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Whether you’re buying a franchise, creating a start-up, purchasing an existing operation or turning a hobby into a home-based entity – starting a business of any kind involves a great deal of planning and preparation. In addition to helping you incorporate or form an LLC, as well as providing information about how to start a business in each particular state, California New Business Bureau offers additional products and services useful to entrepreneurs when starting a business.

Starting a company doesn’t have to be complicated or expensive. California New Business Bureau ™ has been trusted to form more than 30,000 corporations and LLC’s since 1999 with an and a 98% customer recommendation rate. What we are not is that huge, impossible-to-get-someone-on-the-phone, impersonal incorporation services company you hear on the radio or see on TV, or that assembly-line online service that simply files your corporation or LLC paperwork only and leaves you to figure out what’s next. Virtually all incorporation and LLC formation services file the exact same paperwork, but we go further to guide you through the after-formation tasks that need to be completed to protect you financially and legally.

WHAT DOES IT MEAN TO INCORPORATE?

Incorporating a business means turning your sole proprietorship or general partnership into a company formally recognized by your state of incorporation. When a company incorporates, it becomes its own legal business structure – set apart from the individuals who founded the business. Through incorporation, the company’s owner or owners create a separate legal entity to transact business. This new business entity – corporation or limited liability company (LLC) – transforms the way the business is seen through the eyes of the law and often has more credibility with potential customers, vendors and employees.

HOW DOES INCORPORATION WORK?

Wondering how to incorporate a business as a C corporation or S corporation or how to form an LLC? Here are some of the steps included in the process:

1. Determine where you want to incorporate

2. Decide which business types is best for your business and goals. Consult with an attorney or accountant.

3. Determine who the directors of the corporation or who the members/managers of the LLC will be.

4. Select a registered agent. Your registered agent must be listed on your Articles of Incorporation or Article of Organization. The registered agent is appointed by you to receive important legal and tax documents on behalf of your business and forward them to you. California New Business Bureau includes this service in all incorporation packages.

5. Prepare and file Articles of Incorporation or Articles of Organization per instructions from the Secretary of State’s office. California New Business Bureau handles this step for you, allowing you to concentrate on running your business.

WHY IS INCORPORATING A BUSINESS IMPORTAT?

The primary benefit to business incorporation is limited liability. When you own a small business, you will invest a lot of money into not only getting it launched, but in keeping it running smoothly as well. As the owner you are responsible for any debts and losses your business may accumulate along the way. However, when you incorporate, you are typically only held responsible for the amount of money you personally invest. Your personal assets typically cannot be used to satisfy the debts and liabilities of your business. View our Benefits of Incorporation or Benefits of Creating an LLC article to learn more about this and other benefits of incorporating a business.

DOING BUSINESS AS ( DBA )

REGISTER YOUR COMPANY’S TRADE NAME THE RIGHT WAY.

State and local governments usually require companies to register any alternate names under which they do business. Called a Doing Business As (DBA) filing, this action allows your company to legally operate under a trade name, also known as an “assumed” or “fictitious” name. By having a DBA name, it’s possible for sole proprietors and general partners do business using a name other than the owners’ personal name. In the case of c-corporations s-corporations, limited liability companies (LLCs), nonprofits and some other formation types, a DBA filing allows them to do business under a name different than the one that appears on their original incorporation documents.

HERE ARE A FEW PRATICAL EXAMPLES OF HOW DBA NAMES ARE USED:

Sole proprietors and general partners often choose to operate under a DBA name. For example, business owner John Smith might file the DBA name “Smith Roofing.” Corporations and limited liability companies (LLCs) may register alternate names for specific lines of business. For example, Helen’s Food Service Inc. might register the DBA name “Helen’s Catering.”

BY REGISTERING A DBA NAME FOR YOUR BUSINESS, YOU COULD ENJOY:

  • Better visibility for marketing purposes

  • Enhanced credibility among suppliers and customers

  • An easier time opening business bank accounts

  • The ability to transact business under a different name on the Internet

CALIFORNIA NEU BUSINESS BUREAU CAN HELP.

California New Business Bureau can complete DBA registrations for corporations, limited liability companies (LLCs), and some sole proprietorships and partnerships. Let us know that you’d like to register a DBA name and we’ll send you the right application for your DBA filing. You just sign and return it to us and we’ll take it from there. Once the state or local government has accepted tour request, we’ll send you an approval notice. Your DBA name will then be part of the public record.

LIMITED LIABILITY COMPANY (LLC)

A BUSINESS TYPE WITH SEVERAL ADVANTAGES.

When looking at business types, many business owners choose to form a limited liability company (LLC). Starting an LLC is a good way to “wall off” your personal assets from your company’s liabilities, offering protection for your personal assets in the event of a judgment against your business. For this reason, forming an LLC is a better fit for many owners than a sole proprietorship or a general partnership. A limited liability company (LLC) also has certain tax advantages. The business itself is not responsible for taxes on its profits. Instead, the LLC’s owners, known as “members,” report their share of business profit and loss on their personal tax returns, similar to tax reporting for a general partnership. This is known as “pass-through” taxation. The LLC Advantage.

THERE ARE MANY BENEFITS OF A LIMITED LIABILITY COMPANY, INCLUDING:

  • Pass-through taxes. There’s no need to file a corporate tax return. Owners report their share of profit and loss on their individual tax returns.

  • No residency requirement. Owners need not be U.S citizens or permanent residents.

  • Legal protection. Owners have limited liability for business debts and obligations

  • Enhanced credibility. Partners, suppliers and lenders may look more favorably on your business when you’ve formed an LLC

S CORPORATION: BENEFITS AND REQUIREMENTS

A FEDERAL TAX STATUS WITH SEVERAL ADVANTAGES.

Corporation that meet certain requirements can elect an s corporation status with the IRS. This federal tax status enables companies to “pass through” their taxable income or losses to owners/investors in the business, according to their ownership stake in the business. By default, companies that do not specify a tax status with the IRS are considered to be c corporations – with means that they will be taxed as a c corporation. On the other hand, by electing s corporation status, a corporation can eliminate the disadvantage of “double taxation” of corporate income and shareholder, dividends associated with the c corporation tax status. The cost of a S-Corp can vary. Say a corporation makes $300,000 in a given year – if it is an s corporation, the business itself will not be taxed for that amount; instead the company’s shareholders will be required to pay taxes according to their share of the company. In this scenario, if the company has three shareholders, each with an equal share of company stock, each shareholder will pay taxes on $100,000. If the c corporation makes $300,000 in a year, then the company would pay taxes at the current federal corporate tax rate of about 34%. If the remaining profits of $198,000 are distributed to the three shareholders as dividends, each shareholder will pay taxes on $66,000 in dividend income at the current federal dividend tax rate of 15%. S corporations, like other types of corporate entities, also keep owners’ personal assets safe from company debt and judgments against the business. In short, the s corporation status offers the following advantages:

  • Limited liability: Company directors, officers, shareholders, and employees enjoy limited tax returns

  • Pass-through taxation: Owners report their share of profit and loss on their individual tax returns

  • Elimination of double taxation of income is not taxed twice; once as corporate income and again as dividend income.

  • Investment opportunities: The company can attract investors through the sale of share of stock

  • Perpetual existence: The business continues to exist even if the owner leaves or dies.

  • Once-a-year tax filing requirement (vs. quarterly for a c corporation)

ADVANTAGES OF STARTING A C CORPORATION

PROTECT YOUR PERSONAL ASSETS WITH THIS POPULAR CORPORATE STRUCTURE.

The most common type of corporation in the U.S is the C Corporation By forming a C Corporation, business owners create a separate legal structure that helps shield their personal assets from judgments against the company. C Corporations have a specific structure that includes shareholders, directors, and officers.

THE C CORPORATION IS A TIME-TESTED BUSINESS FORMATION. IT HAS MANY ADVANTAGES, INCLUDING:
  • Limited liability for directors, officers, shareholders, and employees

  • Perpetual existence, even if the owner leaves the company

  • Enhanced credibility among suppliers and lenders

  • Unlimited growth potential through the sale of stock

  • No limit on the number of shareholders, although once the company has $10 million in assets and 500 shareholders, it is required to register with the SEC under the Securities Act of 1934

  • Certain tax advantages, including tax-deductible business expenses

The C Corporation structure does have its drawbacks. For instance a C Corporation’s profits are taxed when earned and taxed again when distributed as shareholders’ dividends what’s known as “double taxation.” Shareholders in a C Corporation also can’t deduct any corporate losses. To avoid these concerns, many small business owners choose to form as S Corporation instead.

START PROCTECTING YOUR ASSETS BY FORMING A C CORPORATION

Now That you are aware of the pros and cons of a C Corporation and if you wish to start one, California New Business Bureau can help you form your new C Corporation in any state or the District of Columbia. We’ll help you draft Articles of Incorporation for your business and file them with the state. Remember, once you’re incorporated, your C Corporation must adopt bylaws, hold directors’ and shareholders’ meeting, and issue stock to owners. California New Business Bureau can help you with these and many other business requirements.

NONPROFIT, OR NON-PROFIT CORPORATION

IMPROVING COMMUNITIES AND CHANGING LIVES

A nonprofit, or non-profit corporation, is a company or organization formed for purposes other than making a profit. Like standard for-profit corporations, nonprofits provide limited liability protection. The personal assets of directors and officers typically cannot be used to satisfy the debts or liabilities of the nonprofit. Advantages of a nonprofit corporation.

NONPROFIT CORPORATIONS TYPICALLY OFFER CERTAIN BENEFITS:
  • Limited liability protection. Directors and officers are typically not personally responsible for the nonprofit’s debts and liabilities.

  • Tax-exempt status. Nonprofits can apply for both federal and state tax-exempt status.

  • Access to grants. Some nonprofits are eligible to receive public and private grants, making it easier to get operating capital.

  • Tax-deductible donations. With 501(c) (3) nonprofits, donations made by individuals to the nonprofit corporation are tax-deductible.

FORMING A NONPROFIT CORPORATION?

Non-profit corporations follow state laws that are very different from those of standard corporations – but the business formation process is very similar. To start a non-profit organization, non-profit Articles of Incorporation must be filed with the state and applicable state filling fees paid. In order for your non-profit corporation to become tax- exempt, Form 1023 must be filed with and approved by the IRS. Some states also require a state-level tax-exempt status filing. Located outside the U.S?

KEY BENEFITS

Outside of providing limited liability protection, non-profit incorporation can lend additional credibility to your organization, as others may feel you are “more legitimate” because you have taken the steps to formalize your non-profit with the state.

KEEP IN MIND

Incorporating a nonprofit establishes the nonprofit with the state of incorporation, but does not provide tax-exempt status. In order to have federal tax-exempt status, Form 1023 must be filed with and approved by the IRS.

PARTNERSHIP

A partnership involves two or more persons carrying on a business for profit. The business is not a separately taxed entity, but rather, a conduit where the profit or losses of the partnership flow through to the partners. There are two basic types of partnership (e.g. general partnership and limit partnership). A general partnership involves two or more persons who agree to create a business and share the profits and losses. All of the partners share equal rights and responsibilities in managing the business. In addition, each general partner assumes full personal liability for the debts and obligations of the partnership. A limited partnership involves two or more persons who agree to create a business and share the profits and losses. A limited partnership has at least one general partner and at least one limited partner. The general partner is responsible for managing the business affair, while the limited partner typically provides only capital to the partnership. Similar to the general partnership, each general partner assumes full personal liability for the debt and obligations of the partnership. The limited partner’s liability is limited to their investment in the business. In order to form in California Secretary of State. A limited partnership formed in another state must register with the California Secretary of State prior to conducting business in the state.

KEY FEATURES
  • A PAERTNERSHIP IS A FLEXIBLE FORM OF BUSINESS AND RELATIVELY EASY TO SET UP.

  • The partners will decide the structure of the organization and the distribution of profits and losses. A formal, written partnership agreement is advisable.

  • A separate bank account should be established to run the operations.

  • A partnership allow more than one owner, unlike a sole proprietorship.

  • The cost to form a partnership is generally less expensive than forming a corporation.

  • The partnership does not pay income tax. However, a limited partnership must pay an annual tax of $800. The items of income, deductions, and credits “flow down” from the partnership to the individual partners through the California Schedule K-1, Partner’s Share of Income, Deductions, Credit, etc. Each Partner is responsible for paying taxes on their distributive share.

  • In a general partnership, each partner is personally liable for all business debts and lawsuits.

  • A partnership exist as long as the partners agree it will and as long as there are at least two partners, one of whom is a general partner.

FILING GUIDELINES
  • Every partnership that engages in a trade or business in California or earns income from California sources must file a California Form 565, Partnership Return of Income.

  • Every limited partnership that is registered with the California Secretary of State must file Form 565, even if it has no income from California sources.

  • The partnership provides each partner with a Schedule K-1 that states the partner’s distributive share of the partnership’s item of income, deductions, and credits.

  • The return due date is the 15th day of the 4th month after the close of the taxable year.

  • A limited partnership must pay an annual tax $800.

ESTIMATED TAX

The partnership has no estimated tax requirements. However, partners may have to make estimated tax payments for their own reporting purposes. The partnership may be required to withhold taxes if the partnership distributes California source taxable income to a nonresident partner. For more information about partnership withhold, see FTB 1017, Resident and Nonresident Withholding Guidelines.

LIMITED PARTNERSHIP (LP)

WHY CHOOSE LIMITED PARTNERSHIP?

A limited partnership (LP) is similar to a general business partnership while still offering limited liability protection to some of the partners. In a limited partnership, at least one partner must be a general partner with unlimited liability, and at least one partner must be a limited partner whole liability is limited to the amount of his or her investment. Limited partners act as “silent partners” making a capital investment much like passive shareholders in a publicly traded corporation but having no involvement in the management decisions of the business. Limited partnership allows for pass-through taxation, as its income is not taxes at the business level. Income or losses are reported on the partners’ tax returns and any tax due is paid at the individual level. Limited partners can use losses to offset other passive income on their tax returns. General partners’ losses can be used to shelter other income up to the value of their investment in the partnership, since their losses are not usually considered passive.

ADVANTAGES OF A LIMITED PARTNERSHIP

Limited partnership are especially appealing to a business partnership where a single limitedterm project is the focus-such as the film industry, real estate or estate planning Advantages of a limited partnership typically include:

  • Limited liability protection. Limited partners are not typically held responsible for business debts and liabilities.​

  • Pass-through taxation. Income tax is not paid by the business. Profit/losses are reported on the partners’ tax returns, and any tax due is paid at the individual level.

  • Control over day-to-day operations. General partners in the limited partnership have full control over all business decisions.

  • Flexible management. Partners have more flexibility in management structure.

  • Fewer formal requirements. Limited partnership face fewer formal requirements and paperwork than corporation.

  • Additional source of investment capital. Adding limited partners provides additional sources of investment capital without losing control, as with a business partnership.

How are limited partnership formed?

In order to register a company as a limited partnership, formation documents must be filed with the appropriate state agency and applicable filling fees paid.

KEY BENEFITS OF AN LP

With the limited partners in an LP acting as “silent partners”, limited partnership can raise additional capital for the business by adding additional limited partners. General partners remain responsible for the day-to-day management of the business partnership.

LIMITED PARTNERSHIP: KEEP IN MIND

Like corporations and LLCs, Limited partnership are required to maintain a registered agent in the state of formation. The registered agent is responsible for receive important legal and tax documents on behalf of the LP. California New Business Bureau’ incorporation service packages include 6 months free of Registered Agent Service, if you’d like California New Business Bureau to act as your registered agent.

 

LIMITED LIABILITY PARTNERSHIP (LLP)

WHY CHOOSE A LIMITED LIABILITY PARTNERSHIP (LLP)

Typically only business owners in professions that require a state license in order to practice, such as accountants, architects, attorneys, chiropractors, doctors, dentists, etc., are allowed to form LLPs. An LLP is similar to an LLC: all partners have limited liability for business debts, but be aware that in many states the protection of limited liability partnership are less what LLCs or corporations receive.

ADVANTAGES OF LIMITED LIABILITY PARTNERSHIPS WITH LLP FORMATION, TYPICAL ADVANTAGES INCLUDES:
  • Limited liability protection. Partners are not held personally responsible for business debts and liabilities (the limited liability partnership does not protect against liability for partners’ actions, however).

  • Pass-through taxation. No tax is paid at the business level. Profits or loss are reported on the partners’ tax returns, and any tax due on business income is paid at the individual level

  • Conversion from general partnership. LLPs typically offer easier conversion from a general partnership to an LLP than to a LLC or corporation.

  • Flexible management. Partners have more flexibility in management structure and can determine which partner are responsible for the day-to-day operations.

  • Few formal requirements. A limited liability partnership has fewer formal requirements and annual paperwork than corporations.

HOW IS AN LLP FORMED?

In order to register a business as an LLP, formation documents must be filed with the appropriate state agency, and necessary filing fees paid. LLP Key Benefits Unlike the limited partnership (LP) all partners in a limited liability partnership are typically not personally responsible for the debts and liabilities of the business or practice. LLPs more closely resemble LLCs in that regard; however, LLPs are often required to have insurance policies to cover personal liability. Compare Types of Types of Business Structure.

KEEP IN MIND

Most states restrict the business type that professional service businesses (such as accountants, attorneys and doctors) can take. The limited liability partnership (LLP), the professional corporation (PC) and the professional limited liability company (PLLC) are the options, but the (PLLC) are the options, but the PLLC is not allowed in all states.

 

BUSINESS COMPARISON CHART

Before you begin the incorporation process, you will need to choose a business structure. California New Business Bureau can help you form a new corporation or Limited Liability Company (LLC) in any state. There are plenty of option when it comes to deciding whether to incorporate or form a partnership or act as a sole proprietor; take your time and let California New Business Bureau Business Comparison Chart help you through the process. Please review our chart below for the advantages of forming a C Corporation Subchapter S Corporation, or LLC.

At California New Business Bureau, we realize that not all questions can be answered simply by a chat. Where it concerns your business, you may likely have more in-depth question such as, “Can a partnership become incorporated?” or “Should I incorporate or stay a sole proprietor?” or even “Can I incorporate a sole proprietorship?” Our team of incorporating specialists can help you make the right decision for you and your business as well as equip you with a more a in-depth understanding of the benefits of a sole proprietorship vs incorporation, or other business structure. Call us today and let us help you! Ready to Form Your Business?

Services

What We Offer

California New Business Bureau was founded in 2001 with one simple mission: to make starting a business as simple, fast and as inexpensive as possible. We offer the information, resources, and solutions that help small business owners understand the difference between incorporation vs. LLC, how to incorporate a small business as well as clearly outline the steps to incorporate and register a company.

Naming Your Company

Tax, Licenses, and Permits

Trademarks

Dissolution Filing Service

Name Amendment Filing

Registered Agent Service

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