Los Angeles Attorneys Assisting Business Owners Nationwide
In many instances, it makes sense for the people starting a business to form a corporation. While there are important benefits to incorporating, it is a complicated process, and there are multiple factors that must be considered before finalizing corporate documents. Similarly, when an incorporated business ceases operations, it should be properly dissolved to avoid liability or penalties. If you own a business that you wish to incorporate, or if you need to dissolve an existing corporation, the experienced Los Angeles tax lawyers at Enterprise Consultants Group, LLC can guide you through the process of corporation formation or dissolution. We can make sure that your corporate filings comply with applicable state and federal laws. Our attorneys are skilled in navigating the complexities of corporation formation and dissolution and have been helping clients nationwide in tax and small business matters for over a decade.
When they decide to incorporate, the first choice that the business owners must make is which corporate form the business should take. In most cases, either a C corporation or an S corporation will be formed. A C corporation is a separate taxable entity and must pay federal taxes on net profits. Additionally, the profits do not pass through to the individual owners. A C corporation largely insulates shareholders from personal liability, however. S corporations also protect shareholders from personal liability, with limited exceptions, and they allow corporate losses and profits to flow through to shareholders. S corporations are limited to businesses that have 100 or fewer shareholders. They do not pay federal income tax but are subject to a 1.5% tax on net income under California law.
Once the corporate form is selected, the business must file articles of incorporation and pay any applicable filing fees. Under California law, the articles of incorporation must include the name of the corporation and the name and address of both the corporation and the initial agent for the corporation. The articles of incorporation must also set forth the purpose of the corporation and delineate the classes of shares that the corporation is authorized to issue, as well as the total number of shares for each class. After the corporation is formed, the corporation must designate a registered agent to accept service on behalf of the corporation. While it is not required, it is also prudent to draft bylaws that set forth the corporation’s operating procedures. There are numerous other tax and corporate documents that must be filed as well. If you wish to incorporate your business, it is in your best interest to retain an experienced tax lawyer to help you complete the process correctly and efficiently.
When an incorporated business comes to the end of its existence, it is vital for the business owners to dissolve the corporation properly. There are numerous steps involved in dissolving a corporation in California. While a corporation must cease business operations to dissolve, stopping active business alone is insufficient to dissolve a corporation. Unless a corporation is dissolved, however, it must comply with any requirements regarding taxes and corporate filings. Thus, it is essential to take the legal steps to dissolve the business.
First, the shareholders must take a vote on whether to dissolve the corporation. If the vote is unanimous, and certain other conditions are met, the corporation can file a Certificate of Dissolution with the California Secretary of State. If the vote is not unanimous, the corporation must file a Certificate of Election to Wind Up and Dissolve along with the Certificate of Dissolution. The corporation must also notify the California Franchise Tax Board and the IRS of the dissolution, and it must submit the final tax return for the corporation. Lastly, the corporation should close all of its bank accounts and lines of credit and cancel any licenses.
Retain an Experienced Los Angeles Attorney
The corporate structure helps insulate business owners from liability throughout a business’ operations. Whether you wish to form a corporation to protect your business or are in the process of ceasing operations and need to dissolve a corporation, it is essential to retain an attorney who is experienced in handling corporation formation and dissolution to assist you with your filings. Based in Los Angeles, we serve clients throughout the U.S. You can contact us through our online form or at (800) 575-9284 to schedule a meeting to discuss your needs.