Legal Question in Business Law in California

Re: Becoming a Corporation

In California, a corporation is formed by the filing of Articles of Incorporation with the California Secretary of State, and the payment of a fee. Once a name has been selected, and its availability confirmed, the filing of the Articles can be done within a day or two.

Once the Articles have been filed, the shareholders of the corporation typically hold the corporations first meeting of shareholders. At that first meeting the shareholders appoint directors, adopt the corporation's by-laws, approve and issue shares of the corporations stock, and ratify the actions of the incorporator. The Directors selected by the shareholders (generally the shareholders themselves in a small or "close" corporation) then hold the first meeting of the Directors of the corporation.

During the first meeting of Directors, officers are elected, and resolutions are passed authorizing the officers of the corporation to manage the day-to-day operations of the corporation.

The Shareholders and Directors meetings are generally held at or near the same time.

If the corporation has any employees, it will need to obtain workers compensation insurance on those employees.

Although a number of self-help books are available which explain the entire process, and provide many of the forms necessary, if you have any questions at all about the process, or if you are unsure whether you need to take a particular action, you should consult with an attorney.

While you can certainly form a corporation without the aid of an attorney, it is frequently better practice to spend the relatively small amount an attorney would charge to ensure that the corporation is properly formed, all of the right steps are taken, and you understand what the officers, directors, and shareholders must do to preserve the corporate separateness from its shareholders.

Re: Becoming a Corporation

A corporation is formed by the simple act of filing Articles of Incorporation with the Secretary of State -- and having them approved.

Mantaining a corporation is a little more involved. You need to issue stock, elect a board of directors and appoint officers. Oftern in a small, closely-held corporation these are all the same person(s).

you will need a Federal Tax ID number in order to get a bank account. If you have employees you will also need a State Tax ID number. You need to get a local business license.

Workers' Compensation insurance is also needed for any employees. Generally, the owners of the corporation may be excluded from coverage.

Please let me know if you need help forming a corporation, I do this on a regular basis. It usually takes about 4-6 weeks, although sometime it gets done faster.

Re: Becoming a Corporation

A California corporation is formed by filing its Articles of Incorporation with the Secretary of State and payment of a $100 fee. The Articles are usually quite simple and can consist of a single-page document. If filed in person in Sacramento, processing takes 15 to 45 minutes and costs an additional $15 for while-you-wait service.

However, incorporation itself is only the merest tip of the iceberg in "forming a corporation," as that concept should be understood by the new corporation's promoters. In addition, you may or will need bylaws, a corporate seal and records book, an agreement between the promoters, a tax ID number, an EDD account, a buy-sell agreement, a share issuance and capitalization of the company with the transaction reported to the commissioner of corporations, an "S corporation" election, coaching on how to elect directors, hold meetings and keep corporate records, and perhaps much more.

If the corporation is to operate an existing business, the process will also involve assignment and delegation of things such as leases and contracts, transfers of assets, etc.

As to workers' compensation, I believe the Labor Code makes coverage optional for officers and directors who are also the sole shareholders of the corporation. See Labor Code sections 3351(c) and 4151. You should confirm the current policy of the Labor Commisioner by telephone or visit to one of their offices to see how to opt in or out.

Re: Becoming a Corporation

As already stated, you will need to file Articles of Incorporation with the California Secretary of State.

A check of the name should be done intially to confirm that nobody is using your intended name.

Aside from that there are other corporate formalities involved.

Worker's compensation will be needed for employees.

We can likely assist you with forming your corporation; and we can tailor your set up to meet your specific needs. If you are in the northern or southern California areas, please contact us or email us at www.unalaw.com if we can be of further assistance.