Advantages of Incorporating in California

When running a business, things can quickly get hectic and it can be hard to see the reason for doing things. The advantages of incorporating in California is one such topic.

Incorporating is too expensive. It takes to much time. I don’t have time to figure it out. Payroll? What do you mean I have to run payroll? All of these are reasons given for not incorporating and each has its merit to one extent or another. That being said, there is one other statistic you need to keep in mind.

There are over 100,000 lawyers living in California. More and more of my brethren and sisters are being pumped out of law schools up and down the coast each and every day. These people need work. I’m not going to hire them! The “easiest” are to get started in as a lawyers is to plaintiffs’ work. This essentially means suing someone for something.

As a business owner, this should make you not only mad, but cautious. With this many lawyers running around, what are the chances of you being sued? Unfortunately, they are not good. It may be a customer you have a dispute with. It may be a vendor you do business with. It may be one of your own employees claiming unsafe working conditions or wrongful termination or something else. The point I am trying to make is that you are at risk!

The single biggest advantage to incorporating your business is also the one that will let you sleep at night. Incorporating protects your personal assets. If someone sues your business and wins a judgment, what happens? They can recover from whatever insurance you have on the business and any assets in your business.

What can they not take? They cannot go after you house. They cannot go after your retirement fund. They cannot go after the money you have been saving to put your kids through school. They cannot go after your cars. In short, the only thing you have at risk is the time and money you put into the business. Admittedly, that is a lot, but it beats putting your entire personal life at risk!

You may find it odd to find a lawyer writing an article like this. Well, I’m not like most lawyers as you’ve probably noticed if you read the home page or about us page of this site. Regardless of how you feel about us in the legal profession, you need to act on the practical problem facing you and your business. I’ll incorporate your business or you can find someone else to do it – just do it!

Incorporate in California – CA

California is the fifth biggest economy in the world. It also has probably the second most attorneys of any state. If you are running a business, this should make you nervous! The potential of running into a legal dispute is fairly high. Throw in the fact the legal codes in the state are almost as gargantuan as the federal government, and you know incorporation is needed.

If you want to incorporate in California, the Secretary of State is the agency you must deal with. You can have a go at it yourself or turn it over to attorney such as myself. Is it possible to do it yourself? Of course. Should you? Well, it depends on how clearly you understand the process and how much patience you have with government red tape.

The incorporation process takes a couple of weeks if you use an attorney. On your own, it can take about two months. The Secretary of State is the mecca of red tape and you need to know how to get through the process without running into hurdles. Certain documents have to be filed in certain ways or the state will send the entire thing back to you. If this occurs, the process starts all over.

I offer reasonably priced services if you wish to incorporate in California. The services include a business name check, filing of all papers required to form the entity, creation of the initial bylaws, minutes and stock issuances to make the entity valid. Since you will inevitably have questions, I also include one hour of consultation on your corporate mattes. As with other incorporation services, you will also receive a nice fake leather corporate book to keep all of your corporate documents in.

If you are going to do business in California, you need to protect yourself with a formal business entity. You want to avoid a situation where your business gets sued and you lose your personal assets. A corporation is the way to do it.

Incorporate a Small Business

Start by understanding that it usually makes the most sense to stay put and incorporate in the state where you do most of your business. If you form an out-of-state corporation (such as in Delaware or Nevada, two of the current favorites), you will end up having to qualify to do business in your home state anyway. Unfortunately, this process is similar to incorporating in your state, and costs the same. You also will have to pay any state corporate income taxes levied in your home state for income earned there. Even if another state has more modern or flexible corporation laws, these mostly favor large, publicly-held corporations, not the smaller type of privately-held corporation most small business owners form.

Incorporating is easy as long as you and close associates and family members will own all stock and none will be sold to the public. It's so easy, in fact, that the necessary legal documents--principally your Articles of Incorporation and Corporate Bylaws--can usually be prepared in a few hours. The first step is to check with your state's corporate filing office (usually either the Secretary of State or Corporations Commissioner) and federal and state trademark registers to be sure the name you want to use is available. You then fill in blanks in a preprinted form (available from commercial publishers or your state's corporate filing office) listing the purpose of your corporation, its principal place of business and the number and type of shares of stock. You'll file these documents with the appropriate office, along with a registration fee which will usually be between $200 and $1,000, depending on the state.

You'll also need to complete (but not file) Corporate Bylaws. These will outline a number of important corporate housekeeping details such as when annual shareholder meetings will be held, who can vote and the manner in which shareholders will be notified if there is need for an additional " special" meeting.

Assuming your corporation has not sold stock to the public, conducting corporate business is remarkably straightforward and uncomplicated. Often it amounts to little more than recording key corporate decisions (for example, borrowing money or buying real estate) and holding an annual meeting. Even these formalities can often be done by written agreement and don't usually necessitate a face-to-face meeting.

Fortunately, self-help books exist in many states which make it easy and safe to incorporate your business without a lawyer and, once incorporated, to operate your corporation.