Form a S-Corp in California
Everything you need to know about forming a S-Corp in California. Filing fees, requirements, timeline, and step-by-step guidance.
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How to File
Choose a Corporate Name
Select a unique name that includes a required designator such as 'Inc.', 'Incorporated', 'Corp.', or 'Corporation'. Search the California Secretary of State business name database to confirm availability before filing.
30 minutes
Appoint a Registered Agent
Designate a registered agent (also called an agent for service of process) who has a physical California street address and is available during normal business hours to receive legal documents on behalf of the corporation.
1 hour
File Articles of Incorporation
File Articles of Incorporation (Form ARTS-GS) with the California Secretary of State online, by mail, or in person. The filing fee is $100 and must include the corporation's name, registered agent, shares authorized, and incorporator information.
1-2 hours
File Initial Statement of Information
Submit a Statement of Information (Form SI-550) with the California Secretary of State within 90 days of filing the Articles of Incorporation. The filing fee is $25 and must include officer, director, and registered agent information.
30 minutes
What's Next After Filing
Once your S-Corp is officially formed, you'll want to complete these important steps:
- •Elect S-Corporation Status with the IRS — File IRS Form 2553 (Election by a Small Business Corporation) to elect federal S-Corp tax status. This must be filed no later than 2 months and 15 days after the beginning of the tax year in which the election is to take effect, and all shareholders must sign the form.
- •Create Corporate Bylaws and Hold Organizational Meeting — Draft corporate bylaws governing the internal operations of the corporation, then hold an organizational meeting of the board of directors to adopt bylaws, appoint officers, authorize issuance of shares, and address initial corporate matters. California does not require bylaws to be filed with the state.
- •Obtain EIN, Licenses, and Open Bank Account — Obtain a federal Employer Identification Number (EIN) from the IRS at no cost, register with the California Franchise Tax Board, obtain any required state and local business licenses or permits, and open a dedicated corporate bank account to maintain proper separation of corporate and personal finances.
Advantages
- ✓Pass-through taxation avoids federal double taxation, with income and losses reported on shareholders' personal tax returns
- ✓Shareholders who are active employees can reduce self-employment taxes by splitting income between reasonable salary and distributions
- ✓Provides strong personal liability protection for shareholders, separating personal assets from business debts and liabilities
- ✓Enhances business credibility and makes it easier to attract investors, obtain financing, and enter contracts compared to sole proprietorships or partnerships
Considerations
- •California imposes a minimum $800 annual franchise tax and a 1.5% net income tax on all S-Corporations regardless of profitability, making it more costly than in many other states
- •S-Corp status has strict federal eligibility restrictions: limited to 100 shareholders, only one class of stock allowed, and shareholders must be U.S. citizens or resident aliens
- •Greater administrative burden compared to LLCs, including requirements for a board of directors, corporate bylaws, regular meetings, and detailed recordkeeping to maintain corporate formality
Annual Obligations
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