5 Easy Steps on How to Incorporate a Small Business in California

Are you thinking about bringing your small business to the next level? As a small business owner, the question of incorporation often comes up. Incorporating your business can help your company grow and succeed, and California is the ideal place to do it.

Here we will cover the essential questions that come up when contemplating incorporation. Whether you have just started considering incorporating your business in California or you have already taken the preliminary steps, it is crucial to have all the information before you start. Perhaps you’ve heard about the advantages that incorporating your small company could provide you with or are curious about how to get the process started and what it involves.

For only $850, our corporate attorney can incorporate your business in California which includes the following:

  • Articles of incorporation / organization
  • Bylaws
  • Organizational minutes
  • Filing of Statement of Information re officers and directors
  • Help Obtaining EIN (federal tax ID) number, if requested
  • Help filing IRS S-Election Form, if requested
  • Filing and related costs (including a corporate kit, or minute book with share certificates) are included in the retainer amount.
  • Unlike LegalZoom, RocketLawyer, and other law firms, our law firm will act as an agent of service for free.

Whatever brings you here, we know you care about your business and want it to prosper. So, let’s get started.

Douglas Wade, Business Attorney

Douglas Wade, Attorney

Free Consultation

The Steps to Incorporation


Step 1: Finalize your Name and Location.

Where do you want your newly incorporated company to be established, and where do you want to run your business? Focus on the rules, guidelines, and general sense of accessibility in each state and consider the specific needs of your company.

Additionally, what’s in a name? When you are working on incorporating your small business, a new name is paramount. So, what are you planning on calling your newly incorporated company? Be sure to check state guidelines as you go through the naming process.

Step 2:  Choose a Business Structure:

There are numerous formats available to you in this step. The list of diverse options for partnership ranges from C-corporations to S-corporations, as well as including Limited Liability Companies (LLCs) and Limited Liability Partnerships (LLPs). This is one of the major steps of incorporating your small business in California.

A skilled business attorney can help you narrow down the choices since there are several factors and variables to consider. Depending on the state, for example, there are necessary filings and fees, as well as reports that will be required. From adhering to corporate formalities to examining asset protection, it is important to sit down with a lawyer and the other members of your company and figure out what structure—and what state—will prove to be best for you.

For example: how much will it cost to form an LLC in California, and what will the tax situation look like? For the answers to these questions and more, do not hesitate to get in touch with us at Nakase Wade.

Step 3: Choose a State.

While we are focused on California, each state possesses different rules and regulations. For example, a corporation must have at least three directors under California law unless there are less than three shareholders. Other states have different rules concerning this, however, so it is important to do your research.

Step 4: Inform Yourself

Incorporating is not the correct step for everyone, and before you decide to take this monumental and often advantageous step, you need to grasp the overall impact it will have. Details matter, so carefully go over your current finances and set goals for what you would like to accomplish.

Step 5: Follow-Up

After you have successfully incorporated, we recommend you do not just sit back and wait. Make sure that you have drafted operating agreements and bylaws and searched out and applied for business licenses and other necessary documents, including permits. Also, do not forget to apply for an employer identification number.

The Advantages of Incorporation

Now that you are beginning to become familiar with the process, you may still have some doubts. This is perfectly normal. It helps to consider some of the most significant reasons that business owners seek to incorporate.

  • Protection

When you incorporate your business, you are able to enjoy much more successful Protection of your funds and assets. This is because, on a fundamental level, LLCs and Corporations are simply safer for business owners. Why? These incorporated companies let you, as the owner, differentiate between business debts, costs, funds, and personal assets. This means that your savings, car, home or apartment, or other personal holdings will not be impacted by the business’ performance.

In other words, when you operated your business as a sole proprietorship, you were not entitled to personal asset protection. Incorporation, on the other hand, provides limited liability to owners. This important kernel of information is one major reason that many business owners choose to incorporate.

  • Deductions

Before they provide owners with income, LLCs and corporations can deduct daily business expenses. This includes salaries and other expenses and can be helpful to your bottom line.

  • Taxes

Your LLC can be taxed in a similar way that a corporation would be and therefore will not be taxed doubly for dividends and corporate profits.

  • Continuation of Existence

Did you know that LLCs continue to exist if there are changes to management and ownership? Corporations do as well.

  • Name Protection

In California and many other states, other incorporated businesses cannot use the specific name of your business. Again, naming your business correctly is very important.

  • Protection of Personal Assets

Owners are allowed to protect assets that are deemed personal. As we expressed earlier, this can be helpful financially for your business.

  • Nationwide Recognition

Who doesn’t want more Recognition for their business? The 50 states as well now recognize both LLCs and Corporations, as well as the District of Columbia.

  • More Credibility

Adding “Inc.” or “LLC” after your business name adds a sense of confidence and authority to your company. Or, as Aristotle would say, a sense of “ethos.”

How Location Affects Incorporation


1) Expanding to the Other States

In today’s world, companies conduct their businesses all over the country, the world, and of course, across the internet. Keep in mind that you must complete single-state incorporation before proceeding to run your business or businesses in several states. Do not forget to first register in these additional states, as well as attend to the filing of necessary reports and the payment of obligatory fees.

2) Your Home State

If California is your business’ home state, you will probably want to continue your business journey here in the Golden State. You should expect to save money by doing so since you will avoid filing multiple reports and paying taxes in different states. You should also find this process a bit simpler than if you had moved to a different state after all factors are examined.

If you are already established in California or planning to create an LLC company in California, please allow us to answer any questions you have.

Incorporation and Taxes

The way in which we are taxed depends on the nature of the business that we run—this is nothing new. Taxes also depend on location, the type of corporation, and the structure. Make sure that you are aware of any impact that the incorporation of your business in your chosen state will have on your taxes owed. Make sure you are up to date and have realistic expectations. We can absolutely help with all of your tax questions.

  • LLCs utilize flow-through taxation

A flow-through business pays no taxes. Instead, an individual with the authority to do so pays the business’s taxes through that person’s own personal returns. This sort of taxation usually is seen in sole proprietorships, partnerships, and S-corporations.

  •  S-Corps

Additionally, certain corporations can choose a “flow-through” tax policy by informing the IRS they are an S-corporation. This is, naturally, an important step.

  • Reporting to the IRS

To report income to the IRS, C-corps file form 1120.

One Final Thought

The choice to incorporate your small business should be an exciting one, and we hope we can help to also make sure that it is an informed, rational choice. Explore each piece of information at hand, do your research, and continue to make the best choices that you can for the overall sake of your business and, more importantly, for the individuals who run the company. If you do that, you’ll continue to succeed.