Even a brief delay can trigger consequences. The FTB can assess the $250 penalty under Revenue and Taxation Code Section 19141 for failure to file on time. While the Secretary of State may not immediately suspend your corporation for a minor delay, the filing isn't considered timely and penalty exposure exists. More importantly, if you're habitually late, it signals to potential investors or buyers that your corporate governance is lax. File during your six-month filing period—there's no reason to wait until the last day when you have months to complete it.

Yes, even if you're the sole shareholder and director, corporate formalities still matter. The law doesn't exempt single-shareholder corporations from governance requirements. Courts evaluating whether to pierce the corporate veil look at whether formalities were observed regardless of shareholder count. The practical reality is that single-owner corporations can satisfy these requirements through written consents rather than formal meetings, which is much simpler. Prepare an annual written consent as the sole shareholder electing yourself as director, and a board consent approving key actions for the year. It takes minimal time but provides critical documentation that the corporation was properly maintained as a separate entity.

No. Backdating corporate documents is not only ineffective, it's potentially fraudulent. If you discover you failed to hold required meetings or prepare consents, the proper approach is to document the situation accurately going forward. You can prepare ratification resolutions where the board or shareholders acknowledge that certain actions were taken in the past and now ratify and approve those actions as of the current date. This creates a contemporaneous record without falsifying dates. If you're facing due diligence and discover gaps in your corporate records, address them transparently with buyers or investors rather than trying to manufacture false documentation. Sophisticated parties will often discover backdating through metadata in electronic documents or inconsistencies in the records, which destroys credibility and can kill transactions.

Start by researching what comparable positions earn in your industry and geographic area. Look at salary data for executives with similar responsibilities, experience levels, and company sizes. Websites like Glassdoor, Salary.com, or Bureau of Labor Statistics data can provide benchmarks. Consider the amount of time you're dedicating to the business—if you're working full-time, your salary should reflect that. A reasonable approach is to ask yourself what you would need to pay an arm's-length third party to perform your role. Document your analysis in your board minutes when approving compensation. If your corporation is profitable and you're taking distributions, make sure the salary is substantial enough that it doesn't appear you're trying to avoid employment taxes. Working with a CPA who has experience with S corporation compensation issues can help you strike the right balance between tax efficiency and defensibility.

This is a common but problematic idea. First, you can't properly dissolve a suspended corporation until you bring it back into good standing by satisfying all outstanding obligations. The Secretary of State won't accept a certificate of dissolution from a suspended entity. Second, if you form a new corporation to continue the same business while abandoning a suspended corporation with unsatisfied obligations, you risk successor liability claims and potential veil-piercing arguments that the new entity is merely a continuation of the old one designed to evade liabilities. Third, forming a new entity doesn't eliminate your personal obligations to deal with the suspended corporation's tax debts—the FTB can pursue collection against responsible officers and shareholders in some circumstances. The proper approach is to revive the suspended corporation by filing past-due returns, paying outstanding taxes and penalties, and then either maintaining it in good standing or formally dissolving it after satisfying all obligations.

These are completely different requirements that serve different purposes. The Statement of Information (SI-550) is filed with the Secretary of State under Corporations Code Section 1502 and is a public regulatory filing containing basic information about your corporation's officers and business address. Everyone can access this information through the Secretary of State's business search. The annual report to shareholders under Corporations Code Section 1501 is an internal corporate governance obligation requiring the board to send financial statements to shareholders. This is not a public filing—it's sent directly to shareholders and is not filed with any government agency. Many corporations with fewer than 100 shareholders waive the Section 1501 annual report requirement in their bylaws, but the Statement of Information must always be filed regardless of shareholder count. Both are separate from your FTB tax return filing obligations.

Corporate formation and annual maintenance at the state level—through the Secretary of State and Franchise Tax Board—is distinct from local business licensing. Most California cities and counties require businesses operating within their jurisdiction to obtain local business licenses or permits. These are separate from your corporate status and are typically based on where you physically operate your business. Requirements vary significantly by locality—some cities charge flat annual fees, others charge based on gross receipts or number of employees. Contact your city or county business licensing office to determine what's required for your specific situation. Additionally, depending on your business type, you may need specialized permits or licenses (health permits for restaurants, professional licenses for certain services, sales permits if you sell goods, etc.). This article focuses on corporate-level compliance, but local business licenses are a separate layer of compliance you shouldn't overlook.

For tax purposes, the general rule is to retain corporate tax returns and supporting documentation for at least four years from the later of the due date or the date you filed the return. California's statute of limitations for tax assessments is generally four years, though it extends to eight years if you substantially understate income. The IRS has a three-year statute for most assessments and six years for substantial omissions. However, from a corporate governance and veil protection standpoint, I recommend retaining core corporate documents indefinitely—articles of incorporation, bylaws, minutes of major decisions, stock issuance records, and material contracts should be permanent records. These documents establish the corporation's history and may be needed decades later if ownership is questioned or historical corporate actions become relevant in litigation. For routine annual minutes and consents, many corporations maintain them indefinitely simply because the storage burden is minimal and there's no compelling reason to destroy corporate governance records.

Yes, with some modifications. Foreign corporations (meaning corporations incorporated in another state but qualified to do business in California) must file annual Statements of Information using Form SI-550 (or the foreign corporation equivalent) and must file California tax returns (Form 100 or 100S) if they have sufficient California nexus. The $800 minimum franchise tax applies to qualified foreign corporations. Your corporate governance obligations—board meetings, shareholder meetings, minutes—are primarily governed by your state of incorporation, but California will still examine whether you observed corporate formalities if veil-piercing issues arise in California litigation. If you're a foreign corporation, make sure you're tracking compliance requirements in both your state of incorporation and in California. The Statement of Information filing period for foreign corporations is based on the date you qualified to do business in California, not your original incorporation date in your home state.

Yes. California law recognizes electronic signatures under the Uniform Electronic Transactions Act (California Civil Code Section 1633.1 et seq.). Electronic signatures have the same legal effect as handwritten signatures for most corporate documents, including board consents, shareholder consents, and corporate resolutions. However, there are some practical considerations. First, make sure your electronic signature process creates a reliable record that can be authenticated later—major e-signature platforms like DocuSign, Adobe Sign, or HelloSign provide audit trails and verification features that help establish authenticity. Second, ensure that your bylaws don't prohibit electronic signatures (most modern bylaws either explicitly permit them or are silent, which allows them under California's default rules). Third, keep in mind that some third parties may request original wet-signature documents for major transactions even though electronic signatures are legally valid. For routine corporate governance, electronic signatures are efficient and perfectly acceptable.