The Difference Between an S Corporation & C Corporation

S Corporations and C corporations are two of the most popular business entities when a company decides to incorporate. Once you have incorporated your business, you might want to be an S corp or a C corp. If you are choosing between the two, tax concerns are usually the major basis for making a decision.

Just like a partnership business structure, S Corporations do not pay any federal income taxes. The profits and losses of an S corp are passed through to the stockholders. These people will then report the income and losses on their personal tax return. This process is called single taxation.

C corporations, however, face double taxation. Double taxation means that the C corp pays federal income tax. All dividends paid to the stockholders are also taxed.

It is always best to have a corporate lawyer in California to assist you in deciding what business entity is most suited to your company.

Learn more of the differences between S Corps and C Corps by reading through this article:

Advantages of Being an S Corporation

A major advantage of being an S Corp is that income and losses are passed through to the shareholders of the company, and taxes are paid only once. Thus, double taxation is eliminated. It is important to check the laws and regulations of your state regarding this, because some states do not recognize S Corps and will tax the company just like a regular C corp. There are states that charge S Corps as state tax, even if the company will not have to pay federal income tax.

If your business becomes an S Corp, you as the owner are protected from liability. With S Corps, the personal assets of the owner and the shareholders are separate from the company’s assets.

Accounting is also easier with S corps, because you can simply use the cash method of accounting. It’s perfectly alright if you do not have any inventory. Moreover, with S corps you will have more room for investors. In fact, S corps can have up to 100 stockholders!

Disadvantages of Being an S Corporation

S Corps , just like other business entities, are required to file a number of official and federal documents, including the Articles of Incorporation. The company must also hold regular meeting with their stockholders, and the minutes of these meeting be filed. There are also a number of government fees that have to be met regularly.

There are also shareholder restrictions with S corps. In a C corp, shareholders are taxed only when they receive their dividends. But with S corps, the shareholders are taxed for any income that the company has, even if they have not received any portion of that income. Another restriction is that S corps shareholders are only allowed to issue one class of stack. Many investors can get discouraged by this.

Again, in order to know more about what you’re getting into when it comes to choosing a business entity for your company, it is always best to have a corporate attorney in Orange County, California to assist you.

You Need a Business Attorney to Handle Common Legal Issues in California

All businesses in California will face legal issues; if not now, then eventually. This is why all businesses, whether big or small, should have a corporate lawyer. Corporate lawyers make sure that your business is protected from various kinds of legal troubles. Here are a few of the most common legal issues faced by businesses in Orange County, California.

1. Complaining & Unsatisfied Customers

Dissatisfied customers is one of the most common legal issues faced by businesses in California, and this can be a huge problem, because they can file lawsuits against your company. What’s worse is that most complaining customers gather consumer groups and make a single issue larger than it is. They will sue you over almost anything, from incompetent service to faulty products. Moreover, dissatisfied customers tarnish your company’s reputation, especially if they approach media outlets for their complaints.

You need to have a corporate attorney to handle issues with unsatisfied customers. You are already busy running a company and you cannot overburden yourself by handling legal issues. Have a business attorney in California deal with issues like these, while you focus on running your business.

Wrongfully Terminated Employees

The law provides that you cannot let go of an employee without any final termination forms. Before you terminate incompetent employees, you need to make sure that he signs the necessary documents carefully drafted by your corporate lawyer in Orange County. Your corporate lawyer will make sure that the terms of his dismissal are communicated clearly.

Patent & Copyright Lawsuits

The business world is a very competitive environment. Sometimes it gets too competitive, because other companies will do anything they can to put down their competition. They will look for loop holes in your business and when you do make a mistake, they are quick to file a lawsuit, which will destroy your reputation and ultimately to shut you down. One of the common lawsuits that companies are quick to file are those regarding copyright and patent.

Besides having a business attorney in CA protect you if lawsuits do arise, you also need to make sure that your product development team researches the patents and copyrights of your products thoroughly, so that you can avoid unnecessary problems with your competitors.

The Need for A Corporate Lawyer

All companies, whether big or small, need to have a corporate attorney in California contracted. Not only will they be able to help you when legal issues arise, they also serve a lot of purpose in the company. Corporate lawyers in CA help in preparing contracts, keeping corporate records, and they assist in various legal aspects of a business. Having a corporate attorney in OC, CA contracted will protect your company form potential legal problems in the future.

 

Tips To Remember When a Business Incorporates

Many businesses in Orange County have incorporated. If you are a small business in California and you want to incorporate, there are a few things you need to know. Here are basic tips regarding incorporating a business:

1. Corporate & Personal Matters Should Be Kept Separate

When a business incorporates, it becomes an entirely separate entity from its owners. The law views a corporation as an entity that should pay taxes separate from its shareholders. Therefore, it is very important that you maintain a sound business process, in order to preserve the benefits and protections of the corporation’s legal status.

2. Carefully Decide On Your Company Name

It is imperative that you get the name of your company right the first time, because if you do need to change it later, you will have to make a lot of amendments to your articles of incorporation. Articles of Incorporation are the documents filed when a company decides to incorporate. If you decide to change your company name, you will have to work on these other details too: getting a new domain name, getting a new listing on the telephone and in other directories, and obtaining new stationary and other business documents.

3. Website Domain Name & Company Name Should Be The Same

If not the same, the domain name should at least bear some similarity to the name of your corporation. This will help a lot in your marketing strategy, as having the domain name the same or similar to your company name increases your business’ presence online. This also implies that, before you choose a name for your company, it is best to go online and check whether there is a domain name that will match your company name or not.

4. Business Lawyers Can Help You Incorporate

It is best to entrust the process of incorporating a business to a competent corporate attorney in Orange County, California. They not only complete and submit paperwork that is necessary for incorporation, they also make sure that processes in general are done right. Entrusting the process of incorporation to a good corporate lawyer ensures that you will avoid unnecessary legal issues in the future.

5. Deciding on a What Type of Business Entity

There are various kinds of structures of business to choose from. Of course, it is better to have a business attorney in California assist you in deciding what business structure is best for your company. If it is a huge, publicly traded company that you intend to put up, a C corporation would be a good choice of business structure, because stocks in this type of structure are easily transferred. Some entrepreneurs want an S corporation for tax reasons, but this structure is limited to no more than 75 stockholders, and each should be an individual. For a small business, a Limited Liability Company (or, LLC) is the best type of business structure. Other common kinds of business structures include limited partnership and single proprietorship.

The Skills Required of a Competent Corporate Lawyer in California

Companies and small businesses in California should have a business attorney contracted. A corporate lawyer is an integral part of the success of any business. As you focus on running your business, the corporate attorney handles the legal aspects of the company.

Competent corporate attorneys in Orange County, CA make sure that future legal problems in the business can be avoided. They make sure that all contracts, documents and legal variables are well-made and taken cared of.

Just like doctors, different corporate lawyers in California also have special skills. To make sure you have the best corporate lawyer working for you, here are a few of the most important sets of skills that an attorney should have if you hire him or her:

BUSINESS ORGANIZATIONS

When you put up a business, you need to define its structure. Have a corporate attorney who can help you decide what type of business structure you want to have for your company. Examples of common business structures include a corporation, a limited liability company (LCC), and a limited partnership.

CONTRACTS

A good business lawyer is one who understands your business and is able to prepare standard form contracts that you will need. Contracts are always required when making agreements or deals with customers, clients and suppliers. A good corporate lawyer will also assist you in responding to contracts that other people will want you to sign.

TAXES AND LICENCES

Besides a lawyer, your business will need an accountant. The accountant will be able to help the company with many things, including preparing and filing business tax returns yearly. Before an accountant can do this, your corporate attorney should have already have registered your company for federal and state tax identification numbers. Your business lawyer should also be knowledgeable of the tax implications in the various business transactions that you might engage in.

REAL ESTATE

If you will be renting or leading a commercial space for your business, you will need a corporate attorney in Orange County, California who can add a standard tenant’s addendum to the lease contract. Lease contracts are usually drafted to benefit the owner alone, but with a good corporate attorney, you can make sure that the lease document has details and provisions that will benefit you as well.

INTELLECTUAL PROPERTY

The intellectual properties of a business are variables that need to be protected at all costs. These maintain the identity of a brand or a company. It is also important for a business attorney in California to register your products and services for trademark and copyright protection. There are specific corporate attorneys who specialize in the ins and outs of intellectual properties. Most of the time, if a lawyer claims to specialize in small business, that lawyer should also have a close working relationship with lawyers who specialize in intellectual properties.

These are only a few of the many important skills that a competent corporate lawyer in OC, California should have. Before hiring or having a lawyer contracted, evaluate them for these basic skills.

Searching for the Best Corporate Attorney in California

Many businesspeople find it very difficult to find the best corporate attorney for their company. Since it is very helpful for the company to have a corporate lawyer, one must go through it no matter how difficult. Here are a few tips on how to find the most competent lawyer for your business.

Rid Your Self of Prejudice Against Lawyers

Lawyers are known to be self-interested. They are also notorious for charging too much. The cliché, “lawyers are liars” makes attorneys look bad to many people. Because of these preconceived thoughts regarding lawyers, many businesspeople are mistrustful of the lawyers that they hire. The truth is, these negative notions about lawyers are not applicable to all. Most corporate lawyers in California are very dedicated to their work. If you want a competent corporate attorney, you must let go of your negative thoughts about lawyers and build a relationship with them through a positive mindset.

The Lawyer You Hire Should Share the Same Vision With You & Your Business

Each lawyer has a different field of expertise. Some lawyers specialize in corporate litigation, others in fashion law, sports law, or intellectual property matters. The corporate attorney in Orange County, CA that you choose should be someone who can identify  themselves with the vision you have for your business. Therefore, before hiring a lawyer, research his background first. Check the lawyer’s areas of practice in the past, and the business niches that he used to work in.

Thoroughly Express & Explain What You Need From the Corporate Lawyer

It is imperative that you share with the attorney you are going to hire the nature of your business and what specific help you will be needing from them. This should happen at the initial consultation. Many corporate lawyers in Orange County will do an initial consultation without charge. If you are not sure of what help you will need from them, tell them.

Of course, as much as you are able to express your side freely, you should also allow the corporate attorney to do his job as well, by having an open ear to listen to his expertise. Be willing to trust your corporate counsel when he assists you in legal decision making.

Establish Rates Clearly

The services of some corporate lawyers are more expensive than others. Some have a fixed hourly rates, too. When it comes to the value of a corporate attorney in Orange County, CA, businesspeople should remember that you are not only paying for their service, but also for the assurance that you will be spared from a lot of legal problems later on. The assurance that your stresses in running a company will be minimized is priceless. Nevertheless, it remains important to establish clearly the rates in the beginning of the lawyer-client relationship.