Corporate Lawyers for Cleveland, Ohio

A certificate of good standing shows that your business has complied with all of the applicable laws and regulations for the state in which the business operates (e.g., all required reports have been filed like the annual report; the business has paid all taxes and fees; the business has met any necessary licensing and regulatory requirements, etc.). and that the business is legally authorized to operate in a state. It is important to have so that the business can show potential partners, investors, or lenders that your business has taken the necessary steps to ensure its legal status in the state.

That's something that would be negotiated between the parties involved in the joint venture.

It depends. If you want to use an asset purchase agreement to purchase just the assets of the company instead of the entire company, then an asset purchase agreement is the way to go as you could avoid taking on the company's existing debts. However, if you plan to buy the business as a whole I would expect you will inherit the debts as well unless you draft a release from the former owners.

I recommend hiring an experienced corporate attorney to help negotiate and draft the agreement. You can't be given a list of 3 or 5 pointers and then expect to negotiate the agreement yourself. There are too many pitfalls. And you wouldn't expect someone to come to you and ask you how they can do for themselves what you do, right? It's more complicated than that, and there's a reason you're a professional.

If you're planning to form a corporation in California in 2025, it's important to get every step right, from your initial filings to your long-term compliance obligations. The process itself is well-structured, but both federal and state-level rules have shifted in ways that make the details a bit more complex than they used to be. Let’s walk through what you need to know, one step at a time, based on the latest requirements and guidance. Getting Your Corporation Off the Ground Start by choosing a corporate name that meets the state’s legal requirements. That means it needs to include a word like “Corporation,” “Incorporated,” “Corp.,” or “Inc.” and it must be clearly different from any name already registered with the California Secretary of State. You can reserve a name for 60 days if you need time, but most business owners move straight to filing. Once you’ve confirmed your name, the next step is to file your Articles of Incorporation using Form ARTS-GS, which is the standard form for general stock corporations. The filing fee is $100, and you have the option to file online through the BizFile portal or submit it by mail. After your articles are filed, you have 90 days to submit your initial Statement of Information using Form SI-200. This form provides the state with key details about your corporation, including your business address, officers, directors, and your chosen registered agent. There's a $25 filing fee. Going forward, you'll need to file an updated version of this form annually (Form SI-550) within the six-month window around your incorporation anniversary. If you miss it, you could face penalties or even suspension of your business status. Internally, your corporation is required to adopt bylaws. You don’t file these with the state, but under California Corporations Code §212, you must have them on file at your principal office. Your bylaws should explain how your corporation will operate. That typically includes how meetings are conducted, officer roles, voting rights, and how stock is issued. At your first board meeting, you should formally adopt the bylaws, appoint officers, approve the issuance of shares, and establish a corporate records book. Keep organized copies of your board minutes, stock ledger, and bylaws. Even if you’re the only shareholder, this is a key step to preserve limited liability and maintain corporate formalities. You’ll also need to get an EIN from the IRS. It’s free and available online, and you’ll need it to open a business bank account, file taxes, and hire employees. Depending on what your business does and where it’s located, you may also need a seller’s permit from the California Department of Tax and Fee Administration, along with city or county business licenses. The CalGold website is a good place to find out what permits apply to your specific situation. Taxes and Ongoing Corporate Duties All California corporations have to pay an annual minimum franchise tax of $800, as outlined in Revenue and Taxation Code §23153. However, if your corporation is formed in 2021 or later, you're exempt from that tax in your first taxable year. That exemption doesn’t apply to LLCs, since the first-year waiver expired back in 2023 and hasn’t been renewed. There’s also something called the 15-day rule. If you form your corporation during the last 15 days of the calendar year and don’t do any business during that time, you might be able to avoid the franchise tax for that year altogether. This rule is found under Revenue and Taxation Code §23151.5 and only applies if your corporation uses a calendar fiscal year. If you're forming your entity late in the year, timing your filing could make a financial difference. On the compliance side, California corporations are required to hold annual meetings for both directors and shareholders. You also need to document those meetings with written minutes. This applies even if you’re the only person involved. A lot of solo founders skip this step, but that can become a serious issue during audits or lawsuits. If you don’t follow these basic corporate formalities, a court could decide to disregard your limited liability protections. Where Things Stand with Federal Beneficial Ownership Rules As of March 2025, domestic corporations are no longer subject to federal Beneficial Ownership Information (BOI) reporting under the Corporate Transparency Act. FinCEN issued an interim final rule on March 26 that revised the definition of “reporting company” to exclude entities formed in the U.S. or any U.S. state. Before that change, most newly formed corporations and LLCs were required to report their beneficial owners within either 30 or 90 days after formation. If you're forming a California corporation today, you do not need to file a BOI report under federal law. That said, keep an eye on this area, because rules can change quickly. There’s always a possibility that a future administration could reverse or revise the rule. Separately, California is considering its own version of a corporate transparency law. Senate Bill 1201 would require corporations and LLCs formed or registered in California to disclose beneficial ownership information to the Secretary of State. Some of that data could be made publicly available. As of now, the bill has passed the State Senate and is pending in the Assembly. If enacted, it would go into effect on January 1, 2026, so there’s currently no state-level BOI filing requirement in California. Optional Elections and Strategic Decisions If you’re thinking about electing S-corporation status, keep in mind that this is a federal tax election made by filing IRS Form 2553. It affects how your business is taxed but doesn’t change your legal structure under California law. S-corporations are pass-through entities, meaning profits and losses are reported on shareholders’ personal tax returns. This can help you avoid double taxation, but there are restrictions. You can’t have more than 100 shareholders, and only certain individuals and trusts qualify. You also can’t issue multiple classes of stock. S-corps can make a lot of sense for small business owners who want to minimize tax liability and don’t need venture capital. Just be sure to talk it through with a tax advisor to see if it fits your situation. Some business owners consider incorporating in states like Nevada or Delaware, thinking they’ll benefit from lower taxes or business-friendly laws. That approach only works if you're actually doing business in those states. If your operations, employees, or clients are based in California, you’ll still need to register as a foreign corporation in California and pay the franchise tax anyway. For most small or local businesses, the added paperwork and costs of out-of-state registration don’t offer much real advantage unless you're planning to scale nationally or raise funding. Most legal issues that trip up corporations down the line stem from skipped formalities or missed deadlines. With solid records, clear bylaws, and a calendar for required filings, you’ll be in good shape. If you need to draft internal documents or resolve formation questions, it’s worth getting those answers early rather than cleaning up mistakes later. The lawyers here on Contracts Counsel would be happy to help!