|7304 Pebble Beach Dr.
El Cerrito, California 94530
We will help you to Incorporate or Form an LLC in California
1. We will make sure your company name choice is available.
2. We will file the correct paperwork with the State's filing
For Corporations you must file "Articles of Incorporation",
for LLC's you must file "Articles of Organization".
3. We will help you with the "Organizational Meeting"
and adopt the company's Bylaws (Corporations) or Operating Agreement (LLC's).
4. We will obtain a Federal Employer Identification Number (FEIN) for
your company and open a company bank account. 取得公司稅號
5. You should get a local business license from the city (or county) where
you will be doing business. 在當地市政府再登記公司
A Corporation is a separate legal entity that can shield the
owners from personal liability and company debts. As a separate entity,
it can buy real estate, enter into contracts, sue and be sued completely
separately from its owners. Also, money can be raised easier via the sale
of stock; its ownership can be transferred via the transfer of stock;
the duration of the corporation is perpetual (the business can continue
regardless of ownership); and the tax advantages can be considerable (i.e.
you are able to deduct many business expenses, healthcare programs, etc.
that other legal entities are not). Income is reported completely separate
via a tax return for the corporation.
A corporation is set up in this structure:
1. Shareholders Own the Stock of the Corporation
2. Shareholders Elect Directors (known as the "Board of Directors")
3. Directors Appoint Officers (President, Secretary, Treasurer, etc.)
4. Officers run the Company (day-to-day operations)
In many cases (especially during the startup phase), you will
be the 100% owner of the stock, therefore you elect the directors (usually
yourself) and then appoint yourself as an officer (or all the officers:
CEO, Treasurer, Secretary).
The rules for operating your Corporation are set in what are
called Corporate By-Laws. This document sets the rules for the company
and can be modified as the business grows and changes.
Operating a Corporation involves at the minimum holding a
yearly Directors and Shareholders meeting (the location is determined
by you and the expenses are deductible), keeping written Minutes of major
company decisions and maintaining general Corporate Compliance as dictated
by the Corporate By-laws.
PROS: The most prestigious type of business
entity; provides personal liability protection; conveys permanence, can
reduce taxes (lower tax rate on retained profits,
items like healthcare, travel and entertainment are deductible).
CONS: More expensive to setup than a Sole
Proprietorship or Partnership; more paperwork and formality required than
an LLC (holding Shareholder/Board meetings, keeping minutes and resolutions).
The Lowdown: C Corporations are taxed at
a lower rate on profits and are able to deduct items like healthcare,
travel, entertainment, etc. that LLC's and S Corporations cannot. More
complicated tax and management issues than an "S Corporation".
S-Corporation ( shareholders must be US citizens) (S公司, 限美國公民)
After a corporation has been formed, it may elect "S
Corporation Status" by adopting an appropriate resolution and completing
and submitting a form to the Internal Revenue Service (some states require
their own version). Once this filing is complete, the corporation is taxed
like a partnership or sole proprietorship rather than a corporation. Thus,
the income is "passed-through" to the shareholders for purposes
of computing tax returns.
Most new small corporations elect S-Corporation Status
(90%+) so profits and losses can be added to the shareholders
personal tax returns without having to pay taxes on profits once, then
again when they are given back to the shareholders as income (dividends).
This is known as "double taxation" and is the reason why S-Corporations
were created. An S-Corporation can also revert back to regular
Corporation status fairly easily.
There are some limitations on S-Corporations: they
cannot deduct some expenses like health insurance, travel, entertainment,
etc. that normal corporations can. Also, they are restricted to 75 shareholders
or fewer and those shareholders must be U.S. Citizens.
PROS: Prestige of the Corporation without
the double taxation. Ideal for "1 person corporations".
CONS: More expensive to setup than a DBA;
more paperwork and formality required than an LLC (holding Shareholder/Board
meetings, keeping minutes and resolutions).
The Lowdown: Though taxed in a similar manner
to LLC's, still requires the corporate formalities of a regular Corporation
(holding Board meetings, keeping minutes and resolutions).
Limited Liability Company (LLC) 責任有限公司
A Limited Liability Company can be best described as a hybrid
between a corporation and a partnership. It provides easy management and
"pass-through" taxation (profits and losses are added to the
owner(s) personal tax returns) like a Sole Proprietorship/Partnership,
with the liability protection of a Corporation.
Like a corporation, it is a separate legal entity; unlike
a corporation, there is no stock and there are fewer formalities. The
owners of an LLC are called "Members", instead of "Shareholders"
"Directors" and "Officers". So in essence, it's a
like a corporation, with less complicated taxation and stock formalities.
The heart of a Limited Liability Company is known as the "Operating
Agreement". This document sets the rules for operating the company
and can be modified as the business grows and changes. Operating an LLC
is less formal than a corporation, usually only requiring an Annual Member's
Meeting and Member's agreeing to changes of the Operating Agreement.
PROS: Provides the liability protection of
a corporation without the corporate formalities, no board meetings, shareholder
meetings, minutes, etc. and no extra levels of management , such as shareholders,
directors, officers. Taxed the same as a Sole Proprietorship (1 Member
LLC) or Partnership (2 or more Members).
The Lowdown: The Entity of Choice for 1-5
person startups, has recently surpassed Corporations in popularity. Easy
management and limited compliance requirements have made the LLC the user-friendly
solution for small business.
Stock Information (股票不需有面值)
In California, you can authorize an unlimited number of shares of No Par
Yearly Requirements (每年需登錄事項)
California imposes an $800 Franchise Tax on all newly formed LLC's and
Corporations and $800/year thereafter.
Annual Report (called the "Statement of Information") due every
Annual Report Fee: $25
Which State Should I Incorporate or Form an LLC? California or Delaware?
There are basically 2 choices:
Nevada or Wyoming
Your Home State
For the marity of small businesses, incorporating or forming
an LLC in your home state is usually the easiest and least expensive option.
This is because virtuallyjo every state has laws that require you to "re-register"
a Delaware or Nevada company in the state where it is actually doing business.
For example, if you form a Nevada corporation but your physical
business is located in Colorado, the state of Colorado will want you to
"re-register" as what's called a "foreign corporation"
(a company that was not originally incorporated in Colorado). This is
especially true if you intend to get a bank account and business license
or rent office space in your home state. In this situation, you need to
apply for the Foreign Qualification to authorize your out of state company
to do business in your home state.
In most cases, registering as a "foreign corporation"
or LLC will subject you to all the same taxes and fees as an in-state
company. So you will probably have not avoided any taxes or fees, plus
there is the added expense of registering as a "foreign corporation"
in your home state and any annual fees in both states.
This is not to say there are not valid reasons for choosing
another State, we just like our potential clients to be aware of the additional
steps required when choosing a State outside of their home State. Further
discussion with your attorney or other advisor is recommended.
Delaware, Nevada or Wyoming
Delaware is where most large corporations (Fortune 500, Nasdaq, etc.)
are incorporated. The reason for this is that Delaware's body of law is
more business-oriented and they have a large and advanced business court
system to handle complex legal litigation. It is the State of choice for
both large corporations, foreign corporations and many fast-growing or
Nevada has recently exploded in popularity for both large and small businesses.
This is due to Nevada's very pro-business climate, low-tax mentality and
the lack of an information sharing agreement with the IRS (all other States
share company information with the IRS). Also, shareholders in Nevada
corporations are not public knowledge (though Officers/Directors and Members
of LLC's are).
Despite what you may have heard on radio and TV commercials
touting the benefits of a Nevada corporation or LLC, many of those companies
are encouraging business owners to engage in a sort of scheme that basically
attempts to "trick" the home state and IRS into believing that
the company is really operating in Nevada when, in fact, it is not. They
encourage a business to utilize things like Nevada forwarding addresses,
phone lines and bank accounts to accomplish this. This is not something
we recommend for obvious reasons. There are legitimate ways to obtain
"nexus" for your company in Nevada, but we highly recommend
further discussion with your attorney in this matter.
Wyoming also has a very business-friendly climate and features some benefits
compared to a Nevada entity including lower filing fees, bearer shares,