Advantages of Incorporating/Registering a Business in California

Many business owners believe that incorporating a business is too costly and time consuming. On the other hand,  you may be wondering if you truly need to incorporate your business. Quiet frankly, business owners’ may find themselves facing personal debts and liabilities in the event of a business dispute or lawsuit. Consequently, business owners then find themselves racking up far more legal fees, costs, stress, and lengthy lawsuits.

Incorporating a Business in California

There are number of ways California business owners can benefits from incorporating their business. Likewise, California offers a number of different business forms which a business owner may file under. The California Corporations Code outlines minimum filing requirements for incorporating businesses in California. Not all business structure are alike, each offer different benefits and posses disadvantages. Choosing the business structure that best fits your needs its probably the most vital questions any business owners should ask themselves. After all, the foundation and structure of which you build your business will play a major role in your success. Thus, it is a good idea to contact a experienced Los Angeles business attorney that can consult you on your options and  help you fill in the gaps. We invite you to contact our office and schedule a consultation with a Los Angeles business attorney with strong background in business and economics. Our law firm in Glendale, near Los Angeles is committed to provide a balanced approach to your legal needs, sound advice and assistance to prevent and or resolve problems.

Filing a Fictitious Business Name in California

Prior to starting a business, a business name must be selected that is not already in use. You can find out if the fictitious business name you choose is available for use by going to the Los Angeles County Registrar-Recorder website. If the business name you selected is available, you may then register with the Registrar-Recorder/County Clerk’s Office. Likewise, fictitious business name statements must also be filed with the Registrar-Recorder/County Clerk’s Office.

Starting a business is no small task and you should be confident in your abilities to successfully form your business. California offers a number of business structures you can utilize to accomplish certain things. Choose the business structure that best fits your needs.

What is a Sole Proprietorship?

Sole proprietorships are the basic business form under which a business owner can operate a business. It is important to remember that sole proprietorships are not legal entity. It simply refers to a person who owns the business and is personally responsible for its debts. In other words, a sole proprietorship is owned by one individual, of which is personally taxed on income and is personally liable for debts of the business. Thus, if you are a sole proprietorship, consider registering a sole proprietorship into a corporation. This way you not only protects your personal assets and personal liability, but you also tell the world that you take your business seriously.

What is a Corporation?

A corporation, in its legal form, is an entity separately from you, the business owner. In California, corporations are considered to be an “entity”, you can think of it as a separate “person”. One benefit of registering and filing your business under a corporation is it can shield business owners from personal liability and debits. A corporation is also taxed and so are its shareholders.

What is a liability company (LLC)?

A limited liability company, commonly referred to as an “LLC”, offers liability protection like a corporation, but is not taxed as an entity. Instead, the LLC’s income is usually taxed through the individual on their income. Corporations provide limited liability protection to their owners. Typically, the owners are not personally responsible for the debts and liabilities of the business; thus, creditors cannot pursue owners’ personal assets.

Other Incorporation Benefits

• Tax Advantages – Corporations often gain tax advantages, such as the deductibility of health insurance premiums paid on behalf of an owner-employee; savings on self-employment taxes, as corporate income is not subject to Social Security, Workers Compensation and Medicare taxes.
• Establishing Credibility-Incorporating may help new business establish credibility with potential customers, employees, vendors and partners.
• Unlimited Life – A corporation’s life is not dependent upon its owners. A corporation possesses the feature of unlimited life, meaning if an owner dies or wishes to sell his or her interest, the corporation will continue to exist and do business.
• Transferability of Ownership – Typically an easy process.
• Raising Capital – Capital can be raised more easily through the sale of stock. Additionally, many banks, when providing a small business loans, want the borrower to be an incorporated business.
• Retirement plans – Plans such as 401 (k) may be established more easily.