State Department). By filing a Name Reservation Request Form, the name can be reserved for up to 60 days with the Secretary of State.
At this point it is advisable to secure a Domain Name.
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Provide an official corporation address
A registered address must be provided when forming a California corporation. This can be a home address (if the business is being run from a residential address), or the businesses office address. A postal address can not be used, but it is allowed to use an address that is outside the state of California.
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Appoint a Registered Agent
A registered agent or agent of SOP (service of process) is a person / entity with a legal address within the state the business is registered. They receive all legal documents and notifications and essentially act as a go between the business and the state.
A small business may appoint one of the directors to fulfil this role or a third-party entity may be assigned. The Secretary of State keeps a list of private service companies as a useful tool for businesses looking for an agent of SOP.
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File Articles of Incorporation
Filing Articles of Incorporation solidifies the corporation as a legal entity. The following information must be provided:
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The corporate name.
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The corporate address (not a postal address).
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The name and address of the SOP agent.
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The capital structure of the corporation (e.g. number of shares to be issued).
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The Incorporator’s name and address (person who signed the articles).
This can be done in person or via the post and cost $100.
Mailing address:
Secretary of State
Business Entities Filings Unit
P.O. Box 944260
Sacramento, CA 94244-2260
Physical address:
1500 11th Street
3rd Floor
Sacramento, CA 95814
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Prepare corporate by-laws
The Oxford dictionary defines a by-law as “a rule made by a company or society to control the actions of its members”.
For a business, a by-law is essentially rules put in place to determine how the business will operate and be managed. Well-established by-laws should include:
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The management process (role of the directors and officers).
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The record keeping and managing process .
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The meetings process (voting, electing officials and directors).
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The process of handling disputes.
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The process of amending the bylaws.
It is also important to keep record of the businesses critical corporate documentation (Articles of Incorporation, by-laws, meeting minutes) to set up a Corporates Record Book. A three-ring binder can be used or corporate records book kits can be purchased online.
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Appoint company directors & hold a first board meeting
The Incorporator appoints the corporate directors who will service on the board and schedules the first organizational meeting of the corporation. The first organizational meeting should be held to include the following:
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Appoint corporate officers.
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Adopt the bylaws.
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Selection of a corporate bank.
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Set the fiscal year of the corporation.
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Adopt a conflict of interest policy.
All actions by the directors must be recorded via meeting minutes. This can be prepared by the Incorporator or any of the other corporation directors.
For additional information see the California Secretary of State website.