Legal workshop & business entities

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  • Statement of Information A Statement of Information (Form SI-200) is required to be filed with the Secretary of State within 90 days after filing the Articles of Incorporation and annually thereafter during the applicable filing period. The applicable filing period is the calendar month during which the initial Articles of Incorporation were filed and the immediately preceding five calendar months. (California Corporations Code section 1502.) The required statement can be filed online at https://businessfilings.sos.ca.gov/. Alternatively, Form SI-200 is available on the Secretary of State's website at www.sos.ca.gov/business/be/statements.htm and can be viewed, filled in and printed from your computer for mail or drop off submission. Secretary of
  • Articles of Incorporation must be drafted to include all the provisions required by the California Corporations Code. Article I: The articles must include a statement of the name of the corporation.  The name must be exactly as you want it to appear on the records of the California Secretary of State.  Name restrictions apply to most business entities. Please refer to our Name Availability webpage at www.sos.ca.gov/business/be/name-availability.htm for business entity name regulations and the most common statutory requirements and restrictions relating to the adoption of a business entity name in California. Article II: This exact statement is required by the California Corporations Code and should not be altered. Article III: The articles must include the name of the initial agent for service of process.1  If an individual is designated as agent, include the agent’s business or residential street address in California (a P.O. Box address is not acceptable). Please do not use “in care of” (c/o) or abbreviate the name of the city.  If another corporation is designated as agent, do not include the address of the designated corporation. Note: Before another corporation may be designated as agent, that corporation must have previously filed with the Secretary of State a certificate pursuant to California Corporations Code section 1505. A corporation cannot act as its own agent and no domestic or foreign corporation may file pursuant to Section 1505 unless the corporation is currently authorized to engage in business in California and is in good standing on the records of the California Secretary of State. Article IV: The articles must include a statement of the total number of shares the corporation will be authorized to issue. Note: Before shares of stock are sold or issued the corporation must comply with the Corporate Securities Law administered by the Department of Corporations. Information regarding permits to issue shares can be obtained from the Department of Corporation’s website at www.corp.ca.gov or by calling the Department of Corporations at (213) 576-7500. Execution: The articles must be signed by each incorporator, or by each initial director named in the articles. If initial directors are named, each director must both sign and acknowledge the articles. Note: If initial directors are not named in the articles, the individual(s) executing the document is the incorporator(s) of the corporation. The name of each incorporator or initial director should be typed beneath their signatures. 1 An “agent for service of process” is an individual (director, officer or any other person, whether or not affiliated with the corporation) who resides in California or another corporation designated to accept service of process if the corporation is sued. Note: The agent must agree to accept service of process on behalf of the corporation prior to designation.
  • Legal workshop & business entities

    1. 1. Business Entities
    2. 2. Where to File <ul><li>by mail: </li></ul><ul><li>Secretary of State, Document Filing Support Unit, P.O. Box 944260, Sacramento, </li></ul><ul><ul><li>CA 94244-2600. </li></ul></ul>
    3. 3. In person <ul><li>Sacramento and Los Angeles </li></ul><ul><li>1500 11th Street, 3rd Floor Sacramento </li></ul><ul><li>300 South Spring Street, Room 12513, LA, CA </li></ul>
    4. 4. Fees <ul><li>The fee for filing Articles of Incorporation is $100.00. </li></ul><ul><li>Franchise Tax Requirements </li></ul><ul><li>A general stock corporation is a taxable entity and subject each year to an $800 minimum franchise tax </li></ul>
    5. 5. Partial list of other agencies <ul><li>Department of Corporations </li></ul><ul><li>Responsible for the regulation of securities, franchises, off-exchange commodities, investment and financial services, independent escrows, consumer and commercial finance lending, and residential mortgage lending. </li></ul><ul><li>Franchise Tax Board </li></ul><ul><li>Information relating to franchise tax requirements, penalties and suspensions/forfeitures. </li></ul><ul><li>State Board of Equalization </li></ul><ul><li>Information relating to sales or use tax liability, special taxes and fees, property tax administration, and franchise and income tax appeals. </li></ul><ul><li>Employment Development Department </li></ul><ul><li>Information relating to unemployment insurance, disability insurance and employment tax. </li></ul><ul><li>Department of Consumer Affairs </li></ul><ul><li>Information relating to licensing requirements at the state level for specific business entities. </li></ul>
    6. 6. Statement of Information <ul><li>A Statement of Information (Form SI-200) is required to be filed (best to file online) with the Secretary of State within 90 days after filing the Articles of Incorporation/Year </li></ul>
    7. 7. Instructions: <ul><li>Article I: The articles must include a statement of the name of the corporation. </li></ul><ul><li>The name must be exact </li></ul><ul><li>Article II: This exact statement is required by the California Corporations Code and should not be altered. </li></ul><ul><li>Article III: The articles must include the name of the initial agent process. </li></ul><ul><li>Article IV: The articles must include a statement of the total number of shares. </li></ul><ul><li>Note: Before shares of stock are sold or issued the corporation must comply with the Corporate Securities Law administered by the Department of Corporations. </li></ul><ul><li>Execution: The articles must be signed by each incorporator, or by each initial director named in the. </li></ul>
    8. 8. <ul><li>Articles of Incorporation </li></ul><ul><li>I. The name of this corporation is (Name of Corporation) . </li></ul><ul><li>II . The purpose of the corporation is to engage in any lawful act or activity for which a </li></ul><ul><li>corporation may be organized under the General Corporation Law of California other </li></ul><ul><li>than the banking business, the trust company business or the practice of a profession </li></ul><ul><li>permitted to be incorporated by the California Corporations Code. </li></ul><ul><li>III. The name and address in the State of California of this corporation's initial agent for </li></ul><ul><li>service of process is: </li></ul><ul><li>Name ___________________________________________________________ </li></ul><ul><li>Address _________________________________________________________ </li></ul><ul><li>City _________________________ State CALIFORNIA Zip ____________ </li></ul><ul><li>IV. This corporation is authorized to issue only one class of shares of stock; and the total </li></ul><ul><li>number of shares which this corporation is authorized to issue is _________________ </li></ul><ul><li>(Signature of Incorporator) </li></ul><ul><li>_________________________________________________ </li></ul><ul><li>(Typed Name of Incorporator), Incorporator </li></ul>
    9. 9. <ul><li>Articles of Incorporation </li></ul><ul><li>I. The name of this corporation is (Name of Corporation) . </li></ul><ul><li>II. The purpose of the corporation is to engage in any lawful act or activity for which a </li></ul><ul><li>corporation may be organized under the General Corporation Law of California other </li></ul><ul><li>than the banking business, the trust company business or the practice of a profession </li></ul><ul><li>permitted to be incorporated by the California Corporations Code. </li></ul><ul><li>III. The name and address in the State of California of this corporation's initial agent for </li></ul><ul><li>service of process is: </li></ul><ul><li>Name ___________________________________________________________ </li></ul><ul><li>Address _________________________________________________________ </li></ul><ul><li>City _________________________ State CALIFORNIA Zip ____________ </li></ul><ul><li>IV. This corporation is authorized to issue only one class of shares of stock; and the total </li></ul><ul><li>number of shares which this corporation is authorized to issue is __________________. </li></ul><ul><li>V. This corporation is a Close Corporation. All of the corporation's issued shares of </li></ul><ul><li>stock, of all classes, shall be held of record by not more than ___35_______ persons. </li></ul><ul><li>(Signature of Incorporator) </li></ul><ul><li>(Typed Name of Incorporator), Incorporator </li></ul>
    10. 10. Statement of Information <ul><li>Statement of Information </li></ul><ul><li>http://www.sos.ca.gov/business/corp/pdf/so/corp_so200c.pdf </li></ul><ul><li>90 days after filling </li></ul>
    11. 11. S - Corporation <ul><li>Election of S Corporation Status. Corporations which elect to be S-corporations avoid double federal taxation on corporate profits. </li></ul>
    12. 12. An S-Corp <ul><li>You can be an S-corporation if you are Incorporated in the U.S. </li></ul><ul><li>Has one class of stock; </li></ul><ul><li>Has no more than 100 shareholders; </li></ul><ul><li>All of your shareholders are US Citizens or Residents. </li></ul><ul><li>None of your shareholders are partnerships or corporations </li></ul><ul><li>Your corporation isn't a bank, an insurance company or part of an affiliated group of corporations. </li></ul><ul><li>S-Form election: 2553 http://www.toolsforbusiness.info/success/includes/pdf/2553.pdf </li></ul>
    13. 13. Summary on Corporations <ul><li>There are S corporations and C corporations. This is a tax designation only. </li></ul><ul><li>Normal corporations (C corps) have their earnings double taxed. S corporations are only taxed once. </li></ul><ul><li>S corporations cannot offer incentive stock options to employees. </li></ul>
    14. 14. Getting Started
    15. 15. <ul><li>After you have had a Board of Directors meeting, authorized stock and voted for directors, hold a shareholders meeting. At that meeting: Inform the shareholders of the status and affairs of the corporation, Ratify any insider transactions - only after discussing them with an attorney </li></ul><ul><li>Keep minutes of your meeting (or sign a Waiver of Notice and Consent form). </li></ul><ul><li>Legal details - Your bylaws require: Quorum and voting  A meeting is not valid (i.e. you cannot make decisions) unless there is a quorum of people representing a majority of shares. </li></ul><ul><li>Advising shareholders about meetings  The bylaws state that every shareholder should be notified before a meeting. </li></ul><ul><li>Voting  At shareholder meetings, shareholders cast one vote for each share of stock that they own (i.e. the largest owner has the biggest say). </li></ul><ul><li>Minutes  Your minutes should include: </li></ul><ul><ul><li>The time, place and actions taken </li></ul></ul><ul><ul><li>Outcome of any vote taken and who voted for, against or abstained. </li></ul></ul><ul><li>File your corporate minutes with your  bylaws  and  Articles of Incorporation. </li></ul>
    16. 16. To remain an LLC and avoid being taxed as a corporation <ul><li>Your business must  LACK  two of the following four &quot;corporate“ characteristics: </li></ul><ul><li>1. Continuous life for the business - The business will continue forever even if an owner dies or leaves. </li></ul><ul><li>2. Free transferability of interest - Owners can sell their interest to anyone at any time. </li></ul><ul><li>3. Centralized management - One person or a team of people manages the business on behalf of a group of owners. </li></ul><ul><li>4. Limited liability - Business debts can only be paid from business assets, not the owner's personal assets. </li></ul>
    17. 17. All LLCs formed in California must: Have one or more members. <ul><li>Designate one person (or corporation registered in California) to be an &quot;Agent for Service&quot; who will accept any legal documents pertaining to the LLC or its business. </li></ul><ul><li>Have an office in California which maintains the following books and records: </li></ul><ul><ul><li>A current list of members with: </li></ul></ul><ul><ul><ul><li>Their full name </li></ul></ul></ul><ul><ul><ul><li>Last known business or residence address </li></ul></ul></ul><ul><ul><ul><li>Their capital contributions </li></ul></ul></ul><ul><ul><ul><li>Capital account balance </li></ul></ul></ul><ul><ul><ul><li>Membership interest </li></ul></ul></ul><ul><ul><li>Copies of the Articles of Organization and amendments (if any) </li></ul></ul><ul><ul><li>Copies of the LLC's federal, state and local income tax or information returns and reports for the past six years; </li></ul></ul><ul><ul><li>A copy of the Operating Agreement and amendments, if any. </li></ul></ul><ul><ul><li>Copies of the financial statements, if any, for the past six years. </li></ul></ul><ul><ul><li>The LLC's books and records for the current and past four fiscal years. </li></ul></ul>
    18. 19. Revenue versus profit <ul><li>About 50% of the amount must be paid in taxes ( 28% federal ;  9.3% state ;  15.3% self-employment tax ). </li></ul><ul><li>The remaining is available for your after-tax salary and business expansion. </li></ul>

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