Corporate laws are state specific (i.e. they vary from state to state); most states, however, follow the same basic pattern for incorporation (with slight differences in the naming of documents, etc.)  The following is a generalized list of the steps involved in setting up a corporation in California.  If you incorporate in another state (i.e. such as Delaware) but intend to open an office in California, you should be aware that you are required to file with the California Secretary of State to qualify to do business in California as a foreign corporation.

 

STEP ONE:  CHOOSE AND RESERVE CORPORATE NAME

Before filing your Articles of Incorporation with the California Secretary of State, Infiniti Law will conduct a name search with the Secretary of State to insure the availability of your chosen name as a corporate name.  It is possible to submit a name reservation request to the Secretary of State that will hold the corporate name for up to 60 days to insure that you do not loose the name while preparing to incorporate.  Availability as a corporate name, however, only means that no one else has registered a corporation under this name in California.  It does not guarantee your right to use this name or provide you with any protection from others using this name---intellectual property laws determine these rights.  Prior to making a final decision on a corporate name, it is advisable to conduct a trademark and domain name search to ensure that you will lawfully be able to use the name and that the name chosen will suit not only your current but also future business needs.  Infiniti Law can help you design and implement a trade name protection strategy that is in keeping with both your current and future business goals. 

  

STEP TWO:  DECIDE ON CAPITAL STRUCTURE

Because your capital structure may affect the drafting of the Articles of Incorporation, we recommend that you make the major decisions regarding initial capitalization of the corporation in advance (i.e. will the company be financed through equity or debt financing—or a combination of the two).  Ensuring adequate capitalization is important for protection of your shareholders because undercapitalization is one of the main reasons why courts have chosen to “pierce the corporate veil” (i.e. disregard the corporate entity and hold the shareholders responsible for the debts of the corporation).

 

STEP THREE:  DRAFTING OF ARTICLES OF INCORPORATION AND BYLAWS

The filing of the Articles of Incorporation with the Secretary of State is what actually establishes the corporation.  Bylaws, by contrast, are the governing documents and lay out the location of the principal office, the roles and duties of the directors and officers, procedures for director and shareholder meetings, etc.  Infiniti Law will work closely with your company to ensure that the documents drafted are in keeping with your corporate culture and your vision for your company.

 

STEP FOUR:  FILING OF THE ARTICLES OF INCORPORATION

Infiniti Law files the Articles of Incorporation with the Secretary of State and your Corporation is now an established separate legal entity.

 

STEP FIVE:  ORGANIZATIONAL MEETING MINUTE NOTES DRAFTED AND ORGANIZATIONAL MEETING OF DIRECTORS HELD

At this point, final set-up decisions are required and corporate authorizations for the actions of officers are given.  Information required will include:  who are the officers and directors going to be?  Which officers are to have which powers?  Authorizations will need to be given with regard to appointment of Certified Public Accountants, establishment of bank accounts, authority for obtaining tax identification numbers, etc.  Authorization for the implementation of the capital structure chosen earlier is also given.

 

STEP SIX:  CAPITAL STRUCTURE/FINANCING DOCUMENTS EXECUTED

The capital structure/financing documents are drafted and executed per previously decided guidelines.  Securities law compliance requirements are addressed and required filings completed.

 

STEP SEVEN:  REGISTRATION AND LICENSING DOCUMENTS PREPARED AND FILED

After incorporation, Infiniti Law will assist you in obtaining the various business identification numbers and licenses needed.

 

The following is illustrative of what is typically required:

 

  • CORPORATE NUMBER:  Upon filing of the Articles of Incorporation, the Secretary of State will assign you this number.

 

  • FEDERAL TAX IDENTIFICATION NUMBER:  We apply for this number through the US Internal Revenue Service (IRS).  It is required for a variety of matters, such as your federal employment tax filings, your federal tax return, opening a bank account, etc.

 

  • CALIFORNIA TAX IDENTIFICATION NUMBER:  We apply for this number through the California Employment Development Department.  It is required primarily for your state payroll records and filings.

 

  • SALES PERMIT:  If you are selling goods, a seller’s permit through the California State Board of Equalization will be required.

 

  • BUSINESS LICENSE: A local business license issued through the city in which your office is located is required.  Typically, zoning clearance is required before license issuance.

Other permits and licenses may be required depending on what type of business you are operating and whether or not you will be exporting/importing goods.