Incorporating in California offers your business a number of important legal and financial benefits. Incorporation is the act of notifying the business regulatory body that you plan to operate a business in the state. Incorporation is a legal process, and depending on the complexity of the entity, seeking legal advice offers numerous benefits.
What Are the Benefits of Incorporating in California?
Incorporation offers nonprofit organizations, companies or clubs financial and legal advantages. Companies that are not incorporated, such as limited liability entities, do not have a separate credit history. Corporations can build a credit profile despite the business owner’s credit profile. Corporations can also receive additional funding for operational expenses through the sale of stock. Incorporated entities are also taxed at a lower rate than individual owners.
In a legal sense, incorporation shields the business owner from claims or lawsuits, which protects the owner’s personal assets. In comparison, those who are own a sole proprietorship can be held personally liable for damages.
How Can I Incorporate in California?
There are several legal steps to incorporating in California. Once a business name is selected, the owner must determine name availability. A request to search can be sent to California’s Secretary of State’s Office by mail. If the name is available, the owner can then request that the name be reserved.
The Articles of Incorporation is the document that notifies the state of the intent to do business. The type of Articles of Incorporation required by statutory law depends on a number of factors. For example, if the entity is a not-for-profit, public benefit or religious organization, there are specific guidelines regarding taxation and formation that play a role.
In addition, companies that will offer limited stock, do not want to make a public stock offer, or plan to have a small number of stockholders may wish to form a close corporation. General corporations can offer their stock publicly.
Business owners must select an agent for service of process. The agent for service of process receives court claims in the event the entity is sued. The agent of service can be an individual or another corporation. The state offers a listing of private service companies that may act as an agent for service of process.
What if My Company is Out-of-State?
California enforces another process for conducting intrastate business. Business owners must first obtain a certificate of good standing from their current jurisdiction. The certificate is then attached to the Statement and Designation by Foreign Corporation form.
How Can a Law Firm Help With Incorporating in California?
One of the most subtle issues that arise for new business owners are the concerns associated with trademarks. Trademarks are a type of intellectual property that identifies a business, is products and services. Examples of trademarks include logos, words, images, phrases and symbols or a combination of these components.
Selecting a business name and logo are important parts of incorporating, and trademark infringement is a possibility. As a result, working with an attorney experienced in business formation and intellectual property can limit the infringement of another company’s rights.
In addition, an attorney can help you determine which type of business structure best suits your situation — now and in the future. The complexities of taxes, financial records and legal business governance become more clear when you work with an experience legal team.
Incorporating in California can be an exciting time, but making sure you follow the state’s regulations is important to getting a good start. The governance of an entity doesn’t stop when the Articles of Incorporation are filed. Governance continues through the life of the business, and acquiring the support of legal professionals can make the process less confusing and simpler.