You could be among those folks planning to organize their own business. What better method can there be to combat unemployment than to become a job creator? Now, you are searching for tips on how to start a California corporation. Conversely, maybe you have got word of Limited Liability Companies (LLCs), therefore you want to start a California LLC for yourself. Knowing how a corporation varies from an LLC, plus the great things about establishing either, will allow you to decide which one best suits your business style and requirements.

The start of something massive

When a group would like to start a California corporation, they collect their cash (and other resources) and incorporate themselves. This action creates a “legal entity.” The corporation, in particular after concluding its filing with all the relevant agencies and commissions (most importantly the Internal Revenue Service, or IRS), turns into a person all its own.

The important aspect with this entity is it has rights similar to a real person. A corporation can sue and be prosecuted. It could purchase properties as itself, employ people, and sign contracts. This “legal entity” can generate more capital by issuing stocks. The officers of your corporation – often a President, Secretary and Treasurer – according to the direction of a Board of Directors appointed by the major stockholders, do all of these tasks and run its day-to-day operations.

The important thing to consider when you want to start a California corporation is a thing known as liability protection. Properties the corporation owns is separate from everything you along with other investors personally own. In the event the business is unable to pay its creditors, they cannot legally pursue the private assets of shareholders, for instance a house or car, in order to get back the capital they credited to the corporation.

Three initials, a great deal of opportunities

Some just are unable to or will not want many of the demanding jobs when you start a California corporation. Those large entities require filing of separate tax statements, a yearly board meeting complete with minutes made by the Corporate Secretary in addition to regular ones, and reports to several regulatory bodies.

Alternatively, people can start a California LLC. These small business ventures put together certain great things about corporations with the ones from a partnership. Setting one up can be harder than building your own sole proprietorship or partnership, however it is much easier to manage rather than a corporation. Its owners can be any person, even non-resident foreigners. You also do not have to file so many reports and hold an once a year meeting when you start a California LLC. If you start a California LLC, though, you aren’t creating a legal entity. The IRS treats it as a pass-through entity, with taxes from earnings “passing through” to its members.

The reason why putting up an LLC is more desirable for smaller business owners may be the notion of limited liability from which it gets its title. While not a corporation and not a legal entity, an LLC offers a measure of defense against personal liability for operators against lenders. Like with a corporation, creditors and other claimants cannot legally take the personal belongings of members. Many small business owners usually start a California LLC because of the limited protection it can give them.

The author blogs about starting and running a California LLC and enables interested folks who want to incorporate in California.

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