- Knowledge
1、 Types of California Companies in the United States
1. LLC - Limited Liability Company
Advantages: Flexible management (through operational agreements), personal asset protection, avoidance of double taxation (default through tax system).
Applicable: Small and medium-sized enterprises, startups, freelancers.
2. C Corporation
Advantages: IPO financing, independent legal personality, limited shareholder liability.
Disadvantage: Double taxation (corporate profit tax, shareholder dividend tax).
Applicable: Technology companies and large enterprises planning financing or listing.
3. S Corporation
Advantage: Penetrating the tax system (direct distribution of profits to shareholders for tax reporting), but with shareholder restrictions (≤ 100 people, limited to US tax residents only).
Applicable: Small and medium-sized local enterprises.
2、 California Company Registration Requirements
01. Company Name
The name must include suffixes such as "LLC", "Corp", or "Inc" and cannot be duplicated with existing companies in California (duplication must be checked on the California Secretary of State website).
02. Registered Agent
A registered agent with a local address in California must be designated to receive legal documents (professional agencies may be appointed).
03. Registered address
An actual address in California is required (which can be a proxy address, not a post office box).
04. Requirements of Members/Shareholders
LLC: At least one member, without nationality or residency restrictions.
C Corp: At least one shareholder and one director, both of whom may be foreigners.
05. Articles of Association
LLC: Submit Articles of Organization.
C Corp: Submit Articles of Association.
3、 California Company Registration Materials
（1） Basic materials for registering a California company
1. Basic information of the company
Company Name
The name should include suffixes such as "LLC" (Limited Liability Company) and "Corp" (Limited Liability Company).
Need to verify if the name is available through the official website of the California Secretary of State.
Business Entity
Common choices: LLC (flexible management, suitable for small and medium-sized enterprises) or C Corporation (suitable for financing or listing).
2. Registered Office Address
It must be a physical address in California (which can be a virtual office or proxy address) for receiving government letters.
3. Registered Agent
A California resident or licensed agency must be designated to receive legal documents.
4. Governance Documents
LLC: Submit Articles of Organization.
C Corporation: Submit the Articles of Association.
（2） Specific Material List
1. Limited Liability Company (LLC)
① Articles of Organization
Includes company name, address, registered agent information, and member/manager structure.
② Operating Agreement (not mandatory but recommended)
Establish shareholder rights, profit distribution, and management rules (if not submitted, default California regulations will apply).
③ Member/Manager Information
At least one member or manager, without nationality or residency restrictions.
2. C Corporation
① Articles of Association
Please indicate the company name, address, registered agent, and share structure (such as issuing 1000 shares of non face value stocks).
② Initial Director Consent
List the list of first directors (at least one director, not necessarily a shareholder or California resident).
③ Stock Ledger
Record the names of shareholders, the number of shares held, and the method of contribution (in cash, in kind, or through services).
（3） Additional documents (provided as appropriate)
1. Federal Tax ID Number (EIN)
To apply for an employer identification number (for account opening and tax reporting) from the IRS, you need to fill out Form SS-4 (ITIN can be used as a substitute for SSN for non US residents).
2. California Business License
Some industries, such as catering and construction, need to apply for a local business license from the city where they are located.
3. Registration of foreign/overseas companies
If registered in another state, a Certificate of Qualification must be submitted.
4、 California Company Registration Process
Step 1: Determine the company name
Name requirement:
The name must include the words' LLC 'or' Limited Liability Company '.
Check if the name is valid on the California Secretary of State's website name plagiarism system.
Alternative Name: Name Reservation can be applied for, with a fee of $10 and a validity period of 60 days.
Step 2: Designate a Registered Agent
requirement:
The agent must have a physical address in California (not a post office box) and be responsible for receiving legal documents.
Professional registration agencies can be entrusted (with an annual fee of approximately $100- $300).
Step 3: Submit Articles of Organization
Submission method: Submit through the California Secretary of State's online system (Bizfile) or by mail.
Required information:
Company name, registered agent information, and business scope (can be written as "Any lawful business").
List of Members or Managers (LLC does not need to disclose publicly).
Step 4: Develop an Operating Agreement
requirement:
California law does not require it, but it is strongly recommended to sign internally to clarify equity distribution, management rules, etc.
Step 5: Apply for a Federal Tax ID Number (EIN)
Purpose: Bank account opening, tax declaration, employment of employees.
Application method: Free online application on the IRS official website for instant access.
Step 6: California Tax Registration
Sales Tax License: If selling goods, you need to apply for a license from the California Department of Taxation (CDTFA).
Employer account: If hiring employees, registration with EDD (Employment Development Department) is required.
Step 7: Business License
Requirement: Apply based on the city where the company is located (e.g. Los Angeles requires separate application).
5、 Compliance and tax requirements
1. Annual Report (Statement of Information)
LLC: Submit once every 2 years.
C Corp: Submit once a year
2. Franchise Tax
LLC: An annual profit of ≥ $250000 requires payment of 8.84% of the profit or a minimum of $800 (whichever is higher).
C Corp: Fixed $800/year (regardless of profitability) profit of 8.84%.
3. Federal Taxation
LLC: Default penetration tax system (individual member tax reporting), with the option to pay taxes based on the company.
C Corp: Federal corporate income tax rate of 21% (2023).
