How to Form an S Corp in California
An S corporation is formed in California when the appropriate formation documents are filed with the Internal Revenue Service and the California secretary of state. There are rules that a California S corporation must follow such as having no more than 100 shareholders. Foreign businesses and individuals that are not citizens of the United States may not own shares of a California S Corporation. One of the biggest advantages of a California S corporation is that the owners of the company are allowed to pass their share of company profits and losses directly to their personal income tax returns, instead of paying taxes as businesses.
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Instructions
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Print a name availability inquiry letter from the California Secretary of State website. State the proposed name of the California S corporation, as well as contact information such as your address, name and telephone number. Send the name inquiry letter to 1500 11th St., Sacramento, CA 95814. If this is not feasible, establish a prepaid account with the California Secretary of State by calling 916-653-1233. When you establish a prepaid account, you are allowed to confirm name availability by telephone for $4 per search, as of 2010.
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Set up the company's board of directors. Choose at least three people to serve on the S corporation's board of directors, unless the company has fewer than three shareholders. When a California S corporation has fewer than three shareholders, the number of directors must be equal to the number of shareholders that own the business. There are no age or residency requirements imposed on directors of a California S corporation.
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Draft articles of incorporation for the California S corporation. Use the sample California articles of incorporation located on the California secretary of state website as your guide. Provide information about the S corporation such as the number of shares the company can issue, and explain the purpose for forming the business. State the name and address of each incorporator. This is the person or business that is responsible for filing the S corporation's articles of incorporation with the California secretary of state. Supply the name and address of the S corporation's registered agent. An adult or business with a physical address in California may act as an S corporation's registered agent. The registered agent's address is where the S corporation's lawsuit and other business documents will get delivered.
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Print a fill-in-the-blank statement of information from the California Secretary of State website. Fill out the statement of information. State the name and address of the S corporations and describe the company's business activities. Provide the name and address of the company's registered agent.
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File the articles of incorporation and the statement of information with the California Secretary of State. Deliver the incorporation documents in person or mail the completed documents to the California Secretary of State. As of 2010, it costs an S corporation $100 to file articles of incorporation and $25 to file a statement of information.
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Log onto the Internal Revenue Service website. Print Form 2553 from the IRS website. Provide information about the California S corporation's business activities, and state the legal name and principal location of the company. Include the signature of every shareholder. California S corporations must file Form 2553 within 75 days of filing articles of incorporation with the California Secretary of State. Fax the completed Form 2553 to the IRS at 801-620-7116, or mail Form 2553 to the Department of Treasury, Internal Revenue Service Center, Ogden, UT 84201.
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