Forming Corporations in Orange County, California

A Corporation is one of the most commonly formed business entities in Orange County, California. In this business structure, the law perceives the business as a separate legal person from its owners. In other words, it has its own rights, it can file lawsuits, it can pay taxes, it can buy and sell properties and also, it can commit crimes. The biggest advantage of being a corporation is that the personal assets of its owners are protected from the legal liabilities that arise from the debts and obligations that the business may incur.

How to Incorporate a Business in California?

Incorporating a Business in Orange County

Business Incorporation in Orange County, CA

The term Incorporation refers to the process of forming a new Corporation. A business can incorporate by filing an application for charter with the state of California. These application forms filed are also referred to as Articles of Incorporation (or Certificate of Incorporation or the Corporate Charter). The Articles of Incorporation should include the purpose for forming the corporation, the names and addresses of the members of the corporation, the amount and kinds of stock that the corporation will be authorized to issue, and the right and privileges of each stockholder.

The first step you should take in order to incorporate your business in California is filing the applicable Articles of Incorporation with the Secretary of State. There are various Articles of Incorporation forms to choose from, and each has been drafted to meet the requirements of the State. You can either use the forms they provide, or have a corporate lawyer compose a statutorily compliant document for you. In California, it will cost you 100 USD for filing the Articles of Incorporation, plus an additional handling fee of 15 USD, paid over-the-counter.

The different Articles of Incorporations include:

  1. Articles of Incorporation of a General Stock Corporation (Form ARTS–GS)
  1. Articles of Incorporation of a Close Corporation (Form ARTS–CL)
  1. Articles of Incorporation of a Professional Corporation (Form ARTS–PC)
  1. Articles of Incorporation of a Nonprofit Mutual Benefit Corporation (Form ARTS–MU)
  1. Articles of Incorporation of a Nonprofit Public Benefit Corporation (Form ARTS–PB–501(c)(3))
  1. Articles of Incorporation of a Nonprofit Religious Corporation (Form ARTS–RE)
  1. Articles of Incorporation of a Common Interest Development Association (Form ARTS–CID)

It is important to remember that the documents you submit may be returned to you for correction without being filed. This usually happens when there are name issues, errors, omissions or misstatements in the submitted Articles of Incorporation. To make sure that all issues and concerns are addressed properly and that the filing is done correctly, you must consult with a corporate attorney in Orange County prior to submitting the documents to the Secretary of State.

Why Should a Business Incorporate?

There are various advantages of incorporating a business in California. The prominent advantage is that, in a corporation, shareholders are not liable for the actions of the company. Therefore, creditors cannot touch the owners’ personal assets if the corporation is unable to pay its debts and obligations.

Another advantage of being a corporation is that, unlike Sole Proprietorships and Partnerships, a corporation has unlimited life. In a Sole Proprietorship and in Partnerships, the company has to dissolve upon the death or bankruptcy of a particular owner or owners. A corporation, on the other hand, continues to exist in these situations. A Corporation will continue to operate indefinitely, until it has accomplished its objectives or has merged with another company, or if the corporation itself has gone bankrupt.

Another characteristic of a corporation that incorporators will enjoy is the transferability of the corporation’s shares. One of the main motivators for incorporating a business is to have an assurance that the ownership interest that a shareholder has invested in the company is readily sold, transferred or given away to another family member. In a Sole Proprietorship and in a Partnership, removing yourself of ownership in the company can be burdensome and costly. In the event of the slightest ownership change, properties need to be retitled, new deeds need to be drawn and many other administrative steps have to be taken.

Among the different business entities, Corporations attract more investors, and therefore are able to raise their investment capital. New investors are more attracted to corporations because of the limited liability characteristic of this business structure, and the easy transferability of their shares.

Who Plays What Roles in a Corporation?

California Business Incorporation

Corporations in Orange County, CA

In order for a Corporation to operate efficiently and effectively, there are certain roles that need to function. These roles include:

1. Board of Directors

The original Board of Directors in a Corporation is designated in the Articles of Incorporation that have been filed with the Secretary of State. It is the responsibility of the Directors to oversee the officers of the company, and to make sure that the business operates according to law, and corporate procedures. It is the legal duty of every Board Director to act in the corporation’s best interest, and not their own interests. Their other legal responsibilities included protecting the investments of all their stockholders in the corporation. The Board of Directors also has the power to appoint and to dismiss any of the corporation’s officers.

2. Stockholders

Stockholders, also known as shareholders, are those who have been granted stock by the business in exchange for their investment. Investments may be in the form of money or services done for the corporation. It is part of the stockholders’ responsibility to hold an annual meeting in order to elect the corporation’s Board of Directors. The corporation’s stockholders are not legally liable for any of the corporation’s debts and obligations.

3. Corporate Officers

The Corporate Officers are those given the responsibility of running the corporation daily. A typical set of Corporate Officers includes at least on Chief Executive Officer (CEO) and/or President, a Secretary and a Treasurer/Chief Financial Officer (CFO).

The Role of a Corporate Attorney in a Corporation

Business Attorneys in CA

Incorporation Attorneys in Orange County, California

If you want to have your business incorporated, it is wise to seek the assistance of a corporate attorney in Orange County, California. A corporate lawyer can help you with the Articles of Incorporation, starting your corporation, and can even help you throughout the existence of your business. Having a corporate lawyers contracted is very helpful in all the legal aspects of forming and running a corporation.

Corporate Records Management in Orange County, California

It is common for people to quickly say “no” when they are asked whether they want a receipt or not. But businesspeople should always ask for a receipt, regardless of what they are purchasing, especially if it is related to their business. Corporate lawyers in Orange County, California strongly advise good corporate record management to avoid problems, particularly with the IRS. Diligently collecting all receipts is part of good corporate record keeping. Learn a few tips about receipts and corporate record management by reading through this article.

1. All Receipts for Business Related Expenses Should Be Kept

This is very, very important. When tax time comes, the IRS requires that all small businesses in California have a receipt to support certain expenses made by your business. It does not matter if you are paying cash, using your credit card, or issuing a check; if you are making a purchase that is related to your business, it is imperative that you ask for a receipt.

2. Label All Your Receipts

There are lots of small businesses in Orange County, California that issue receipts with incomplete details. The only information you’ll find in many of these receipts is the amount that you paid and the date that you made the purchase. These details are not enough, and are not very helpful when you are trying to manage all of your corporate records properly. It is very important that you label your receipt with the details, such as the exact item you purchased, and for what purpose you bought it. Not only will you avoid problems when auditing comes, but you will also be able to keep track of your expenses.

3. Have All Your Receipts Scanned

There are times when the IRS might ask for documentation, and audit you up to 6 years back. It would be an issue if the receipts you’d collected from before had already faded by then. You can protect your business from any unnecessary legal problems if you have your receipts scanned. You can further back up your receipts by not only saving the file in your computer, but also by keeping a copy in a flash drive. Another cool way to have a digital copy of your receipt is to take a picture of it through your smartphone.

4. Do Not Depend on Credit Card Statements and Cancelled Checks

Credit card statements and cancelled checks are important for proper corporate record management in CA, but these are insufficient if you do not have the receipts. The IRS auditor will want to see the details of your expenses, and without receipts, you cannot adequately prove your statements.

5. Avoid Using Cash For Business Expenses

Many corporate lawyers in CA advice using cash for business expenses. Expenses made using cash are difficult to track, because cash is very easy to spend and almost always tedious to reconcile with receipts. It is more efficient to use debit cards and credit cards. Back them up by never forgetting to ask for a receipt.

Small Business Tips

Running a business is not as easy as many people may think. Having to deal with corporate records and other legal problems can be an additional burden. Make your business life easier by having a corporate attorney in Orange County, CA assist you with your company. There are various business attorneys in Orange County that are very competent, and readily able to help you in the legal aspects of your business.

Corporation Name: Tips On How To Choose a Name for your Business

Are you planning to put up a business in Orange County? Choosing a name for your company in Orange County, California is one of the most important things to do when starting a business. You must choose the company name carefully, because it is so tedious to change it later on. Moreover, the name you choose might give you an extra edge on your competitors.

The following are tips on choosing a name for your company:

1. A Company Name Must Stand Out

All businesses should strive to rise above their competitors. A common mistake made by many businesses in California when naming their company is making it sound like the names of other companies. Usually, this is because they are worried whether their business will be taken seriously by customers or not.

For a business to rise above its competitors, it should have a name that stands out. When you choose a business name, use the names of your competitors as examples of what to avoid.

2. A Company Name Should Not Have Generic Surnames

Some businesses use their owner’s full name for the corporation name. If so, make sure the family name is not generic. Only those who have a truly memorable or unique family name can get away with this. Generic surnames will not make you stand out from your competitors.

3. Do Not Use Descriptive Names for your Corporation Name

In the past, many companies used business names that were descriptive of their brand. Even corporate attorneys in California used to advice this. Although it was good advice at that time, it is not as applicable today. In fact, it may hurt your company more than it can help.

There is no need to have descriptive names these days, because there are many ways customers can figure out what you do. Customers can search you on Google, scan your QR code, or look your company up in the local phone book.

It can be a burden to think of a name that will describe everything you do at once. There are other things you can do to explain the nature of your business to your customers, particularly through your website and your business card.

4. Avoid Using Acronyms for your Business Name

These days, many corporate lawyers in CA would advise business owners to do away with acronyms for a business name. The fact it, there are already many businesses in the world that use acronyms. Stand out by avoiding them.

5. Do Not Use Faux Latin for your Company Name

A lot of people are fascinated by Latin words and that is why businesspeople like to use Latin-like words to name their corporation in California. Latin-like names (e.g. Accordis, Nutiva, Valero, Abertis and Veriton) are easy to trademark, because you can always make one up that no one has used before. But the problem is that so many companies have leaned toward using faux Latin that if you use this for naming your company, you still won’t be able to stand out.

Seek The Help of a Competent Corporate Attorney in California

Choosing a business name for your company can be tedious. You can make it easier for you by seeking the help of a corporate lawyer in Orange Company in California.

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.

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.

Corporate Lawyers in California Assist Businesses in Choosing Their Form of Business Entity

Business owners need to decide what form of business entity they want their company to be. This process of choosing can be a difficult task, which is why it is important to have a corporate attorney in Orange County, CA to help them pick the right one. Learn about the most common forms of business entities by reading through this article.

1. General Partnership

A general partnership or a joint venture is the least expensive type of business entity to form, not to mention the easiest. This is because in a general partnership, no documentations and other filings need to be done with any agency. The only imperative requirement is that a signed written agreement be made between the involved people so that each one’s roles and responsibilities are defined accordingly. Moreover, since there is no filing or documentation with an agency required, the individual partners can choose to remain anonymous and keep their privacy.

One disadvantage of this kind of business entity is that all partners are jointly responsible for any obligation, debt and liability that one partner incurs. It’s an one for all and all for one accountability scenario.

2. Corporation

Unlike a general partnership, a corporation requires articles of incorporation filed with the secretary of state. If there is no close corporation formed, a centralized management is usually chosen in a corporation where there are directors and officers elected annually. All profits and losses are indiscriminately allocated to each shareholder. Moreover, corporations (except for Subchapter S corporations), are subject to double taxation (first during the corporate level and second when profits are distributed among stockholders). Of course, the company itself is taxed and not the stockholders because the company is viewed by the government as an individual entity apart from its owners.

What makes a lot of companies decide to incorporate is the fact that a corporation provides limited liability to its business owners. Basically, if there is no fraud or the like, then owners have absolutely no liability for any of the company’s obligations.

3. Limited Partnership

A limited partnership is similar to a general partnership where there are at least 2 individuals or entities join to form the company. The difference is that in a limited partnership, one partner has full control of the company while the others only have limited control. This also means that that one partner has unlimited liability for partnership obligation while the other partners do not.

One of the disadvantages of this setup is that it is more complicated compared to the other forms of business entities. This is why, although a limited partnership does not require a written agreement, most limited partners request one made so that the partner with unlimited control will be made accountable to operate the company according to the agreement made between them.

4. Limited Liability Company (LLC)

The setup of a limited liability company is like a cross of a general partnership and a corporation. The LCC has pass through taxation just like a general partnership and has a centralized management system just like a corporation.

There is a lot of flexibility in the structure of an LLC. The business owners of the company can have an agreement on how the company will be run and managed. They may decide to have managers just like how a corporation has board of directors or they may choose to have the members manage just like how a general partnership is managed by the partners.

Seek the Assistance of a Corporate Attorney in Orange County, CA

It is important that a business owner chooses the appropriate structure for his business. To know which business entity is best suited for your company, it is best to seek the counsel of a competent corporate lawyer in Orange County, California. Have one contracted at your convenience.

Legal Issues are Common for All Business Owners

Starting a business can be both exciting and challenging. Those who want to venture into starting a small business should be prepared for the challenges that may come their way. A few of the most common problems faced by businesspeople are legal issues. A lot of business owners tend to overlook the potential legal pitfalls that they may encounter. Legal issues can shut down an entire business faster than the business owners can react. If you plan to start a small business, you need to avoid all these legal pitfalls in order to preserve a lot of time and money later on. Of course, having a corporate attorney contracted is one of the wisest ways to make sure that you get assistance in all the legal aspects of your business. Here are a few other things that you should do in order to protect your business from damages cause by legal pitfalls:

Know Your Intellectual Properties and Protect Them

Generally, businesses have their own intellectual property, this includes trademarks, patents, trade secrets, domain names and copyrights. These things give a business an identity; they make the company different from the others. In order to protect the value of a business, a business owner should protect all intellectual property. Early in the start of the business, a business owner should build a portfolio that contains the rights to all intellectual properties and create an agreement stating that everyone in the company who has access to this private information must commit to not use these outside of the business.

Have A Good Understanding About Employment Law

Many businesses encounter a lot of problems simply because they do not understand employment law. Employment law covers various issues that need to be understood well, such as fair salaries and different kinds of discrimination towards employees. Problems between employer and employees can be avoided if you know the law and adhere to it faithfully.

Have A Competent Corporate Attorney Contracted

All businesses will face legal concerns, and most entrepreneurs are not lawyers, nor do are they very knowledgeable of legal terminologies and regulations. This is why it is very important to have a corporate lawyer contracted for the company. You, as a business owner, can focus on running your company while you let your corporate attorney handle the legal matters.

Strive To Maintain Customer Satisfaction

There are different kinds of dissatisfied customers. There are those who would talk bad about your company, there are those who would simply not go back to you and there are those who would file lawsuits. This is why it is imperative that your products and services deliver what you promise, and if anything goes wrong, be sure to address the issue promptly. Ensure the quality of all your products and services to avoid unnecessary lawsuits that can destroy your company’s reputation.

Ensure Proper Licensing

The law requires that all businesses have the necessary permits and licenses for operation. Each business differs in permits and licenses, depending on the state where that company is in. Know what your state requires and obtain the necessary permits and licenses before starting your small business. Your corporate lawyer can assist you in this.