Incorporating a California corporation involves more complexity than forming an LLC, but offers distinct advantages for certain business scenarios. California’s General Corporation Law (Corporations Code §§ 100–2319) provides a well-established framework with decades of case law, making it a predictable jurisdiction for corporate governance.

This guide walks you through both the mechanics of incorporating and the strategic decisions you should make before filing anything. Whether you’re a California-based startup founder, an out-of-state entrepreneur considering California incorporation, or a professional evaluating corporate structure options, you’ll find the actionable information you need here.

Before You File: Is a California Corporation the Right Choice?

Before you reserve a corporate name or click “file” on BizFile Online, step back and evaluate whether a California corporation is actually the right vehicle for your business.

When a California Corporation Makes Sense

You’re in California with Actual Operations Here: If your customers, employees, or physical presence are in California, incorporating locally eliminates the complexity of dual-state filings and compliance. You’ll deal with one set of rules rather than navigating both Delaware and California requirements.

You’re a Licensed Professional: Many licensed California professionals (physicians, lawyers, CPAs, architects, psychologists, certain healthcare providers) cannot practice through a standard LLC under the Moscone-Knox Professional Corporation Act (Corporations Code §§ 13400–13410). If your profession falls under these restrictions, a Professional Corporation (PC) is your required structure.

You Want S-Corporation Tax Treatment with Simplicity: While LLCs can elect S-Corp status, corporations provide a more natural fit for corporate tax elections, especially if you anticipate multiple shareholders or want the formality of a traditional corporate structure.

You’re Building for Acquisition or IPO: Traditional corporations—especially those seeking institutional investors who aren’t comfortable with VCs—sometimes prefer the straightforward corporate structure familiar to acquirers and public markets.

You’re an International Entrepreneur Seeking Credibility: Non-U.S. founders establishing serious U.S. operations sometimes prefer the “Inc.” designation, which carries global recognition and formality that can help with international banking and credibility.

When You Should Consider Alternatives

Venture-Backed Tech Startups: If you’re planning to raise Series A or later venture capital, Delaware C-Corporation is the overwhelming standard. VCs are familiar with Delaware law, their counsel knows it, and the investment documents are boilerplate. You can still qualify the Delaware corp to do business in California if you have California operations.

Service Businesses Seeking Simplicity: If you want liability protection without the formality of corporate governance (annual meetings, board resolutions, officer elections), a California LLC offers more operational flexibility with fewer compliance requirements.

Single-Owner with No Outside Investment: For solo entrepreneurs, an LLC’s pass-through taxation and minimal formality usually beats corporate structure unless you specifically need S-Corp tax treatment for self-employment tax savings.

Businesses with Minimal California Nexus: If you don’t live in California and have no California customers, employees, or operations, incorporating here means paying California’s minimum franchise tax for no reason. Your home state or another jurisdiction likely makes more sense.

Corporation vs. LLC: California Tax and Cost Comparison

Understanding the financial implications upfront prevents surprises.

California Corporation Costs

California LLC Costs

Key Tax Differences

First-Year Minimum Tax: Newly incorporated California corporations are exempt from the $800 minimum franchise tax for their first taxable year. However, if the corporation is profitable, it still pays tax at 8.84% (C-corp) or 1.5% (S-corp) on net income. LLCs no longer enjoy first-year minimum tax exemption (that program ended January 1, 2024).

Ongoing Taxation:

• C-Corporation: 8.84% of California net income, minimum $800/year
• S-Corporation: 1.5% of California net income (3.5% for financial S-corps), minimum $800/year
• LLC: Pass-through to members for income tax, but subject to additional LLC fee based on California-source gross receipts over $250,000

Double Taxation: C-Corporations face potential double taxation—once at the corporate level (8.84%) and again when shareholders receive dividends (individual income tax). S-Corporations and LLCs avoid this through pass-through taxation.

Self-Employment Tax: LLC member income is typically subject to self-employment tax (15.3%). S-Corp shareholders pay themselves a “reasonable salary” (subject to payroll taxes) and take remaining profits as distributions (not subject to self-employment tax), potentially saving thousands annually for profitable businesses.

Special Considerations for Non-California Residents

If you don’t live in California but are considering incorporating a California corporation, analyze these factors carefully.

When Non-Residents Should Form California Corporations

You Have Substantial California Operations: If you’re hiring California employees, serving significant California customers, or maintaining California property, you may already meet California’s “doing business” thresholds. Incorporating in California from the start simplifies compliance rather than incorporating elsewhere and then registering as a foreign corporation.

California Nexus Thresholds: California’s Franchise Tax Board considers you “doing business” in California if you exceed ANY of these (indexed annually):

• California sales exceeding approximately $757,070 (or 25% of total sales)
• California property exceeding approximately $75,707 (or 25% of total property)
• California payroll exceeding approximately $75,707 (or 25% of total payroll)
• Any transaction for financial gain within California

If you meet these thresholds, you’ll owe California’s $800 minimum franchise tax plus applicable corporate tax regardless of where you incorporate. You might as well simplify by incorporating directly in California.

You’re Serving California Clientele: For professional service providers (consultants, designers, developers) with California clients, a California corporation provides local presence and compliance simplicity.

California Real Estate or Intellectual Property: If your corporation will hold California real estate or license IP to California companies, direct California incorporation often makes sense for tax clarity.

When Non-Residents Should Incorporate Elsewhere

No California Business Activity: If you have no California customers, employees, or property, forming a California corporation means paying the $800 minimum franchise tax annually for no benefit. Incorporate in your home state or a state with lower fees.

Delaware for Venture Capital: Delaware C-Corporation remains the gold standard for companies seeking VC funding. Even if you have California operations, VCs expect Delaware formation. You’d then register the Delaware corporation to do business in California (as a foreign corporation), accepting dual compliance requirements.

Privacy Concerns: California’s Statement of Information requires disclosure of officers and directors with addresses, which become public record. States like Wyoming, Nevada, and New Mexico offer more privacy. However, if you’re “doing business” in California, you’ll still need to file there and disclose information regardless of where you incorporate.

Lower Ongoing Costs: Wyoming ($100 annual report, no state income tax), Nevada (no corporate income tax but higher annual fees), or New Mexico (no annual report) offer lower ongoing costs than California’s $800 minimum plus 8.84% tax rate.

The Foreign Corporation Problem

Here’s what many entrepreneurs miss: if you incorporate in Delaware or Nevada but conduct significant business in California, you must:

1. Register as a foreign corporation in California
2. Pay California’s $800 minimum franchise tax annually
3. Pay California income tax on California-source income
4. File California Statement of Information annually
5. Maintain compliance in both states

You end up with dual fees, dual filings, and dual complexity. For many businesses, the supposed savings from incorporating in a “tax-friendly” state evaporate when California compliance obligations kick in.

My Recommendation: If you’ll have substantial California activity (customers, employees, operations), incorporate in California from the start unless you’re specifically pursuing VC funding (Delaware) or need the privacy protections offered elsewhere. If you have minimal California nexus, incorporate in your home state or a state aligned with your actual business activity.

Step-by-Step: Incorporating Your California Corporation

1. Choose Your Corporate Name

Your corporate name must comply with California Corporations Code § 201 and Secretary of State regulations (Title 2, California Code of Regulations §§ 21000–21008).

Required Elements:

• Must include a corporate indicator: “Corporation,” “Incorporated,” “Limited,” or abbreviations (“Corp.,” “Inc.,” “Ltd.”)
• Must be distinguishable from existing registered business names

Restrictions:

• Cannot mislead the public into thinking you’re a bank, insurer, or government agency unless properly authorized
• Cannot include certain restricted words without appropriate licensing (e.g., “Bank,” “Insurance,” “Trust”)
• Cannot be confusingly similar to existing registered entities

Check Availability: Search the California Secretary of State’s business database at bizfileonline.sos.ca.gov/search/business.

Optional Name Reservation: Reserve your chosen name for 60 days by filing a Name Reservation Request with the Secretary of State. Fee: $10. This is useful if you’re not ready to file Articles immediately but want to secure the name.

Pro Tip: Check domain availability and social media handles simultaneously. Your corporate name should align with your digital presence.

2. Determine Your Corporate Structure and Share Classes

Before filing Articles of Incorporation, decide:

Number of Shares: California requires you to specify the total number of shares the corporation is authorized to issue. Common approaches:

• Simple structure: 10 million shares authorized, all common stock
• Investment-ready structure: Multiple classes (Common and Preferred) with different rights

Share Classes: For most small corporations, a single class of common stock suffices. If you anticipate investors, you might authorize both common and preferred shares (Corporations Code § 409 governs classes and series).

Par Value vs. No Par Value: California allows both. Most modern corporations use no par value stock for flexibility.

Initial Shareholders: Decide who will receive shares at incorporation. For closely-held corporations, this is typically the founders.

3. Appoint Your Initial Agent for Service of Process

Every California corporation must designate an agent for service of process—the person or entity authorized to receive lawsuits and legal notices on behalf of the corporation.

Requirements:

• Physical street address in California (no P.O. boxes)
• Available during normal business hours
• Can be an individual California resident or a registered corporate agent service

Options:

Use an Officer or Director: Free, but that person’s address becomes public record and they must reliably receive service during business hours.

Hire a Professional Service: Costs $100-300 annually but provides privacy, reliability, and professional forwarding. Practically required for non-resident incorporators.

4. File Articles of Incorporation

The Articles of Incorporation legally create your California corporation. File through the Secretary of State’s BizFile Online portal.

Form Selection:

• General Stock Corporation: Form ARTS-GS ($100)
• Professional Corporation: Form ARTS-PC ($100)
• Close Corporation: Form ARTS-CL ($100)

Information Required (for General Stock Corporation):

• Corporate Name: Exact name with proper indicator
• Purpose: Standard language: “The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business, or the practice of a profession permitted to be incorporated by the California Corporations Code.”
• Agent for Service of Process: Name and California street address
• Authorized Shares: Number of shares the corporation can issue, classes of shares if multiple, and rights associated with each class
• Incorporator Information: Name and signature of person(s) forming the corporation

Processing Time: Online filings typically process within 1-2 weeks during normal periods. The Secretary of State maintains a Current Processing Dates page showing real-time processing status.

Important Timing Note: Processing times increase significantly at fiscal year end (June) and calendar year end (December) as filing volume spikes. Plan accordingly or use expedited service options ($350-750 for faster processing).

Special Requirements for Professional Corporations: If you’re incorporating a Professional Corporation, your Articles must include additional statements confirming that all shareholders will be licensed professionals in the appropriate field, as required by the Moscone-Knox Professional Corporation Act.

5. Prepare Corporate Bylaws

Unlike Articles of Incorporation (which are filed with the state), bylaws are your corporation’s internal operating manual. California Corporations Code § 212 provides guidance on required and optional provisions.

Your bylaws should address:

Shareholder Provisions:

• Annual meeting date, time, and location (or virtual meeting procedures)
• Notice requirements for shareholder meetings
• Quorum requirements (typically majority of shares)
• Voting rights and procedures
• Action by written consent without meeting

Board of Directors:

• Number of directors (minimum one for corporations with single shareholder; minimum three if multiple shareholders, unless fewer shareholders)
• Director qualifications and term lengths
• Board meeting procedures and frequency
• Quorum and voting requirements
• Committees and their authority
• Removal and vacancy procedures

Officers:

• Required officer positions (President/CEO, Secretary, CFO/Treasurer)
• Appointment procedures and terms
• Duties and authority of each officer
• Removal procedures

Stock and Dividends:

• Share transfer restrictions (if any)
• Certificate requirements
• Dividend policies
• Buy-back provisions

Records and Reports:

• Required corporate records
• Shareholder inspection rights
• Annual report obligations

Amendments:

• Process for amending bylaws (board authority vs. shareholder approval)

California-Specific Considerations:

California’s Corporations Code is more prescriptive than Delaware’s regarding certain provisions. Your bylaws must account for:

• Cumulative voting rights for director elections (default unless specifically eliminated)
• Shareholder action requirements
• Notice periods mandated by statute
• Minority shareholder protections

Why Bylaws Matter:

Banks, investors, and business partners will request your bylaws. Courts reference them when resolving corporate disputes. Well-drafted bylaws prevent governance conflicts and establish clear procedures before disagreements arise.

Create your Corporate Bylaws

6. Hold Organizational Meeting and Adopt Resolutions

After filing Articles of Incorporation, the incorporator(s) should hold an organizational meeting (or act by written consent) to:

• Adopt Bylaws: Formally approve the corporate bylaws
• Elect Directors: Appoint the initial board of directors
• Appoint Officers: Elect President, Secretary, Treasurer, and other officers
• Authorize Stock Issuance: Approve issuance of shares to initial shareholders
• Adopt Share Certificate Form: Approve the format for stock certificates
• Approve Banking Resolution: Authorize officers to open corporate bank accounts
• Select Fiscal Year: Choose calendar year or different fiscal year end
• Approve Initial Transactions: Ratify any pre-incorporation activities

All organizational actions should be documented in formal minutes or unanimous written consent. These records become part of your corporate minute book.

7. Issue Stock Certificates to Shareholders

After authorizing stock issuance, issue actual shares to your initial shareholders.

Process:

1. Prepare stock certificates or book entry records
2. Have shareholders sign subscription agreements (documenting what they’re paying for shares)
3. Receive consideration (cash, property, or services performed)
4. Issue certificates and record in stock ledger
5. Update capitalization table

Consideration for Shares: Under California law, shares must be issued for valid consideration: money, property, or services actually rendered. Promissory notes and future services generally don’t qualify as valid consideration in California.

Securities Law Compliance: Stock issuance triggers federal and state securities laws. Most small corporations rely on exemptions (like federal Regulation D or California Corporations Code § 25102(f)), but ensure you qualify for any claimed exemption. This is an area where attorney guidance is valuable.

8. Obtain an Employer Identification Number (EIN)

Apply for a federal EIN from the IRS. This number identifies your corporation for tax purposes.

How to Apply: IRS EIN Online Application (free, immediate result).

For Non-U.S. Persons: The online application requires an SSN or ITIN. If you don’t have either, apply by fax or mail using Form SS-4 (takes 4-6 weeks). Consider obtaining an ITIN first if you’ll have ongoing U.S. tax obligations.

9. File Initial Statement of Information

Within 90 days of filing Articles of Incorporation, file a Statement of Information (Form SI-550) with the California Secretary of State.

Information Required:

• Corporate name and Secretary of State file number
• Principal executive office address
• Mailing address
• Agent for service of process
• Names and addresses of CEO, Secretary, CFO, and all directors
• Type of business

Filing Details:

• Fee: $25
• File online at BizFile Online
• Due: Within 90 days of incorporation
• Renewal: Annually thereafter during your designated filing period

Late Penalty: $250 penalty for missing the filing deadline (Gov. Code § 12176.1). Calendar this date immediately.

Annual Requirement: Unlike LLCs (which file biennially), corporations must file their Statement of Information annually. This is a more frequent compliance burden.

10. Open Corporate Bank Account

With your Certificate of Incorporation, EIN, bylaws, and banking resolution, open a dedicated corporate bank account.

Critical: Keep corporate funds completely separate from personal funds. Commingling is one of the fastest ways to lose corporate liability protection (pierce the corporate veil).

For Non-Residents: Expect heightened KYC requirements. Have your passport, corporate documents, EIN letter, and proof of business address readily available. Some banks require in-person visits; others (like Mercury or Relay) offer remote onboarding for business accounts.

California Corporate Tax Obligations

C-Corporation Taxation

Tax Rate: 8.84% of California net income (Form 100)

Minimum Franchise Tax: $800 annually after first taxable year

First-Year Exemption: Newly incorporated corporations are exempt from the $800 minimum franchise tax for their first taxable year. However, if profitable, they still pay 8.84% tax on actual net income—just no minimum floor in year one.

Due Dates:

• First-year minimum tax: N/A (exempt)
• Subsequent years: By 15th day of 4th month of taxable year
• Tax return (Form 100): By 15th day of 4th month after close of taxable year (April 15 for calendar-year corps)

S-Corporation Tax Election

Federal Election: File IRS Form 2553 within 75 days of incorporation (or within 75 days of start of tax year for existing corporations electing S status).

California Election: California generally conforms to federal S-election, but you should notify FTB via Form 3560. If you want different treatment for California purposes, Form 3560 is required.

S-Corp Tax Rate: 1.5% of California net income (3.5% for financial S-corps) (Form 100S)

Minimum Franchise Tax: Still $800 annually after first taxable year (same as C-corp)

S-Corp Eligibility Requirements:

• No more than 100 shareholders
• Only individuals, estates, and certain trusts as shareholders (no corporations or partnerships)
• All shareholders must be U.S. citizens or resident aliens (non-resident aliens disqualified)
• Only one class of stock (ignoring voting rights differences)
• Not an ineligible corporation (certain financial institutions, insurance companies, etc.)

Non-U.S. Owner Alert: If any shareholder is a non-resident alien, the corporation cannot elect S status. This disqualifies many international entrepreneurs from S-Corp benefits.

Estimated Tax Payments

California corporations generally must make estimated tax payments if they expect to owe $500 or more in tax. Payments are due:

• 1st quarter: 15th day of 4th month
• 2nd quarter: 15th day of 6th month
• 3rd quarter: 15th day of 9th month
• 4th quarter: 15th day of 12th month

Underpayment penalties apply for insufficient estimated payments.

Late-Year Incorporation Planning

Unlike LLCs, corporations do enjoy first-year minimum tax exemption. However, you still need to be mindful of short tax years and when your second-year $800 minimum becomes due.

Example: Incorporate November 1. Your first (short) taxable year runs November 1 – December 31. Your second tax year begins January 1. The second year’s $800 minimum is due by April 15 (15th day of 4th month of that tax year).

You get the first-year exemption, but your second-year payment comes quickly.

Compliance Calendar: Your First-Year Timeline

At Incorporation

• [ ] File Articles of Incorporation (ARTS-GS) – $100
• [ ] Designate agent for service of process
• [ ] Adopt corporate bylaws
• [ ] Hold organizational meeting / adopt resolutions
• [ ] Elect directors and appoint officers
• [ ] Authorize stock issuance
• [ ] Issue shares to initial shareholders
• [ ] Apply for EIN (IRS.gov)
• [ ] Open corporate bank account

Within 90 Days

• [ ] File Statement of Information (SI-550) – $25

First Tax Year

• [ ] First-year minimum franchise tax: EXEMPT (but pay tax on actual income if profitable)
• [ ] File Form 100 (C-Corp) or Form 100S (S-Corp) by 15th day of 4th month after year end
• [ ] If S-Corp election desired: File IRS Form 2553 within 75 days; notify California FTB with Form 3560

Ongoing Annual Requirements

• [ ] Pay $800 minimum franchise tax (after first year)
• [ ] File annual Statement of Information – $25
• [ ] Hold annual shareholder meeting (or written consent)
• [ ] Elect directors annually (unless staggered board)
• [ ] Approve officer appointments
• [ ] File Form 100/100S corporate tax return
• [ ] Make estimated tax payments if required
• [ ] Maintain corporate minutes and records

Federal Requirements: Beneficial Ownership Information Reporting

If you heard about the Corporate Transparency Act (CTA) requiring Beneficial Ownership Information (BOI) reports to FinCEN, here’s the current status:

Current Rule: As of March 2025, FinCEN’s interim final rule exempts all domestic U.S.-formed corporations and LLCs from BOI reporting requirements under the Corporate Transparency Act.

This means a typical California corporation owned by U.S. persons currently has no BOI filing obligation with FinCEN.

Foreign-Owned Corporations: If your California corporation is owned by non-U.S. persons or is itself a foreign entity registered in California, BOI reporting rules may still apply. Consult current FinCEN guidance.

Volatility Warning: This regulatory area has seen multiple court challenges and policy reversals. The exemption for domestic companies is current law, but monitor for any future changes.

Maintaining Your Corporation: Corporate Formalities

Corporations require more formality than LLCs. Failure to observe these formalities can result in “piercing the corporate veil”—where courts disregard the corporate entity and hold shareholders personally liable.

Essential Formalities to Maintain

Annual Shareholder Meetings: California law requires annual shareholder meetings to elect directors. Document attendance, votes, and resolutions in formal minutes.

Board of Directors Meetings: Hold regular board meetings (at least annually; quarterly is common). Document significant decisions in board minutes.

Written Resolutions: Major corporate actions (large contracts, borrowing, asset sales, officer elections) should be authorized by formal board or shareholder resolutions.

Maintain Corporate Minutes: Keep organized records of all meetings, resolutions, and significant corporate actions.

Stock Ledger: Maintain accurate records of all stock issuances, transfers, and current ownership.

Separate Finances: Never commingle corporate and personal funds. All corporate expenses paid from corporate account; personal expenses from personal accounts.

Use Corporate Name Properly: Sign contracts as “Corporation Name, by [Name], [Title]” not in personal capacity. Use corporate letterhead and email signatures reflecting corporate entity.

Adequate Capitalization: Ensure corporation has sufficient capital or insurance to meet its reasonably expected obligations.

File Required Reports: Submit annual Statement of Information and tax returns on time. Missed filings lead to suspension, which undermines your corporate protection.

Consequences of Failure

If you ignore corporate formalities:

• Courts may “pierce the corporate veil” and hold shareholders personally liable
• Corporate status may be suspended by FTB (making you unable to sue or defend lawsuits)
• Contracts may be challenged
• Tax penalties and interest accrue
• Professional reputation suffers

The administrative burden is real, but it’s the trade-off for liability protection and the corporate structure’s benefits.

Professional Corporations: Special Requirements

If you’re in a licensed profession that requires a Professional Corporation (PC) under the Moscone-Knox Professional Corporation Act (Corporations Code §§ 13400–13410), additional rules apply.

Professions Typically Requiring PC:

• Attorneys
• Physicians/Surgeons
• Dentists
• Psychologists
• Optometrists
• Chiropractors
• Accountants
• Architects
• Marriage and Family Therapists
• Clinical Social Workers

Key PC Requirements:

Shareholder Restrictions: Only licensed professionals in the same profession can be shareholders. A medical PC’s shares can only be owned by licensed physicians.

Name Restrictions: Corporate name must include “Professional Corporation” or “Prof. Corp.” and comply with naming rules of the applicable licensing board.

Professional Liability: The corporate structure does not shield individual practitioners from personal professional malpractice liability. You remain personally liable for your own professional negligence, though the corporate structure protects against general business debts.

Regulatory Compliance: Your licensing board may have additional reporting or compliance requirements beyond Secretary of State filings.

Stock Transfer Restrictions: Shares can only be transferred to other licensed professionals in the same field. Your bylaws and shareholder agreements must reflect this restriction.

Amendments, Conversions, and Dissolution

Amending Articles of Incorporation

If you need to change corporate name, authorized shares, or other provisions in your Articles:

• File Certificate of Amendment (Form AMDT-STK)
• Fee: $30
• Requires board and shareholder approval (process specified in bylaws and Corporations Code)

Restating Articles

If you have multiple amendments and want to consolidate into a single clean document:

• File Restated Articles of Incorporation (Form REST-STK)
• Fee: $30

Dissolving the Corporation

To formally wind up and dissolve:

1. Board and shareholder approval of dissolution
2. Wind up affairs, pay debts, distribute remaining assets
3. File Certificate of Election to Wind Up and Dissolve
4. File final tax returns with FTB and IRS
5. File Certificate of Dissolution with Secretary of State

Note: You remain liable for franchise tax for the year of dissolution. Formal dissolution requires multiple filings and careful attention to creditor claims.

Amend your Corporate Bylaws as needed

Additional Compliance: Permits, Licenses, Employment

Business Licenses and Permits

Your state incorporation doesn’t replace local requirements. Depending on your business type and location:

• City Business License: Many California cities (Los Angeles, San Francisco, San Diego, Oakland) require business tax registration
• Seller’s Permit: If selling tangible goods, register with California Department of Tax and Fee Administration (CDTFA)
• Industry Licenses: Contractors, healthcare facilities, financial services, cannabis businesses have specialized licensing
• Local Permits: Zoning, health, fire safety depending on physical location

Use CalGold to identify required permits and licenses for your specific business and location.

Employment Compliance

If hiring employees:

California Employment Development Department (EDD): Register for employer payroll taxes (state income tax withholding, unemployment insurance, disability insurance)

California Department of Industrial Relations (DIR): Comply with minimum wage requirements ($16/hour statewide, higher in some localities), wage and hour laws, workplace safety regulations

Workers’ Compensation: Mandatory insurance coverage for all employees, even part-time or family members

Non-Compete Restrictions: California broadly prohibits non-compete agreements. Recent legislation expanded these restrictions and created private enforcement rights. Assume your employment agreements cannot restrict employees from working for competitors after leaving your company (narrow exceptions for business sales).

Tools and Resources

Official State Resources

• California Secretary of State BizFile Online – File Articles of Incorporation, Statement of Information
• Current Processing Dates – Real-time SOS processing timelines
• Service Options – Expedited processing fees
• Forms, Samples & Fees – All SOS corporate forms
• California Franchise Tax Board – Corporate tax information, Form 100/100S
• Doing Business in California – FTB nexus rules
• CalGold Permit Database – Find required permits and licenses

Federal Resources

• IRS EIN Online Application – Free EIN application
• IRS Form 2553 – S-Corporation election
• FinCEN BOI Information – Beneficial ownership reporting status

Document Generators

• Corporate Bylaws Generator
• Amendment to Bylaws Generator
• Co-founder Agreement Generator
• Founders Agreement Generator

Frequently Asked Questions

How much does it cost to incorporate in California?

Minimum first-year costs:

• Articles of Incorporation: $100
• Statement of Information: $25
• Total: $125 (plus $800 franchise tax starting year two)

Ongoing annual costs: $800 minimum franchise tax + $25 Statement of Information = $825 minimum per year. If profitable, add 8.84% (C-corp) or 1.5% (S-corp) of California net income.

What’s the difference between C-Corp and S-Corp?

C-Corporation: Taxed at corporate level (8.84% in California), potentially double-taxed when dividends distributed to shareholders. No ownership restrictions.

S-Corporation: Pass-through taxation (income flows to shareholders), single layer of tax. California still imposes 1.5% corporate-level tax. Restricted to 100 shareholders, only U.S. citizens/residents, one class of stock.

S-Corps can save on self-employment taxes but add complexity. The choice depends on your specific situation—consult a tax professional.

Can non-U.S. citizens incorporate in California?

Yes. California allows non-U.S. citizens to incorporate and serve as shareholders, directors, and officers. However, non-resident aliens cannot be shareholders of an S-Corporation (federal tax law restriction), limiting you to C-Corp status with potential double taxation.

Do I need an attorney to incorporate?

Not legally required. Many entrepreneurs successfully incorporate using online tools and careful research. However, complex situations benefit from professional guidance:

• Multiple founders with different contribution amounts
• Outside investors
• Professional corporations with licensing requirements
• Stock option plans or equity compensation structures
• Significant intellectual property contributions

Even if you self-incorporate, consider attorney review of your bylaws and shareholder agreements.

How long does incorporation take?

Standard processing: 1-2 weeks for online filings during normal periods. Expedited processing: 24 hours to 5 business days depending on service level chosen. Check Current Processing Dates for real-time status.

What’s the minimum number of shareholders/directors required?

California allows single-shareholder corporations. Director requirements:

• 1 director if 1 shareholder
• 2 directors if 2 shareholders
• 3+ directors if 3+ shareholders (unless reduced by shareholder agreement for closely-held corporations)

Can I convert my LLC to a corporation later?

Yes. California allows statutory conversions under Corporations Code § 1155. This involves filing a Certificate of Conversion and Plan of Conversion. Tax consequences can be significant—consult a tax advisor before converting.

Does California require annual meetings?

Yes. Corporations must hold annual shareholder meetings to elect directors (Corporations Code § 600). The meeting can be held by written consent without actually gathering if shareholders agree unanimously. Document it properly regardless of format.

What happens if I miss the Statement of Information deadline?

The Secretary of State assesses a $250 late penalty. Continued failure to file can result in corporate suspension. A suspended corporation cannot sue in California courts, defend lawsuits, or conduct business. Reinstatement requires filing missing documents, paying back penalties, and satisfying outstanding tax obligations.

Should I incorporate in Delaware instead?

Delaware is standard for venture-backed startups due to established case law, investor familiarity, and flexible corporate statutes. However, if you have California operations, you’ll need to register the Delaware corporation in California as a foreign corporation anyway—resulting in dual compliance and fees. For small businesses without VC aspirations, California direct incorporation is often simpler and more cost-effective.

Conclusion

Incorporating a California corporation provides strong liability protection, established legal framework under the California General Corporation Law, and credibility for serious business operations. The costs ($100 formation + $825+ annually) are higher than some states, and compliance requirements (annual Statement of Information, board meetings, corporate formalities) demand ongoing attention.

For California-based businesses, professional corporations, or companies with substantial California operations, direct California incorporation often makes sense. For venture-seeking tech startups, Delaware remains the standard. For businesses without California nexus, evaluate whether California’s minimum taxes are justified for your situation.

Whatever your decision, incorporate thoughtfully. Choose your structure based on actual business needs—not because someone told you Delaware or Nevada is “better” without understanding your circumstances. Draft proper bylaws, maintain corporate formalities, and stay current on compliance requirements.

The corporate structure is powerful, but only if you respect it.

This guide provides general legal information about incorporating in California and is current as of publication date. Laws and regulations change. This information should not be construed as legal advice for your specific situation. Consult with a qualified attorney and tax advisor regarding your particular circumstances before making incorporation decisions.