Why Incorporate?
- Asset Protection. There are countless cases in California where business owners who failed to consult a California Incorporation Lawyer incorporate have been sued and lost everything, because they didn't have the protections of a corporation or other business form. If you properly form and operate a corporation, you are allowed to protect your family's assets from business debts and obligations.
- Easily transfer your ownership. Transferring ownership interests is as easy as endorsing some papers and recording them in the records. You might ask why you would want to transfer ownership interests. True as the owner you don't plan on doing so, but you never know when you may want to add a new owner, or investor, or share the business with a family member.
- Perpetual existence. This is good for owners who want their business to continue down the family line, generation after generation. Plus if something terrible were to happen to the owner, the business continues to exist.
- Tax advantages. There are certain business expenses that are only available to corporations. Also, audits for incorporated businesses are lower than self-employed businesses.
Why Hire a California Incorporation Lawyer?
A California Incorporation Lawyer will help you properly form a corporation. Before even forming a corporation, you have to decide whether a corporation is right for your business. There are also limited liability corporations, limited partnerships, limited liability partnerships, and for some businesses even a sole proprietorship is good enough. The California Incorporation Lawyer will help you with incorporation requirements. There are California Secretary of State requirements. There are California Department of Corporation requirements that if not followed, may result in having pay hundreds or thousands in extra fees. An experienced, well qualified California Incorporation Lawyer will make sure you are aware of this. You don't have to hire a California Incorporation Lawyer, you can certainly incorporate on your own. Just as some business owners do their own accounting, or file their own taxes, some owners are DIY types. As long as you do not run into any legal troubles, then this is okay. If you do, then your understanding of the extensive procedures and red tape will be tested.
What can a California Incorporation Lawyer do for you?
- A California Incorporation Lawyer will analyze your specific business situation, and advise you on your choices between the various business forms, or advise that you don't do anything at all. Unlike the online document preparation services, you will receive legal advice from a real California Incorporation Lawyer, not a machine.
- You will get a consultation with a real California Incorporation Lawyer, not a machine or a customer service rep. The attorney will discuss your business structure, goals and challenges. These facts unique to you help determine the path you choose. At the online services, you must know what you want as you can't receive any advice.
- After your consultation a California Incorporation Lawyer will perform the necessary pre-filing procedures, such as preparing the formation documents as well as verifying the name you want for the company is available and reserve it, if necessary
- Your documents will be filed. If time is of the essence, an expedited filing can be made, at additional cost (imposed by the State, not your California Incorporation Lawyer)
- After you receive your incorporation papers, your California Incorporation Lawyer will then get to work on the numerous post-filing requirements, that are necessary in order to ensure your Corporation is valid in the eyes of the court. Below are just a few of these requirements:
- Hold the initial directors meeting, and keep minutes of the meeting
- Draft the bylaws, or shareholders agreement if you choose a "Close Corporation"
- Apply for an Employer Identification Number from the IRS
- File the necessary securities documents with the Department of Corporations
Top Mistakes made by business owners when they do not use a California Incorporation Lawyer
There are some who choose to incorporate on their own, instead of employing a California Incorporation Lawyer. This can lead to mistakes. Some of these mistakes can become big enough that they ruin your business, and in the extreme cases, put the business owner's family assets at risk. These are:
- Choosing the wrong entity. A California Incorporation Lawyer will know, once listening to you tell your story, which entity makes the most sense for you. It may be a tossup between two forms. It may be one particular form that is better than all the others. But until you talk to a California Incorporation Lawyer, you won't know for sure which one is right for you.
- Insufficient capital. This one can be fatal. A corporation with insufficient capital can be disregarded by the Courts. In one California case, a business that incorporated just a few weeks before a tragedy occurred on their premises was sued. The corporation had formed, but there were no assets, no capital. The court found one of the incorporators personally liable for the death that occurred. This result can happen with any one of these mistakes, not just insufficient capital. A well qualified California Incorporation Lawyer would not allow this to happen, as this would be on a checklist of items to review.
- Not treating your corporation as a separate entity. Another lethal mistake. Treat the corporation as an extension of your personal self, then the courts will ignore the corporate status and look to you if you are sued for any reason. They call this "alter ego" where the corporation was not a separate entity but just an extension of you. Do not get caught in this situation as you are putting yourself and your family at risk. Ask your California Incorporation Lawyer how to avoid these mistakes.
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