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Creating a corporation differs from starting another small business or limited liability company, starting with the first document you must file.
Launching your corporation in California begins with filing your Articles of Incorporation. This is true regardless of the type of corporation you’re starting.
But creating a corporation can be a complex task. The requirements and exact process for Articles of Incorporation filing may need to be clarified. This article provides information to help you get started.
California Articles of Incorporation: Key Takeaways
- Articles of Incorporation is a crucial legal document you must file to create a corporation in California.
- Different corporation types will have slightly different methods of incorporation.
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What are Articles of Incorporation?
Articles of Incorporation is the formative document of a corporation, particularly in the eyes of the California Secretary of State. This means you can’t properly form your corporation in California without this document.
Articles of Incorporation contain crucial information about your corporate business entity. This document is critical for all corporations. Filing allows the state to document your business and keeps you compliant with state requirements.
The Articles of Incorporation typically include:
- The company’s name and address (cannot be a P.O. Box)
- The name and address of a registered agent
- The type of corporation
- Board of directors’ information
- The number of shares the corporation will issue
Creating your corporation by filing your Articles of Incorporation is also important for liability protection. Corporations offer limited liability, meaning company debt or legal issues don’t usually impact owners. However, this is only true when you register your corporation. Before that happens, you’ll be personally responsible for any company obligations as a promoter.
Finally, the sooner you get your Articles of Incorporation in order, the sooner you can reap tax benefits. It’s not uncommon for corporations to have better tax rates compared to individuals (the default federal corporate tax rate is 21%).
What to include in your California Articles of Incorporation
In California, the information required in the Articles of Incorporation depend on your corporation type. For a standard corporation filing, you’ll complete the Article of Incorporation of a General Stock Corporation form, which includes the following:
- A corporate name
- A business mailing address (cannot be a P.O. Box)
- A service of process agent (or registered agent), regardless of whether your registered agent service is an individual or a corporation
- The number of shares that your corporation can issue (cannot be blank or zero)
- The name and signature of each incorporator (document preparer)
The filing fee is $100 if providing for shares and $30 without shares. There’s no processing fee for this form and the certified copy if submitted online. If you submit the form in person, a $15 handling fee applies and there is an optional $5 certified copy fee. If you’re converting a corporation from another entity type (like an LLC), be sure to prepare a Statement of Conversion ($150 fee applies).
A Close Corporation will use the Articles of Incorporation of a Close Corporation form. This form will differ from the first one in only one field. Since a Close Corporation has a limited shareholder number, you’ll need to enter how many shareholders your corporation will have. This number must not be higher than 35.
It’s worth noting that the California Articles of Incorporation forms mentioned so far have a pre-filled Purpose Statement field and state that the Purpose Statement should not be modified. Modifying the Purpose Statement field could invalidate your document.
This will be the primary difference when filing an Articles of Incorporation of a Professional Corporation form. This form will be almost identical to the General Stock type, except for the Purpose Statement. Your Professional Corporation form must specify the profession associated with your corporation.
The fees for filing the close and professional corporation forms are the same: a filing fee of either $100, $30, or $150, no processing fee, an optional $5 certified copy fee, and a $15 handling fee when submitting in person.
The requirements for nonprofit corporations are different.
Nonprofit Corporations
There are four different Articles of Incorporation forms for nonprofits depending on purpose:
- Mutual benefit
- Public benefit
- Religious
- Common interest development
When filing an Articles of Incorporation of a Nonprofit Mutual Benefit Corporation, you must fill out the organization’s specific purpose under the Additional Statements field. The same will apply to the Articles of Incorporation of a Nonprofit Religious Corporation.
For the Articles of Incorporation of a Nonprofit Public Benefit Corporation, you’ll need to designate whether the corporation is for public or charitable purposes. If it’s for public purposes, or you plan to apply for tax-exempt status in California, you’ll also have to enter the exact purpose of the corporation. This information should be under the Purpose Statement in the form.
Finally, the Articles of Incorporation of a Common Interest Development Association differs the most from other forms. Be sure to read the form carefully to ensure you’re completing the form accurately for your needs.
The state fees for nonprofit corporations are the same as for for-profit organizations: a filing fee of either $100, $30, or $150, no processing fee, an optional $5 certified copy fee, and a $15 handling fee when submitting in person.
Where to submit Articles of Incorporation in California
The fastest way to file your Articles of Incorporation, and other required incorporation documents, in California is through the California Secretary of State’s Bizfile Online website. In addition to immediate submission, forms submitted online are prioritized and will be processed more quickly. You can also pay for expedited filing when submitted online.
If you wish to submit the document in person, go to the address below during regular business hours. Remember that offices are closed weekends and holidays and that you must pay an additional $15 handling fee to file in person.
Secretary of State
Business Programs Division
Business Entities
1500 11th Street, Sacramento, CA 95814
If you choose to use Block Advisors Business Formation, we will submit all required incorporation documents to the California Secretary of State on your behalf.
Additional California corporation requirements
There are other documents and specific state requirements you must meet in addition to filing the Articles of Incorporation. These include:
- Corporate bylaws
- Director appointment
- Initial board meeting
- Statement of Information
- Issuing stock
- Tax considerations
Corporate Bylaws
Bylaws define the operational rules of your corporation. This document formally outlines how your corporation will function and reinforces the notion that your business is legitimate. While you’re not required to publish your bylaws in the public record, it’s important to create these and keep them as an internal document.
Director Appointment
Most corporations appoint an initial board of directors to act on behalf of the business while it gets up and running. The initial directors on your first board won’t necessarily remain there moving forward. When you choose to appoint the permanent board, you’ll to write an incorporator’s statement where you’ll name the new board of directors.
While you won’t need to submit a certified copy of this statement to the state, it would be best to keep a copy on file internally. Of course, you’ll need to sign the document.
Initial Board Meeting
Your corporation’s first (initial) board meeting will serve as the foundation for everything that comes afterward. At this meeting, the board will make several crucial decisions and document these decisions via meeting minutes. Examples of common activities and decisions are below:
- Approve corporate bylaws
- Appoint corporate officers
- Issue shares of stock
- Select a corporate bank
- Sett the fiscal year
- Adopt a stock certificate form
- Adopt a corporate seal
Statement of Information
The Statement of Information is another mandatory document your corporation must submit to the California Secretary of State. You’ll need to file this document no more than 90 days after you’ve submitted your Articles of Incorporation. Additionally, the corporation must file a Statement of Information annually (for nonprofits, every two years).
The Statement of Information form for for-profit corporations includes the following information:
- Corporation name, entity number, and address
- Names of the Chief Executive Officer, Secretary, and Chief Financial Officer
- Board of Directors information
- Registered Agent (Service of process agent) information
- Type of business
Additionally, you’ll need to submit an Attachment to Statement of Information, where you can provide details about the other Directors, if any exist.
In the case of a nonprofit, you’ll need to submit a Statement of Information form for nonprofits, which includes the following:
- Corporation name, number, and address
- Officer names and addresses (Chief Executive, Secretary, Chief Financial)
- Service of process
- Common interests developments
There’s a $25 filing fee for general stock corporations and an optional $5 certified copy fee. The filing fee for nonprofits is $20. You can submit the documents online or at the same mailing address above.
If you choose to use Block Advisors Business Formation to form your California corporation, we will submit all required Statement of Information forms as part of your standard order.
Tax Considerations
One of the most important actions you’ll need to take when creating a California corporation will be to apply for an Employer Identification Number (EIN) with the IRS. You should get familiar with the taxes your organization will need to pay. Franchise tax and income tax are common in California; consult with a Small Business Certified Tax Professional to understand what tax obligations apply to you.
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Navigating your options
As you begin this process, it’s important to consider your personal situation and needs of your business. This article is intended to be informative, but it is not legal advice or a substitute for legal advice. A business attorney can help you understand your specific circumstances and guide your decisions. Likewise, the California Secretary of State office offers resources for small business owners, including online information that may help you decide on the best options – and possible requirements – for your specific circumstances.
FAQs
What are the California Articles of Incorporation?
California Articles of Incorporation is a legal document that, when filed, allows you to do business in the state of California.
How much does it cost to file Articles of Incorporation in California?
Filing Articles of Incorporation in California costs $100 when providing for shares and $30 without providing for shares. If you want to include a statement converting your LLC, limited partnership, or general partnership into a corporation, the filing fee will be $150. Additional fees may apply depending on how you choose to file your documents.
If you choose Block Advisors Business Formation to form your business, packages start at $205 plus applicable fees.
What are the requirements for filing Articles of Incorporation?
To file Articles of Incorporation in California, you must provide a business name, address, registered agent details, and the number of shares your corporation will issue. You must also pay applicable state fees at the time of filing.
What is the difference between Articles of Incorporation and Articles of Organization?
Articles of Incorporation is a foundational document for corporations. Articles of Organization are required when registering an LLC.
Does an LLC have Articles of Incorporation in California?
LLCs in California require an Articles of Organization. Articles of Incorporation are exclusively for corporations.
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