First of all, let us find out what a nonprofit corporation is. It is an organization formed to serve the public good, such as for charitable, religious, educational, or other public service reasons.  

Choose a corporate name

The first thing to keep in mind is that your corporation's name must not be the same/similar as an existing name on the California Secretary of State's records. Also, it should not be misleading to the public.It may include the words "Corporation," "Incorporated," or "Limited" (or an abbreviation of one of those words).

You can request a free preliminary check of the availability of a name by mailing a completed name availability inquiry letter to the California Secretary of State’s office in Sacramento. Note that email or online inquiries are not accepted.

Name reservation is also possible for 60 days. You just have to fill a name reservation request form with the Secretary of State. It costs $10 and must be filed by mail or in person.

Prepare and file articles of incorporation

You must fill an article of incorporation with the California Secretary of State in order to legally create your corporation. The filing fee is $100 and they must be filed by postal mail or in person. The articles must include the corporate name, its purpose, the name and street address of an agent for service of process and the number of shares the corporation is authorized to issue. All articles must include the corporation's street address and mailing address.

Appoint a registered agent

California corporations must have an agent for service of process in the state. This is an individual or corporation that agrees to accept legal papers on the corporation's behalf if it is sued. The agent should agree to accept service of process on your corporation's behalf prior to designation.

The agent must have a physical street address in California, not a post office box. For small corporations, it is normal to name a director or officer to serve as the initial agent. A different agent can always be named later.

Set up a corporate records book

You should set up a corporate records book. In that book, you keep all of your corporation's important papers, including minutes of meetings, stock certificates, and stock certificate stubs. Keep your corporate records book at the principal office of your corporation.

Prepare corporate bylaws

Bylaws are an internal corporate document that set out the basic ground rules for operating your corporation. They are not filed with the state. Your corporation is not legally required to have corporate bylaws, but you should adopt them because they establish your corporation's operating rules. Also, they help to show banks, creditors, and others that your corporation is legitimate.

Appoint initial corporate directors

The incorporator is the person who signs the articles. He must appoint the initial corporate directors who will serve on the board until the first annual meeting of shareholders. The incorporator must fill in an Incorporator’s Statement (with the names and addresses of the initial directors). The incorporator must sign the statement and place a copy in the corporate records book.

Hold your first board of directors meeting

You should hold the first meeting of the corporation's board of directors. During the meeting the directors can appoint corporate officers, adopt bylaws, set the corporation's fiscal year, select a corporate bank and adopt an official stock certificate form and corporate seal. The incorporator or any of the directors should prepare corporate minutes recording the directors' actions. The minutes are necessarily prepared over one or two weeks. Then they are sent to all the directors for their signature.

Issue stock

You should issue stock to each shareholder. Small corporations usually issue paper stock certificates. Remember to Enter each shareholder's name and contact information in the corporation’s stock transfer ledger. A share of stock in your corporation is classified as a security under state and federal securities laws that regulate the offer and sale of corporate stock.

Comply with California tax requirements

All California corporations must pay California taxes to the California Franchise Tax Board. The same concerns foreign corporations doing business in California.

There are annual minimum taxes that must be paid during the first quarter of each accounting period whether the corporation is active, operates at a loss, or does not do business. There are some additional taxes as well. If the corporation’s income is over certain levels it must pay an additional fee based on their total annual income.

File a statement of information

Be aware that a California corporation and foreign corporation registered in California must file a Statement of Information with the Secretary of State within 90 days after filing the Articles of Incorporation.

Foreign corporations doing business in California

All corporations organized outside of the state must register with the Secretary of State in order to do business in California. Foreign corporations must appoint a registered agent for service of process physically located in California.

If the name of the foreign corporation is not available for use in California, the corporation must qualify under a name other than the true corporate name.

These were the most important things you need to know if you are going to form a nonprofit corporation in California.