Many small business owners have incorporated their business because of the safety and the financial advantages that incorporating allows. In addition to making your business a legal presence within the state of California, incorporating your business also has some direct benefits to you. These benefits include allowing you to separate your personal finances from your investment in your business. If your business ever runs into financial or legal trouble, creditors cannot pursue your personal assets such as your home, car or bank account savings. The only risk you have in your business depends on the money you directly invest into the business.
Other benefits of incorporations include the ability to sell shares in your business in order to raise funds. Different types of corporations allow different numbers of shareholders to take part in your business. For example, a C corporation allows for an unlimited number of shareholders, and many large businesses incorporate with this type. A subchapter S corporation has a maximum of 75 shareholders, and also provides better tax benefits than a C corporation. Many smaller businesses prefer the subchapter S to the C corporation. Other types of corporations exist, as well, and when deciding which type best fits your business, you should look at the features of all of them.
When applying to incorporate your California business, you have to fill out a California article of incorporation. Every state has slightly different rules and fees, and these may change a little yearly, as well. Every business corporation has to have a registered agent, who serves as the business incorporation advisor. The agent has to live in the same state as your business operates – most probably, California. Even though you can register your business in another state, unless that state’s registration fees cost a lot less than your state, you will probably find it easier to register in your own state. The agent can help you fill out a California article of incorporation, and help you with other legal issues concerning your corporation, as well.
An incorporation service advisor will also help you register your business as a corporation in California. In order to fill out the California article of incorporation, you have to submit a written description of your business’ vision and goals, and where you predict your business will go in the future. You can find samples of an article of incorporation on the Internet, and you’ll see how short and easy they are to write. You should review a sample California article of incorporation before you begin to write your own because you can plan in advance how you want to structure your submission. Then after you pay the filing fees, which can range from a few hundred dollars to a thousand dollars, then your business can turn into a legally recognized corporation. If you want to amend your corporation in the future, then you can write a letter to the California Secretary of State explaining what you want to change, for a minimal fee.
By Lisa Zyga