How to Form Your Own California Corporation

Table of Contents......Page 10
Introduction......Page 14
1. Choosing the Right Legal Structure for Your Business......Page 18
The Different Ways of Doing Business......Page 19
Comparing Business Entities at a Glance......Page 36
2. How California Corporations Work......Page 42
Types of California Corporations......Page 43
Corporate Powers......Page 47
Corporate People......Page 48
How Many People May Organize the Corporation?......Page 55
Capitalization......Page 56
Selling Stock......Page 58
Paying Dividends......Page 59
Dissolving a Corporation......Page 60
Piercing the Corporate Veil......Page 61
3. Issuing and Selling Stock......Page 64
Securities Laws and Exemptions......Page 65
The Limited Offering Exemption......Page 66
Federal Securities Act......Page 76
4. Corporate Taxation......Page 82
California Taxes......Page 83
Federal Taxes......Page 84
S Corporation Tax Status......Page 88
Corporate Accounting Periods and Tax Years......Page 92
Tax Concerns When Stock Is Sold......Page 93
Tax Treatment When an Existing Business Is Incorporated......Page 95
Tax Treatment of Employee Compensation and Benefits......Page 101
5. Steps to Form Your Corporation......Page 104
Step 1. Choose a Corporate Name......Page 106
Step 2. Prepare Your Articles of Incorporation......Page 113
Step 3. Set Up a Corporate Records Book (Or Order a Corporate Kit)......Page 120
Step 4. Prepare Your Bylaws......Page 121
Step 5. Prepare Minutes of the First Meeting of the Board of Directors......Page 126
Step 6. Prepare Shareholder Representation Letters......Page 142
Step 7. Prepare and File Notice of Stock Transaction Form......Page 149
Step 8. Issue Shares of Stock......Page 156
6. After You Incorporate......Page 172
Postincorporation Paperwork and Tasks......Page 174
Tax Forms—Federal......Page 180
Tax Forms—State......Page 183
Private Insurance Coverage......Page 186
7. Lawyers and Accountants......Page 188
Lawyers......Page 189
Accountants and Tax Advisors......Page 190
Appendix A: How to Use the CD-ROM......Page 192
Installing the Form Files Onto Your Computer......Page 193
Using the Word Processing Files to Create Documents......Page 194
Using California Secretary of State Forms......Page 196
Forms on CD-ROM......Page 198
Appendix B: Contact Information and Incorporation Forms......Page 200
Name Availability Inquiry Letter......Page 204
Name Reservation-Order Form......Page 208
Articles of Incorporation......Page 210
Cover Letter for Filing Articles......Page 212
Bylaws......Page 214
Waiver of Notice and Consent to Holding of First Meeting of Board of Directors......Page 230
Minutes of First Meeting of the Board of Directors......Page 232
Shareholder Representation Letter......Page 244
Notice of Transaction Pursuant to Corporations Code Section 25102(f)......Page 250
Bill of Sale for Assets of a Business......Page 252
Receipt for Cash Payment......Page 254
Form for Cancellation of Indebtedness......Page 256
Bill of Sale for Items of Property......Page 258
Receipt for Services Rendered......Page 260
Share Register and Transfer Ledger......Page 262
Stock Certificates......Page 266
Index......Page 286
Web Resources......Page 302