I’m a Business: What Does “Incorporated” Mean in California?
Ready to take your small business to the next level? Want to protect your personal assets and raise capital more easily? In this case, consider getting help to form a corporation in California for your business. Incorporating your business won’t be easy, but it’s worth the effort. You’ll find it easier to secure funding, enjoy tax advantages, and it adds a layer of privacy. Furthermore, a corporation is an entity on its own, so generally you won’t be personally responsible for its debts (the Corporation remains responsible for its own debts). Another advantage is that you’ll be able to issue stock to shareholders. This can make your business more appealing to investors and lead to faster growth. Legal requirements vary among states. So what does “incorporated” mean in California and what to expect?
Let’s find out.
What Does “Incorporated” Mean?
A corporation, also known as an incorporated business, is a legal entity on its own. This means it can sign contracts, buy and sell property, apply for a loan, initiate lawsuits, and so on.
When you incorporate a business, you create a separate legal entity. Therefore, you have limited personal liability for its debts, taxes, and obligations. Partnerships and sole proprietorships, on the other hand, are not considered legally separate from their owners.
All corporations are required to have a board of directors, which is elected by the shareholders. Its role is primarily to appoint officers and make key decisions. This type of business may issue stock certificates and has a perpetual existence.
How to Incorporate in California
Incorporation is a complex process that involves several steps. First, you must choose a business name and register it with the California Secretary of State. Consider filing a Name Reservation Request Form to reserve the name for up to 60 days.
Next, decide on the type of corporation. C corporations can have an unlimited number of stockholders, provide liability protection, and offer greater flexibility but are subject to double taxation.
With an S corporation, you can avoid double taxation but you may only issue one class of stock and have a limited number of shareholders.
After you register a business name and choose your incorporation type, Articles of Incorporation must be filed.
Beware that all filings and documents submitted to the Secretary of State are available to the public.
Once these steps are complete, you must create the corporate bylaws, have an organizational meeting, prepare minutes and prepare and sign a shareholder’s agreement. During this initial meeting, the board of directors will appoint corporate officers, set the company’s fiscal accounting year and more.
Get Professional Help
Still wondering “what does incorporated mean in California?” The truth is that incorporating a business can be stressful and complicated. Even the slightest mistake can lead to hefty fines and slow you down.
Don’t take unnecessary risks. Contact our experienced lawyers today!
Whether you want to form an LLC, a corporation, or a partnership, we can help. Our team will prepare and file the documents on your behalf, assist you with the drafting of contracts, and provide legal advice.
