Why Incorporate?

Important reasons for incorporating is:

(1). To limit the personal liability of the business owners for the debts and liabilities of the business. If a corporation cannot pay its debts or other financial obligations, creditors cannot usually seize or sell the corporate investor's home, car or other personal assets. Be aware that the IRS and the state Franchise Tax Board do not recognize the concept of limited liability in the instance of failure to pay income, payroll or other taxes including sales taxes. They may attempt to recover unpaid taxes from "responsible" employees if they can't collect these taxes from the corporation.

(2). It is one way for business people to put notice others on notice that the business is an established business whose operations are carefully planned and routinely reviewed.

(3). The corporate form often "lends" itself to a number of arrangements for the borrowing of funds for business operations. Lending institutions are familiar with the various types of debt instruments which have been developed through the years to provide corporations with funds and the risk-conscious corporate lender with special preferences.

(4) A corporation's existence begins upon the filing of its Articles of Incorporation in the Office of the Secretary of State. A Corporation continues perpetually, unless otherwise expressly provided by law or its Articles of Incorporation (Corp. Code, ¤200). In essence, a perpetual existence, despite changeovers in management or ownership.

(5) Taxation is a significant area where a corporation can give the owners of a small or medium-sized business flexibility in decision making and financial planning. By forming a corporation, the owners immediately become eligible to split business income between themselves personally, and the separate taxable entity, the corporation.

(6) Election of federal S Corporation tax status: Generally, a corporation which elects to become an S corporation has its profits and losses passed through the corporation to its shareholders. This means, with exceptions, that profits and losses are not taxed to, or deducted by, the corporation, but by the individual shareholders in proportion to their stockholdings. The corporation side-steps taxation on its profits and its shareholders (like partners) get the tax benefit of the losses, credits, deductions, etc., of the corporation. Profits of the S corporation pass through to shareholders on a per-share, per-day basis, whether or not such profits are actually distributed to them. Consequently, S corporation tax status can be a very flexible planning tool, providing corporations with the ability to live in two different worlds, enjoying a corporate legal life (including limited liability status for its owners) and partnership tax status.

If you are looking to incorporate, or simply need information, click on the following links below. If after reading the material or consulting an attorney, you decide to use our service, use our online questionnaire.

You can even download an application for Limited Liability Company and open it in Adobe Acrobat Reader. If you do not own a copy of Acrobat Reader, we have provided the link for a FREE copy of Adobe Acrobat Reader. We have also provided our application for Power of Attorney in Microsoft Word.

Simply download and complete the questionnaire and fax, mail or drop it off to one of our offices. We do the rest! Any questions please call (805) 582-6172.