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CALIFORNIA CORPORATION FORMATION ATTORNEY

FORMING A CORPORATION IN CALIFORNIA

The primary benefit of a “C” corporation is limited liability. The owners’, i.e. shareholders’, liability is limited to the assets of the company. The shareholders’ personal assets are shielded from creditors and most law suits. A “C” corporation differs from a LLC in that the corporation pays taxes directly and not through the owner’s personal tax returns. In some cases this can result in lower taxes if the individuals are in high tax brackets.

“C” corporations are usually selected if there are many owners, large revenues are anticipated and the company may wish to go public in the future. A corporation can also offer fringe benefits, stock options and other incentives that may not be available with other organization structures. Corporations are owned by shareholders but managed by a Board of Directors.

Forming a (regular) “C” corporation is somewhat similar to forming a LLC. You first need to choose a name and the name must not be currently in use. You also need to file Articles of Incorporation with the Secretary of State, draft bylaws and issue stock certificates. The bylaws specify how the corporation will be run, how the board of directors and officers are elected, required meetings, quorums etc. It is important in a corporation to have regular shareholders’ and board of directors’ meetings and to have the corporate secretary keep good minutes. A corporation must adhere to more formalities than a LLC.

There is also a corporate structure designated as a “S” corporation. This is similar to a LLC in that taxes are not paid by the corporation but pass through to the owners. The “S” corporation predated the LLC and has now been largely replaced by the LLC for new company formation.

We can help you decide if a “C” corporation is the right organizational structure for your business and handle the required filings and document preparation.

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