Many businesses in Orange County, California have benefited from turning into corporations. When a business becomes a corporation, its personal assets are protected because the business is considered a separate entity from its owners. This is only one of the many advantages of forming a corporation in California.
If you are planning to convert your business into a corporation, specifically a C corporation, visit the California Secretary of State’s website. Here is a quick overview of the steps on how to form a corporation in California:
1. Corporation Name
One of the very first things that you need to decide on when forming a corporation is the business name. It is always better to choose a name that reflects the nature of your business.
It is important to understand that you can’t just choose any name. Under the trademark law, it is specified that the name of your business should not be the same, or similar, to any existing business. Moreover, the name of your business must not contain the words “bank,” “trust,” “trustee,” or any word related to these.
2. Corporation Directors
The directors are a few of the most important people that a corporation needs to operate properly. Before your business transitions into a corporation, you first need to recruit or appoint directors. Under California law, a corporation is required to have at least three directors. You may have less than three if there are less than three shareholders, too (e.g. a corporation that has only one shareholder may have only one or two directors).
One good thing about the state of California is that there is no minimum required age or residency for corporation directors. It is mandatory, though, that the number of persons that will constitute the corporation’s board of directors is stated in the articles of incorporation.
3. Articles of Incorporation
The articles of incorporation is the document filed with the California Secretary of State, in order for a business to be legally recognized as a corporation. All of the information stated in the document must be thoroughly thought through, in order to avoid unnecessary revisions later on. Have an incorporation attorney in California prepare and file your articles of incorporation for you. You may visit the California Secretary of State’s website for more information.
4. Corporation Bylaws
A corporation needs to have bylaws created. Bylaws contain the internal rules and procedures for the corporation, including the responsibilities of the different corporate offices, the responsibilities of the board of directors, the manner of election and term of the board of directors, how and when annual board meetings will be held, who may call meetings, etc.
Although a business is not required to file their bylaws with the Secretary of State, California law requires all corporations to run by a set of bylaws. Furthermore, all businesses in California are required to keep a copy of their bylaws at the corporation’s place of business.
5. Statement of Information
Every corporation in California is required to file a Statement of Information with the California Secretary of State. You may visit their website for a simple form with instructions included. Businesses in California must submit their Statements of Information within 90 days of filing the articles of incorporation. Additionally, corporations must file their Statements of Information with the Secretary of State every year after the original Statement of Information was filed.
6. Organizational Meeting
The owners of the corporation should hold an initial organizational meeting. The purpose for the meeting may include appointing the members of the board of directors, appointing corporate officers, adopting the bylaws, authorizing issuance of stock, setting the corporation’s accounting year, designating a bank, selecting a corporate seal, and adopting a stock certificate form.
If the initial directors are already named in the articles of incorporation, they can be the ones to hold the initial organizational meeting.
It is very important to have someone record the minutes of the meeting. Have a business attorney in Orange County, CA keep the corporate records, including the minutes of the organizational meeting.
7. Stock Certificates
Shares or stocks are issued by a corporation to its owners in return for capital contributions, which may be in the form of cash, property, or services. A stock certificate is a document issued to stockholders to certify their ownership of a specific number of shares in the corporation. The price to be paid in return for shares is set by the directors of the corporation.
When a corporation issues a stock, federal and state securities laws apply. Complying with these laws is complex and can be burdensome. A business should hire a business attorney in Orange County to assist them when they issue stock to avoid any legal problems in the future.
8. Local Licenses
All businesses in California are required to obtain a basic business license, also known as a tax registration certificate. Contact the Orange County or city clerk’s office or other local government authority for more information about the fees and procedures involved in obtaining local licenses.
9. Bank Account
When forming a corporation in Orange, Orange County, California, it is always a good idea to keep your business account separate from your personal accounts. You need to open a bank account that is solely for your corporation. To open one, you will need a tax ID number, a copy of the articles of incorporation, and a resolution that identifies the authorized signers (if the names are not included in the articles of incorporation).
Incorporation Attorneys in Orange, Orange County, California
The fact is, incorporating a business in California can be tedious. Get it right by hiring an incorporation attorney to assist you through it. Gale & Vallance are competent and reliable business lawyers based in Orange, Orange County, California. Besides assistance in forming a corporation, they also offer various legal services, including corporate record keeping and assistance in business transactions and contracts. Their clients vary from small to large companies in California. For more information about their services, contact them today at +1 (714) 634-4838.