California Business Incorporation Key Terms

Take smart steps in starting a business by learning California business incorporation key terms

To form any type of business in California, you must comply with various state laws governing incorporation practices. Although California doesn’t have the most favorable tax structure for business owners, the state is home to a large number of corporations and LLCs.

If you are looking to incorporate a business in California, it’s important that you thoroughly explore the various business entity options and their tax obligations. In addition, you should learn how to protect the intellectual property of your business by registering trade names and trademarks. Familiarizing yourself with California business incorporation key terms will help you obtain the knowledge you need.

California S-corporation (S-corp)

An S-corporation is a business form that is legally recognized as an individual entity independent of its owners or shareholders. In California, there are no eligibility guidelines for incorporators and a corporation can be formed by one or more individuals.

California C-corporation (C-corp)

A C-corporation is a business entity that provides flexibility in the number and types of shareholders. Many large companies choose this form because of its flexible structure. The major disadvantage of a C-corp is that it is subject to double taxation by the Internal Revenue Service. The California tax rate for C-corps is a little more than 8% of the corporation's net income.

California limited liability company (LLC)

A limited liability company is formed by one or more individuals, partnerships, trusts, estates, associations and other business structures. LLC members are provided limited liability protection and are subject to pass-through taxes.

Pass-through taxes

Business entities subject to pass-through taxes don't pay income taxes and pass profits through the entity's members and shareholders. California LLCs and S-corps are subject to pass-through taxes.

Trade name

A trade name is any name used to identify an individual's company. California law states that business trade names must be filed with the county where the primary business is located.
California Secretary of State.

Trademark or service mark

A trademark or service mark is any word, name, symbol or object used to identify the unique qualities or product offerings of a company. The difference between a service mark and a trademark is that a service mark identifies the service rather than the actual product.

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