This section will explain the basic procedures for setting up a corporation in California. The procedure for incorporation in California is similar but not identical to many other states.

CORPORATE NAME

The first step is to reserve the corporate name. Since there are hundreds of thousands corporations in California, many names are not available. Therefore, the first step is to check if the corporate name is available. Usually, if the corporate name is available, it can be reserved with the Secretary of State of California for 60 days.

ARTICLES OF INCORPORATION

After the corporate name is selected, the articles of incorporation are prepared and filed with the Secretary of State of California.

FIRST MEETING OF BOARD OF DIRECTORS

After the articles of incorporation have been filed with the Secretary of State, the directors hold their first meeting. At the meeting, the directors and officers are elected, stock issuance is authorized, bylaws are adopted, corporate office address is established, bank selected, and other initial matters.

TAX IDENTIFICATION NUMBER

After the corporation has filed its articles of incorporation, it may obtain a federal tax identification number from the Internal Revenue Service using IRS form SS-4.

STOCK ISSUANCE

After the board of directors have authorized the initial stock, the corporation proceeds to issue stock. The shareholders must fund the corporation with the initial capital. Before stock is issued, a permit must be obtained from the Department of Corporations. However, if the shareholders of the corporation is limited to less than 35 persons, then it is possible to issue stock by registering with the Department of Corporations under Corporate Code Section 25102(f), which is a simplified and common method to issue stock.

BUSINESS LICENSE

In most cities, it is required to obtain a city business license from the city where the corporation is located.

SELLER'S PERMIT

If the corporation will be selling products in California, it must obtain a seller's permit from the State Board of Equalization. Also, the corporation must pay California sales tax for products it sells.

COMPLETION OF CORPORATION

After the articles of incorporation, first meeting of directors, and stock issuance are completed, the basic formation of the corporation has been completed. However, there are other business matters that must be completed to set up the corporation as an existing business which varies depending on the type of company.

This outline states the basic procedures for setting up a corporation in California. It is not intended to be a complete guide and if you are intending to set up a corporation you should consult with a lawyer and accountant.