By: Brandon Shelton. Esq.

Starting a business goes beyond formation—it requires effective management. In the final installment of our three-part series, Strategy Law walks you through key legal and operational steps to keep your startup compliant, efficient, and ready for growth.

Registering as a Foreign Entity – Doing Business in California 

If your company was formed in another state (such as Delaware) but conducts business in California, you are required to register as a foreign entity.

What qualifies as “doing business”?
The definition is quite broad. Simply having an executive physically located in California, even if your business operates primarily online, can trigger the need for foreign registration.

Avoid penalties
To ensure compliance and avoid costly penalties, it’s crucial to register early if California is your operational base.

Bylaws – The Blueprint of Corporate Governance

Your corporate bylaws outline the internal operations of your company and are essential for guiding day-to-day activities. Typically drafted during incorporation, these bylaws serve as the foundation for your company’s governance structure.

What Bylaws Cover:

• Meeting Procedures: The rules for how and when board and shareholder meetings are held.

• Stock Certificate Issuance: The process for issuing stock certificates to shareholders.

• Officer Responsibilities and Powers: The duties and authority granted to company officers, such as the CEO and CFO.

Bylaws act as your company’s playbook—establishing clear rules from the start to prevent confusion and legal issues down the road.

Board & Shareholder Meetings – Keep the Company Accountable

Board Meetings:
While not always legally required, board meetings are typically held quarterly or annually to update investors and align on the company’s direction.

Shareholder Meetings:
Required at least once a year to elect directors. In smaller or founder-run companies, these meetings can often be replaced with unanimous written consent.

Tip: Consistent governance through regular meetings helps maintain your company’s liability protection and strengthens its legal foundation.

Opening a Bank Account – A Necessary Step, with Some Hurdles

To operate your business, you’ll need to open a corporate bank account. Banks follow Know Your Customer (KYC) regulations, which require them to verify your business identity and ownership. As part of this process, they will request specific documentation.

Be prepared to provide:

• Articles or Certificate of Incorporation: Proof that your company is legally registered with the state.

• EIN (Employer Identification Number): This is your company’s unique federal tax ID number, required by the IRS.

• Board Resolutions: Sometimes required, especially for companies with a board of directors, outlining who has authority to open and manage the account.

• Ownership Breakdown: In certain cases, banks may request information on the ownership structure of the company, especially for businesses with multiple shareholders.

Founders outside the U.S.?
For global startups, some banks now offer virtual onboarding, allowing founders outside the U.S. to open accounts remotely, simplifying the process for international businesses.

Getting Operating Capital Into the Company – Fuel the Engine

Every startup needs capital to get off the ground. Understanding your funding options and securing the right resources is essential to ensuring your company thrives. Here are common ways to get operating capital:

Funding Options:

• Founder Capital Contributions: When founders contribute personal funds to the business to get it started.

• Loans from Founders: Founders can also lend money to the business, typically on terms they set.

• External Investments: Bringing in outside investors can fuel growth and expand your business. Common methods include:
  • SAFEs (Simple Agreements for Future Equity): A flexible agreement that allows investors to convert their investment into equity at a later date, often when a priced round of funding occurs.

  • Convertible Notes: Short-term debt that can convert into equity, usually during a future funding round.

  • Stock Purchases: Investors can directly buy shares of your company in exchange for capital.

Important: Always work with legal counsel to ensure that your agreements are properly documented and compliant with applicable laws. This protects both your interests and the company’s future.

Bonus: Staying Compliant Year-Round

To ensure smooth operations and avoid penalties, your business should maintain compliance with both state and federal regulations. Here’s a checklist to keep your operations running without hiccups:

• Hire a CPA: A Certified Public Accountant will help you manage your finances and taxes efficiently.

• Obtain Business Insurance: Protect your business with the right insurance to cover liabilities and risks.

• Secure a City Business License: Ensure you have the necessary local licenses to operate legally in your city or municipality.

• File Annual Statements and Pay Franchise Taxes: Stay on top of your required filings and taxes to avoid late fees and penalties.

• Set Calendar Reminders: Stay organized by scheduling reminders for key filing and tax deadlines, so you never miss an important date.

Operational compliance isn’t optional—it’s the foundation for scaling your business successfully. By staying organized and proactive, you can ensure your startup remains on track as it grows.

Launch Smart. Grow with Confidence.

At Strategy Law LLP, we help founders in San Jose and beyond turn their ideas into structured, scalable businesses. Whether you’re issuing your first shares or preparing for a capital increase, our business law experts ensure every detail is managed properly—so you can focus on what you do best.

Ready to get started? Contact us today for a consultation.