California Corporate Laws Every Entrepreneur Must Know

Planning on opening a business in California? There are some things you need to know.Here are 5 important corporate California laws you can’t ignore.

Your company has outgrown itself, and now it is time to move on to bigger and better things. Things like forming a corporation.

Incorporating your company in California helps protect your personal assets, reduces financial liability, and offers protection from the actions of your business partners.

But first, you will need to adhere to California corporate laws. Not sure where to start? We’ve got you covered. Below you will find what you need to know!

California Corporate Laws

Whether you are forming a C or an S corporation, there are certain steps you need to take. While some of the specifics may vary, the general requirements remain the same.

Check out this lost to see what it takes to incorporate a company in California:

1. Articles of Incorporation

The first item on the California corporate laws to-do list includes filing your articles of incorporation with the California Secretary of State.

The articles of incorporation should include a street address, the number of shares the corporation has authorized, signatures of each person involved, as well as the corporation name and purpose (more on that later).

2. Choosing a Name

According to California corporate laws, you need to select a name for your corporation before you can submit your articles of incorporation.

Checking the availability of your tentative corporate name can be accomplished by contacting the California Secretary of State or by using an online service.

The name, however, must meet some basic requirements. The name cannot be deceptive in any way, and it can’t be similar to other corporation names unless written permission is granted.

3. Specifying Incorporators

New corporations in California are required to list the people (as well as entities) who will be applying for incorporation.

This list of incorporators must be included with the articles of incorporation, as well as the respective signatures of each. However, only one incorporator is actually needed to form a corporation.

California law also specifies that if the directors aren’t named in the articles of incorporation, the incorporators are still permitted to take the necessary steps to complete the incorporation process.

4. Appointing Directors

California law dictates that a corporation must have a minimum of three directors.

However, this law does not apply if the corporation has less than three shareholders. For instance, if a corporation has only one shareholder, the company may operate with one or two directors.

The final number of selected directors, though, must be specified within the articles of incorporation or the corporation’s bylaws.

5. Creating Corporate Bylaws

Another requirement of California law is the creation of corporate bylaws. The purpose of these bylaws is to determine how the corporation will operate.

California law requires that a corporation’s bylaws do not include anything illegal. Also, these bylaws must specify the number of directors. These bylaws do not need to be filed with the Secretary of State. Rather, they are to be kept at the corporation’s main place of business.

Conclusion

Forming a corporation is not only a great way to grow your business, but it’s also a great way to protect your personal interests and assets.

For more information about how to navigate California corporate laws, contact Lisa Wills Law today for a consultation!

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