Key Takeaways

  • Corporation registration in California requires filing Articles of Incorporation with the Secretary of State, along with appointing a registered agent and reserving a unique name.
  • Foreign corporations must obtain a Certificate of Qualification before conducting business in California, and failure to do so can result in fines and inability to defend lawsuits.
  • Nonprofit corporations follow similar steps but must clearly define their charitable purpose and comply with additional IRS and state tax exemption requirements.
  • California corporations must meet ongoing obligations, including annual franchise taxes, Statements of Information, and compliance with state-specific governance rules.
  • Professional corporations and benefit corporations have special rules and requirements unique to their business purpose and industry.

Corporation registration California is a fairly straightforward process and is mostly focused on filing your Articles of Incorporation with the Secretary of State. If you wish to register a foreign corporation, you will first need to acquire a Certificate of Qualification.

Registering a California Corporation

Registering a corporation in California is very beneficial, thanks to the state's large economy. In California, the existing business infrastructure can make it easier for corporations to turn a profit. Incorporating your business is a good choice because it can shield your private assets from the debts of your company. Once you have separated your personal and business assets, you will have a much easier time attracting investors and obtaining grants or bank loans.

Completing corporation registration in California requires a few simple steps:

  • Name a registered agent. All California businesses must have a registered agent that is legally allowed to work in the state. Your agent will accept legal notices mailed to your company.
  • Perform a name search. You must choose an original name for your corporation. Check the availability of your company's name by performing a business search on the Secretary of State website.
  • Reserve your name. If your corporate name is available. you can complete a Name Reservation Request Form and reserve your name for 60 days. You can file this form online or by mail, and you must pay a filing fee.
  • File formation documents. Submitting your Articles of Incorporation is the final registration step. The form you will use will depend on the type of corporation you are establishing. You can submit your articles, along with a filing fee, to the Secretary of State.

Ongoing Compliance Requirements for California Corporations

Registering your corporation is just the beginning. To remain in good standing in California, corporations must fulfill several ongoing compliance obligations:

  • Annual Franchise Tax: All corporations must pay the minimum $800 annual franchise tax to the California Franchise Tax Board, regardless of revenue.
  • Statement of Information: Within 90 days of filing your Articles of Incorporation, and every year thereafter, you must file a Statement of Information (Form SI-550). This document updates the state on corporate addresses, officers, directors, and the registered agent.
  • Corporate Records: California law requires corporations to maintain bylaws, minutes of board and shareholder meetings, and accurate stock issuance records.
  • Licenses and Permits: Depending on your industry and city, you may need additional local business licenses or permits.
  • Employment Compliance: Corporations hiring employees must register with the California Employment Development Department and comply with payroll tax obligations.

Failing to meet these requirements can lead to penalties, suspension, or forfeiture of corporate status.

Foreign Corporation Registration

If you want to register a foreign corporation, meaning a corporation formed in another state, your first step should be obtaining a Certificate of Qualification. You are not allowed to conduct business in California before you have acquired this document.

To acquire your Certificate of Qualification, you must file a Statement and Designation by Foreign Corporation form. Include the following information on this form:

  1. The name of your corporation and the location where it was incorporated.
  2. The principal executive office address.
  3. The corporation's principal California address.
  4. The contact information of your California registered agent.

Once you have filed your statement, your corporation will be subject to a minimum franchise tax. This tax is due annually and costs $800. Your corporation must pay this tax even if it does not generate any revenue in California.

Even if you started your business in California, you may want to incorporate in another state. For instance, many California businesses choose to incorporate in Delaware or Nevada because of their business-friendly laws. If you decide to form your corporation in another state, you will still need to register in California if you want to conduct business in the state.

If you do not register your foreign corporation in California and continue to do business in the state, you will incur a fine of $20 per day until you complete your registration. Conducting business in California means that your corporation consents to the laws of the state and any lawsuits filed against your company in this state will be heard by the California courts.

Additionally, if your foreign corporation gets sued and has not registered, you will not be able to defend yourself from the suit until you complete several steps:

  1. Pay a $250 fine.
  2. Pay any other fines resulting from your lack of registration.
  3. Pay outstanding franchise taxes.
  4. File a Certificate of Qualification with the Clerk of Court.

Professional and Benefit Corporations in California


California law recognizes special corporation types with unique requirements:

  • Professional Corporations (PCs): Certain licensed professionals—such as doctors, attorneys, and accountants—must form a Professional Corporation rather than a general corporation. PCs must comply with licensing board rules in addition to California corporate law.
  • Benefit Corporations (B Corps): A benefit corporation is designed for businesses that want to pursue profit while also creating a positive social or environmental impact. California requires these corporations to prepare annual benefit reports outlining their progress toward their stated mission.

These specialized structures offer additional credibility but also impose stricter compliance standards than traditional corporations.

Forming a Nonprofit Corporation

Forming a California nonprofit corporation follows a similar process to registering a typical corporation. For instance, your first step in forming your nonprofit will be choosing a unique name and completing a 60-day name reservation. After you've selected and reserved a name for your nonprofit, you should draft your Articles of Incorporation. In this document, you will list several pieces of information about your nonprofit, including its name, purpose, and any limits you wish to place on your company's power.

You will need an incorporator's signature on your Articles of Incorporation. Only one incorporator is necessary, and this person doesn't actually need to have a role in your nonprofit after its formation.

Tax-Exempt Status and Charitable Compliance

Forming a nonprofit corporation in California involves more than filing Articles of Incorporation. To gain tax-exempt recognition:

  1. Apply for Federal 501(c)(3) Status: File IRS Form 1023 (or 1023-EZ) to be recognized as a tax-exempt charitable organization.
  2. Apply for California Tax-Exempt Status: Submit Form 3500A to the California Franchise Tax Board to avoid state income tax obligations.
  3. Register with the Attorney General: Nonprofits soliciting donations must register with the California Attorney General’s Registry of Charitable Trusts.
  4. Annual Filings: File IRS Form 990 and California Form RRF-1 annually to maintain compliance and transparency.

Nonprofits that fail to meet these requirements risk losing their tax-exempt status.

Frequently Asked Questions

1. How much does it cost to register a corporation in California?

The Articles of Incorporation filing fee is $100. Additional fees apply for name reservations, Statements of Information, and expedited processing.

2. How long does corporation registration take in California?

Processing can take several weeks. Expedited services are available for an additional fee through the Secretary of State.

3. Can I register my corporation online in California?

Yes. The Secretary of State allows online filing of Articles of Incorporation, Statements of Information, and other required forms.

4. Do foreign corporations pay California franchise tax?

Yes. Once registered, foreign corporations must pay the $800 annual franchise tax, even if no revenue is generated in California.

5. What is the difference between a nonprofit and a benefit corporation in California?

Nonprofits operate exclusively for charitable or public purposes and qualify for tax exemptions, while benefit corporations are for-profit entities that balance profit with social or environmental goals.

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