Saving Money When Forming A California Corporation
Looking at every idea for minimizing the startup costs of forming a new California business
? Well, don't forgot or ignore the fact that you've even got options for reducing the costs of forming your corporation.
Money Saving Idea #1: Use the Secretary of State's Pre-printed Forms
Here's a first, easy to consider idea: Why not use the preprinted forms that the Secretary of State supplies at its website to create your articles of incorporation? Unfortunately, the precise web address changes, but if you use a search engine like Google, Yahoo or Bing to search on the phrase, " California Secretary of State Debra Bowen," the first or second result should be the official Secretary of State web site, which provides downloadable, printed forms you can use for forming a corporation in California.
Note: California's downloadable forms are really simple to use. You just ["e;]fill in the blanks.["e;] And, by the way, if you can fill in the blanks yourself, you will probably save hundreds of dollars or more.
Once California accepts and certifies your articles of incorporation, the corporation exists. But note that the processing time is often slow--in summer of of 2010, for example, the state took about 60 days to turnaround incorporation articles. Ugh.
Money Saving Idea #2: Recycle Standard Corporate By-laws
Like almost every other state, California requires corporations to work from a set of by-laws that specify how the entity governs itself. The by-laws, for example, describe the rules for electing directors and officers and for holding corporation meetings.
If you're working with a big budget or you have outside investors, you of course should recruit a local attorney (or at least an attorney fluent in state corporation law) to draft corporate by-laws that meet your requirements and those of the state.
However, if you won't have outside investors and you're operating on a tight budget, you might want to look at the option of just using a boilerplate, or standard, set of corporate by-laws. You can buy simple, workable by-laws off of websites (not surprisingly). And you can also often, er, copy a friend's by-laws.
Tip: Be sure your friend's corporate by-laws were written originally for a California corporation.
Not everybody will feel comfortable minimizing costs for something as critical as the corporate by-laws, but one often pays $200, $300 or more per hour for good legal advice. Accordingly, taking a do-it-yourself approach with your by-laws can save you bundles of cash.
Money Saving Idea #3: Hire Yourself as the Agent for Service of Process
One last money-saving tip: Why not be your own registered agent--the person the state contacts if it has official business it needs to conduct with your corporation? The only requirement is that the person you appoint needs to actually reside in California and you need to be able to provide a California street address.
In other words, rather than paying some paralegal firm, legal secretary or attorney $100 to $200 annually to act as your registered agent, just be your own agent.
Note: The California SI-200 C form you use to appoint your registered agent calls your agent an "Agent for Service of Process." Note that if you've in the past used a paid registered agent, you can also use this form to change the agent for the current and future years.
by: Stephen Nelson
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