What is a shareholder in a California corporation?
When you form a California corporation, you issue shares of stock to your owners, who are known as shareholders. It is these shares of stock that designate ownership in a corporation. In general, a shareholder exchanges assets, such as money or property, in return for stock.
What is public traded stock?
Publicly-Traded Stock. A publicly-traded corporation is a company that has stock sold on a public exchange, such as the New York Stock Exchange (NYSE). “Going public” is a lengthy and expensive undertaking, generally taking at least a year of time and costing over a million dollars.
Why is it so hard to go public?
This is why the process of going public is long and difficult, because investment banks do not want to take on a bad or risky investment.
Can stock be divided into different classes?
Stock can be divided into different classes (although it does not have to be). The most common example of this is when a corporation offers both Common Stock and Preferred Stock. Common and Preferred are different classes. The purpose of having different classes of stock is that each class offers different rights.
Does preferred stock have voting rights?
Preferred Stock usually comes with no voting rights, but promises set dividends regardless of whether or not the company shows any profits. The rights, privileges and restrictions for different classes of stock can be determined by the Board of Directors in any way it sees fit.
Can a California corporation issue more than one stock?
State law allows a California corporation to issue more than one class of stock, and different series of stock within each class. However, all series of stock within a class must have the same rights and privileges.
What is a C corp?
A C Corporation is taxed as a separate entity and must report profits and losses on a corporate tax return. The C Corp pays corporate taxes on its profits while the shareholders are not taxed on the corporation’s profits. C Corp shareholders report and pay income taxes only on what they are paid by the corporation.
When does a C corp end?
C Corporations can choose when their fiscal year ends while an S Corporation’s fiscal year end must be December 31. If a C Corp has been using a fiscal year end other than December 31, it must change to a December 31 fiscal year end if it converts to an S Corp. And if the S Corp status is later revoked, it cannot change from the 12/31 fiscal year.
What are the benefits of a C corporation?
Both C Corporations and S Corporations are allowed to provide employee benefits that are deductible by the corporation and tax free to the employees. Retirement Plans, Medical Plans, Life Insurance, Childcare, and Education Plans are some of the types of benefits frequently offered.
Does an S corporation pay income tax?
While an S Corporation with more than one shareholder does file an informational K-1 tax return, the corporation itself does not pay any income taxes.
Do S corporations pay payroll taxes?
Of course that means employee-owners cannot avoid paying payroll taxes by paying themselves nothing.
Can a C corporation accumulate capital?
Since the corporate tax rate is typically lower than an individual’s tax rate and profits retained in the corporation will not be double taxed as dividends, a C Corporation can generally accumulate capital more effectively than an S Corporation. Of course an S Corporation could accumulate even more capital if it did not distribute any of its profits to the shareholders – but doing so would create obvious problems for some owners who would have to pay income taxes on this HYPERLINK "https://www.maxfilings.com/incorporation-knowledge-center/Phantom-Income.php" “phantom income” which they did not actually receive.
Can a C corporation have multiple classes of stock?
Each S Corporation shareholder must be a U.S. citizen or resident. C Corporations can have multiple classes of stock while S Corporations are limited to one class of stock (voting rights can differ).
What is a California corporation?
Corporation. A California corporation generally is a legal entity which exists separately from its owners. While normally limiting the owners from personal liability, taxes are levied on the corporation as well as on the shareholders. The sale of stocks or bonds can generate additional capital and the longevity of the corporation can continue past ...
What is an LLP in California?
An LLP is a partnership that engages in the practice of public accountancy, the practice of law, the practice of architecture, the practice of engineering or the practice of land surveying, or provides services or facilities to a California registered LLP that practices public accountancy or law, or to a foreign LLP.
What is considered when establishing a business?
Once you decide to establish a business, a primary consideration is the type of business entity to form. Tax and liability issues, director and ownership concerns, as well as state and federal obligations pertaining to the type of entity should be considered when making your determination.
What is a sole proprietorship?
Sole Proprietorship. A sole proprietorship is set up to allow an individual to own and operate a business. A sole proprietor has total control, receives all profits from and is responsible for taxes and liabilities of the business.
Does California have limited liability?
A California LP may provide limited liability for some partners. There must be at least one general partner that acts as the controlling partner and one limited partner whose liability is normally limited to the amount of control or participation of the limited partner. General partners of an LP have unlimited personal liability for the LP’s debts and obligation.
Signature Requirements
The document must be signed and acknowledged by the chairman of the board, the president or any vice president AND the secretary, the chief financial officer, the treasurer or any assistant secretary or assistant treasurer. (California Corporations Code section 1155 (b) or 3304 (b) .)
California General Stock Corporation
File Articles of Incorporation containing a statement of conversion. Article forms are available below for the following conversions.
California Professional Corporation
The converting entity must be a California LLC, LP or GP; or a Foreign Corp, LLC, LP, GP or Other Business Entity.
California LLC
The filing fee is $150 if a California Corp is involved; and $70 for all others.
California LP
The filing fee is $150 if a California Corp is involved; and $70 for all others.
Registered GP
The filing fee is $150 if a California Corp is involved; and $70 for all others.
Non-Registering GP
The filing fee is $150 if a California Corp is involved; and $30 for all others.
How to start a corporation in California?
Starting a California corporation involves several steps. The first thing an entrepreneur must do to start a California corporation is to choose a name. The corporation's name cannot be the same or substantially similar to an existing corporation in California that is registered by the Secretary of State and cannot mislead the public.
What is a corporation's bylaw?
A corporation’s bylaws are a set of rules the corporation agrees to follow. Bylaws are internal and help get the corporation operating. While not legally required to have bylaws, doing so helps the corporations credibility and can help when trying to take out a loan, obtain credit, or other similar matters.
How long does it take to file a statement of information in California?
Each corporation doing business in California needs to file a Statement of Information within 90 days after filing its Articles of Incorporation with the Secretary of State. The Statement of Information must be filed every year during the same month the Articles of Incorporation were filed or the prior five months.
Do foreign corporations need to register in California?
Foreign Corporations Doing Business in California. Any incorporation registered with a different state must also register with California if it wants to do business in the state. Foreign corporations are also required to appoint an agent that will be physically present in California.
How is franchise tax calculated?
For new businesses, the franchise tax is calculated depending on their first year’s income and is subject to estimation. Income amounts of a certain level or higher will require the corporation to pay an additional fee based on their total yearly income.
Where do you keep the records book for a corporation?
This records book must typically be kept at the corporation’s headquarters or principal office.
What is the purpose of the first board of directors meeting?
At the first Board of Directors meeting, the directors should elect corporate officers, who basically act as agents of the corporation. They should also adopt the corporation’s bylaws, select a bank, and authorize the amount of shares they will issue.
What is a professional corporation in California?
A California professional corporation organized to engage in the practice of veterinary medicine is controlled generally by all of the provisions of the California Corporations Code and specifically by the provisions of §§ 13400-13410 (Professional Corporations) of that Code.
What is an accountancy corporation?
An accountancy corporation is a corporation which is registered with the California Board of Accountancy and has a currently effective certificate of registration from the board. Subject to all applicable statutes, rules and regulations, an accountancy corporation is entitled to practice accountancy.
What is the California Business and Professions Code?
California Business and Professions Code, §§ 6000-6228. General Discussion: A California professional law corporation is controlled generally by all of the provisions of the California Corporations Code and specifically by the provisions of §§ 13400-13410 of that Code.
How many directors are needed for a professional corporation?
A professional corporation which has only two shareholders need have only two directors who shall be such shareholders. The two shareholders between them shall fill the offices of president, vice president, secretary and treasurer.
What is a medical corporation?
A medical corporation is a corporation which is authorized to render professional services, as defined in §§ 13401 and 13401.5 of the Corporations Code, so long as that corporation and its shareholders, officers, directors and employees rendering professional services who are physicians, psychologists, registered nurses, optometrists, podiatrists physician assistants, are in compliance with the Moscone-Knox Professional Corporation Act, the provisions of Business and Professions Code §§ 2000-2521, and all other statutes and regulations now or hereafter enacted or adopted pertaining to the corporation and the conduct of its affairs.
What is a licensed person?
A “licensed person” is any natural person who is duly licensed under the provisions of the Business and Professions Code to render the same professional services as are or will be rendered by the professional corporation of which he or she is or intends to become, an officer, director, shareholder, or employee.
Authorizing and Issuing
- When you file Articles of Incorporation, you are required to list the amount of stock you are authorizing. Authorizing is the same as creating. If you authorize 100 shares, you are creating 100 shares of stock. Those shares, however, have not yet been issued. In other words, they have not been given to anyone. You will issue stock initially at your first shareholders meeting. It is at this …
Classes and Series
- Stock can be divided into different classes(although it does not have to be). The most common example of this is when a corporation offers both Common Stock and Preferred Stock. Common and Preferred are different classes. The purpose of having different classes of stock is that each class offers different rights. Generally, Common Stock gives the shareholder a vote at sharehold…
Value of Shares of Stock
- Shares of stock have value. In a private company (i.e a corporation that is not traded on a public stock market), you can set the value of these shares how you see fit. The value of the stock is set in your corporate bylaws. Each share could be worth $1, $10, $100, etc. It is important to recognize that when your initial shareholders buy-into the corporation, they are exchanging asse…
Publicly-Traded Stock
- A publicly-traded corporation is a company that has stock sold on a public exchange, such as the New York Stock Exchange (NYSE). “Going public” is a lengthy and expensive undertaking, generally taking at least a year of time and costing over a million dollars. Very few companies are publicly-traded. Private companies are the norm. Publicly-traded s...