Forming Corporations in Orange County, California

A Corporation is one of the most commonly formed business entities in Orange County, California. In this business structure, the law perceives the business as a separate legal person from its owners. In other words, it has its own rights, it can file lawsuits, it can pay taxes, it can buy and sell properties and also, it can commit crimes. The biggest advantage of being a corporation is that the personal assets of its owners are protected from the legal liabilities that arise from the debts and obligations that the business may incur.

How to Incorporate a Business in California?

Incorporating a Business in Orange County

Business Incorporation in Orange County, CA

The term Incorporation refers to the process of forming a new Corporation. A business can incorporate by filing an application for charter with the state of California. These application forms filed are also referred to as Articles of Incorporation (or Certificate of Incorporation or the Corporate Charter). The Articles of Incorporation should include the purpose for forming the corporation, the names and addresses of the members of the corporation, the amount and kinds of stock that the corporation will be authorized to issue, and the right and privileges of each stockholder.

The first step you should take in order to incorporate your business in California is filing the applicable Articles of Incorporation with the Secretary of State. There are various Articles of Incorporation forms to choose from, and each has been drafted to meet the requirements of the State. You can either use the forms they provide, or have a corporate lawyer compose a statutorily compliant document for you. In California, it will cost you 100 USD for filing the Articles of Incorporation, plus an additional handling fee of 15 USD, paid over-the-counter.

The different Articles of Incorporations include:

  1. Articles of Incorporation of a General Stock Corporation (Form ARTS–GS)
  1. Articles of Incorporation of a Close Corporation (Form ARTS–CL)
  1. Articles of Incorporation of a Professional Corporation (Form ARTS–PC)
  1. Articles of Incorporation of a Nonprofit Mutual Benefit Corporation (Form ARTS–MU)
  1. Articles of Incorporation of a Nonprofit Public Benefit Corporation (Form ARTS–PB–501(c)(3))
  1. Articles of Incorporation of a Nonprofit Religious Corporation (Form ARTS–RE)
  1. Articles of Incorporation of a Common Interest Development Association (Form ARTS–CID)

It is important to remember that the documents you submit may be returned to you for correction without being filed. This usually happens when there are name issues, errors, omissions or misstatements in the submitted Articles of Incorporation. To make sure that all issues and concerns are addressed properly and that the filing is done correctly, you must consult with a corporate attorney in Orange County prior to submitting the documents to the Secretary of State.

Why Should a Business Incorporate?

There are various advantages of incorporating a business in California. The prominent advantage is that, in a corporation, shareholders are not liable for the actions of the company. Therefore, creditors cannot touch the owners’ personal assets if the corporation is unable to pay its debts and obligations.

Another advantage of being a corporation is that, unlike Sole Proprietorships and Partnerships, a corporation has unlimited life. In a Sole Proprietorship and in Partnerships, the company has to dissolve upon the death or bankruptcy of a particular owner or owners. A corporation, on the other hand, continues to exist in these situations. A Corporation will continue to operate indefinitely, until it has accomplished its objectives or has merged with another company, or if the corporation itself has gone bankrupt.

Another characteristic of a corporation that incorporators will enjoy is the transferability of the corporation’s shares. One of the main motivators for incorporating a business is to have an assurance that the ownership interest that a shareholder has invested in the company is readily sold, transferred or given away to another family member. In a Sole Proprietorship and in a Partnership, removing yourself of ownership in the company can be burdensome and costly. In the event of the slightest ownership change, properties need to be retitled, new deeds need to be drawn and many other administrative steps have to be taken.

Among the different business entities, Corporations attract more investors, and therefore are able to raise their investment capital. New investors are more attracted to corporations because of the limited liability characteristic of this business structure, and the easy transferability of their shares.

Who Plays What Roles in a Corporation?

California Business Incorporation

Corporations in Orange County, CA

In order for a Corporation to operate efficiently and effectively, there are certain roles that need to function. These roles include:

1. Board of Directors

The original Board of Directors in a Corporation is designated in the Articles of Incorporation that have been filed with the Secretary of State. It is the responsibility of the Directors to oversee the officers of the company, and to make sure that the business operates according to law, and corporate procedures. It is the legal duty of every Board Director to act in the corporation’s best interest, and not their own interests. Their other legal responsibilities included protecting the investments of all their stockholders in the corporation. The Board of Directors also has the power to appoint and to dismiss any of the corporation’s officers.

2. Stockholders

Stockholders, also known as shareholders, are those who have been granted stock by the business in exchange for their investment. Investments may be in the form of money or services done for the corporation. It is part of the stockholders’ responsibility to hold an annual meeting in order to elect the corporation’s Board of Directors. The corporation’s stockholders are not legally liable for any of the corporation’s debts and obligations.

3. Corporate Officers

The Corporate Officers are those given the responsibility of running the corporation daily. A typical set of Corporate Officers includes at least on Chief Executive Officer (CEO) and/or President, a Secretary and a Treasurer/Chief Financial Officer (CFO).

The Role of a Corporate Attorney in a Corporation

Business Attorneys in CA

Incorporation Attorneys in Orange County, California

If you want to have your business incorporated, it is wise to seek the assistance of a corporate attorney in Orange County, California. A corporate lawyer can help you with the Articles of Incorporation, starting your corporation, and can even help you throughout the existence of your business. Having a corporate lawyers contracted is very helpful in all the legal aspects of forming and running a corporation.