You may save money and protect your personal property by forming a California S Corporation for your new business. You may avoid paying taxes twice by creating an S corporation, allowing shareholders to retain profits and losses. Here are the basic steps to begin.
What Makes a S Corporation Special in California?
California S Corporations do not pay federal income taxes. You and the other owners keep all the money your business made or lost and pay taxes on it individually. Unique criteria, one kind of stock, and less than one hundred shareholders are necessary for a S corporation. A yearly franchise fee of $800 is due regardless of whether your business is profitable. The state may not demand this fee during your first year.
Steps on How to start an S Corporation in California
Pick a name for your company that no one has yet claimed. You may temporarily reserve your name and check it on the Secretary of State’s website.
Get the Articles of Incorporation done and send them to the Secretary of State in California. You may now use this as official corporate correspondence.
Choose a person to serve as your registered agent. Important business papers are sent to this person or company.
Afterwards, draft the company’s bylaws. Follow these criteria for your company.
Minutes of your first board meeting must be recorded.
As a sign of ownership, the corporation should distribute shares to its owners.
To apply for S Corporation status with the IRS, you must file Form 2553. In California, you must use Form 100S.
After the first 90 days, you must file an annual Statement of Information.
These steps will ensure that your California S Corporation is formed and runs smoothly.
How to Open a C Corporation in California: A Simple Guide for Business Starters
How to open a C Corporation in California means you want to develop a large, multi-owner corporation. C Corporations are independent from you, so your personal belongings are secure if the firm fails.
Why Pick a C Corporation in California?
California C Corporations may have unlimited owners and sell shares to generate funds. The corporation pays taxes, and you pay taxes on business income. Double taxation helps your firm develop and attract investment.
Steps to Open a C Corporation in California
- Start by naming your firm differently from California competitors. Must end in “Inc.” or “Corporation.”
- Submit Articles of Incorporation to the Secretary of State. This form lists your company’s name, address, and more.
- Choose directors to assist in making key corporate choices.
- Create bylaws to govern your company.
- Meeting with directors to adopt bylaws and choose officers, such as a president.
- Share equity with owners.
- Apply for an IRS EIN to pay taxes and recruit staff.
- Annually register for state taxes and pay the $800 minimum franchise tax.
- Obtain all business permissions and licenses.
These procedures will help you form a California C Corporation and expand your business.
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