Starting a New Corporation or LLC? Call Me!
According to the Los Angeles Times, California has created new businesses at one of the fastest rates in the nation, reflecting the entrepreneurial spirit that made our state a great place to live and work. Kern County continues to outpace other California communities in terms of economic growth spawned by small and medium sized businesses.
Whether it is a longtime dream or the result of a brilliant idea, people form corporations and Limited Liability Companies (LLC’s) every day. Call my office for assistance with the formation of your new corporation or LLC so that you ensure that you are off to the best start in terms of fulfilling your legal requirements. A successful business depends on a successful formation.
In California a “Corporation” is the most common form of a business organization, and one that is chartered by a state and given certain legal rights as an entity separate from its owners. Corporations share most of the rights and responsibilities that individuals have, such as the right to enter into contracts, to loan and borrow money, to hire employees and to own assets.
According to the California State Franchise Tax Board, some key features of a corporation include:
- A corporation must register with the California Secretary of State before conducting business operations and file appropriate paperwork.
- A corporation must create bylaws (e.g., how the corporation will operate) that cover items such as stockholder meetings, director meetings, number of officers, and their responsibilities.
- If formed as a corporation, the owners of the corporation are not liable for the losses of the businesses and creditors may only look to the corporation and the business assets for payment.
- A separate bank account as well as separate records are required.
- The owners have ultimate control of the corporation but must elect directors who in turn elect officers for the company. The directors make the major decisions, while the officers make the day-to-day decisions.
- A corporation’s life is perpetual in nature.
- Ownership is easily transferred through the sale of stock, and new owners can be easily added through the issuance of additional stock.
Limited Liability Companies (LLC’s) are the most basic business structure that can be developed and is flexible in nature. They have the advantage of pass-through taxes and limited personal liability for the owners. I have the expertise to help you decide which type of company will best suit your needs.
Key features of LLC’s include:
- Are a type of business ownership that combines several features of corporation and partnership structures.
- Owners are considered “members”, not “partners” or “shareholders”.
- The number of members is unlimited and can be individuals, corporations or other LLC’s.
It’s good to remember some basic tips for starting a business such as:
- Be clear on why you want to start a business and most importantly, make sure the opportunity is right and be sure you are not starting a business as a last-ditch effort to bring in revenue.
- Determine your business type. Contact my office so we can discuss the best options that meet your personal needs as well as your financial needs.
- Create a simple business plan and have that reviewed by good business people. The plan should include what you are offering, who you are targeting, how much you will charge and basic strategies for making it happen.
- Determine your target customer. Be specific about who you are targeting for business and create strategies around those specifics.
- Button down your pricing. Determine the value of your product or service and ensure you are considering all costs. Do not underestimate the value of what you have to offer.
- Find start-up money until you begin making a profit, such as a loan. If a loan is not an option, then consider online fundraising such as crowdsourcing, where people invest in your ideas.
- Go and get customers. Do not expect that people will just come to you. The majority of your time as well as your effort should go into ensuring a solid customer base.
I am a big fan of the free market and our right to form corporations and businesses. Small and medium businesses drive our local economy. Please contact my office if you are looking to form a corporation so that you start off on a solid foundation that will help your business grow and thrive.
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