C-Corporations

Why Incorporate?

 

All legal and tax professionals agree, if your business is not incorporated you may be throwing away thousands of dollars in tax savings and deductions.

In addition, all of your personal assets such as your home, cars, boats, savings and investments are at risk and could be used to satisfy any law suits, debt or liability incurred by the business. Forming a Corporation can provide the protection and tax savings needed to give you peace of mind and make your business even more successful and profitable.

Some Benefits Include:

Liability Protection: Properly forming and maintaining a corporation will provide personal liability protection to the owners or shareholders of the corporation for any debt or liability incurred by the business. Personal liability of the shareholders is normally limited to the amount of money invested in the corporation.

Tax Advantages: 

Another important benefit is that a corporation can be structured many ways to provide substantial tax savings. You can minimize self-employment taxes and increase the number of allowable deductions lowering the taxes you pay on the income of the business. Many corporations structure retirement and tax deferred savings plans for their owners and employees which can provide even greater tax savings.

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C-Corporations?
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C-Corporation Q&A

 

What is a corporation?

A corporation is a legal entity that exists separately from its owners. Creation of a corporation occurs when properly completed articles of incorporation are filed with the correct state authority, and all fees are paid.   Back To Top

What is the difference between an "S" Corp and a "C" Corp?

All corporations start as "C" corporations and are required to pay income tax on taxable income generated by the corporation. A C-corporation becomes an S-corporation by completing and filing federal form 2553 with the IRS. An S-corporation's net income or loss is "passed-through" to the shareholders and are included in their personal tax returns. Because income is NOT taxed at the corporate level, there is no double taxation as with C-corporations. Subchapter S-corporations, as they are also called, are restricted to having no more than 100 shareholders.   Back To Top

Do I need an attorney to incorporate?

An attorney is not a legal requirement for incorporating a business in any state except South Carolina, where a signature by a South Carolina attorney licensed to practice in the state is required on articles of incorporation. In every other state, you can prepare and file the articles of incorporation yourself. However, if you are unsure of what steps your business should take and you don't have the time to research the matter yourself, a free consultation with Incorporate Bakersfield is often well worth the time you spend.   Back To Top

How do I know if my name is available?

 

We will request your three top name choices. We will check these as part of our service. If these names are not available, we will contact you for another name choices.  Back To Top

How do I name my corporation?

 

First, we recommend that you spend some time coming up with a name for your corporation. Although each state has different rules concerning the naming of your corporation, the most common rule is that it must not be deceptively similar to another already formed company. The corporate name must include a suffix. Some examples are "Incorporated", "Inc.", "Company", and "Corp."    Back To Top

What are the benefits of incorporating?

The primary advantage of incorporating is to limit your liability to the assets of the corporation only. Usually, shareholders are not liable for the debts or obligations of the corporation. So if your corporation defaults on a loan, unless you haven't personally signed for it, your personal assets won't be in jeopardy. This is not the case with a sole proprietorship or partnership. Corporations also offer many tax advantages that are not available to sole proprietors.

Some other advantages include:

  • A corporation's life is unlimited and is not dependent upon its members. If an owner dies or wishes to sell their interest, the corporation will continue to exist and do business.

  • Retirement funds and qualified retirement plans (like 401k) may be set up more easily with a corporation.

  • Ownership of a corporation is easily transferable.

  • Capital can be raised more easily through the sale of stock.

  • A corporation possesses centralized management.

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What is a Registered Agent?

California requires that a corporation have a registered agent. That agent must have a physical location in California. The registered agent can typically be any person (usually a resident of the state) or any properly registered company who is available during normal business hours to receive official state documents or service of process (lawsuit).  Back To Top

How many Directors/Shareholders do I need?

California allows for one person to act as shareholder, director, and all officer roles.  Back To Top

How many shares of stock should I choose, and at what par value?

We provide a default of 1,000 shares, although you can choose any amount you want. Your par value is not required and is usually expressed as "No Par Value" or some dollar amount per share such as "$1.00" or "$0.10." California does not require that you do not issue your stock for less than the par value. California does not base their fees on the number of shares authorized, multiplied by the par value.  Back To Top

What is a Federal Tax Identification Number or EIN?

Your corporation is required to have an Employer Identification Number (EIN) also known as your Federal Tax Identification Number so that the IRS can track payroll and income taxes paid by the corporation. But, like a social security number, an EIN is used for most everything the business does. Your bank will require an EIN to open your corporate bank account. We provide full EIN services:​ We actually obtain your company's EIN for you.  Back To Top

What do I need to do AFTER I incorporate?

You must have your initial shareholder(s) meeting to elect your director(s), if your director(s) haven't been designated in the articles. Then, you must have your initial organizational meeting of your directors. At this meeting, you will need to elect your officers, adopt your company's bylaws, and issue your stock (among other actions).  Back To Top

How do I get started?

Once we have discussed the different business options for you and you have decided on a name, I will verify the availability of your name choices and draft your articles, I will then file them with the state and send you all appropriate documents after they have been filed. I will obtain all necessary company identification numbers that your new company will require. Depending on the State of California's processing time, we well meet again to deliver your legal documents and binders. From that point, you will be given advise how to proceed. I will not only give you the keys to your new business, I will also show you how to drive it correctly.  Back To Top

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