Updated: Oct 16, 2021
Important Steps To Corporate Formation In California
Corporations are the most difficult to set up and operate of all the legal business structures. However, they offer business owners the best protection for personal assets, as well as an immense potential to generate cash and other benefits.
In any case, the size and nature of your company will influence the legal structure you should use. So before you get in, make sure you understand the incorporation procedure and follow it step by step:
1. Choose A Business Name
Choose a winning business name. Keep in mind that your state may require an identifying word, such as "incorporated," "limited," "corporation," or an abbreviation of such a term, to be included in your corporate name.
You could also look for names that are similar to those already in use. However, you may not be able to register your name if it is too similar to an existing name, causing customers to be confused.
Aside from your official business name, you need also to register any fictitious business names under which you do business.
2. Select a Location for Incorporation
Even if your company's primary operations are in one state, you may choose to incorporate in another if the benefits outweigh the costs.
Then, for your corporation, choose directors. The board of directors is in charge of overseeing operations and ensuring that the interests of investors and shareholders are protected. Directors might be company officers, investors, or people who have no other ties to the company.
The articles of incorporation are filed with your secretary of state's office and act as your corporation's formal charter.
If there's any confusion with these steps, consider contacting a Business Litigation Attorney in California to help you with documentation and other business requirements.
3. Create Your Bylaws
The objective of the corporation and who administers the business are both outlined in corporate bylaws.
You might also want to draft a shareholder agreement. While it isn't necessarily required, it often addresses shareholders' rights and duties, such as share ownership terms and valuation.
4. Articles of Incorporation Should Be Filed
File the articles of incorporation with the secretary of state's office in your state, together with the required filing fees.
This is an especially crucial step. That said, it's easy to overlook a few requirements when you're doing them on your own. Contact a California Business Lawyer to help you.
5. Open A Bank Account And Start Company Records
Because the corporation is a legal entity distinct from its owners, you should open a bank account in the corporation's name rather than an individual's.
Additionally, maintaining accurate records will assist your company in achieving its objectives and holding officers and board members accountable.
6. Hold Your First Meeting
Because this is the initial meeting, you'll spell out the company's structure, vision, and goals and set the tone for subsequent meetings.
Explain how the business will run, and what you need to do from there on out.
7. Obtaining Business Permits and Licenses
Most importantly, you need to acquire business permits and licenses. Again, this will depend on your business, niche, location, and employment types.
As you take this crucial step, keep in touch with your California Business Lawyer. This way, you'll be able to keep track of the essential legal documentation and requirements to run your business.
Find A Business Litigation Attorney in California
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You can contact us through our 24/7 live chat (or complete our case submission form) for a free initial case consultation.