Making the Most of California Business Incorporation

Protect your assets by incorporating a business in California

The key to making the most of California business incorporation is selecting the best structure for your business. A corporation affects your ability to gain capital, controls the amount of debt you assume and determines your tax obligations. However, these advantages must be balanced against the additional taxes your business will incur.

You may also choose a partnership when you incorporate in California. Unlike a corporation, a partnership is subject only to personal income taxes although business partners may still be held responsible for business debts.

There are several options for forming a company under California corporate law. These include:

1. California incorporation as a profit or non-profit corporation. An S corporation (S-corp) is taxed under Subchapter S of the Internal Revenue Code which generally does not include income taxes.

2. A California limited liability corporation (LLC). This is a hybrid business entity that shares the characteristics of both a corporation and partnership. It pays incomes taxes and is more suitable for a small business with one owner.

3. A California limited partnership. This type of partnership has limited partners in addition to general partners.

 

Determine the best structure for your business when starting a corporation in California

The most important factors to consider are the personal liability obligations and tax implications. You should also familiarize yourself with the operating requirements and reporting regulations.
Try: The Secretary of State summarizes each business structure available in California and also provides the answers to frequently asked questions on each type. Nolo provides an extensive discussion dedicated to selecting a business entity in California.

Find an attorney that specializes in creating an LLC in California

Incorporating in California must comply with the disclosure, operating and reporting requirements. California corporation law specifies these requirements in detail.
Try: Oswald & Yap are based in Irvine and provide a summary of the business entities available to clients in Southern California. Alan M. Insul in Encino includes corporate law as one of its practice areas and also provides links to a number of legal resources for new businesses.

Register your California business LLC

You must file the registration forms and pay the associated fees as required by California corporation law in order to form a California business LLC. You may also need to file Articles of Incorporation, depending on the type of corporation you decide to register.
Try: IncorporationNation summarizes the differences between a corporation and an LLC. It also provides business resources for small businesses. Incorporating in California provides specific information about creating an LLC in California, including the information required in the Articles of Organization.

 

• California incorporations must be maintined with annual fees and filings. Corporations are automatically C-corps unless they specifically register as S-corps with the primary difference being the way they are taxed. One person may frequently hold more than one position in these corporations and many if not all shareholders are also directors in a small corporation.

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