Incorporating In California

Most individuals choose to incorporate their business in California as it can shield their personal assets. Personal liability protection and tax saving are the major reasons for incorporating in California. The risk of losing your personal assets is high when you have a single proprietorship or partnership. But incorporating in California involves creating a separate legal person for protecting personal assets. As a shareholder, director and/or officer it is possible for you to have control over your own California corporation.

Three types of corporations can be formed in California. They are non-profit corporations, profit corporations and foreign corporations. A profit corporation is a legal entity that exists separately from its owners. California nonprofit corporations include religious, charitable, social, educational and social organizations. These organizations come under the non profit corporation law. A foreign corporation in California is incorporated by any jurisdiction other than California to transact business.

The main reasons for incorporating in California are separate liability for corporate debts, creating a separate legal entity for personal protection, building corporate credit, anonymity, tax savings, law suit protection , small claims court benefits, perpetual duration, deductible employee benefits and the ease of raising capital. Incorporating in California is possible by submitting formatted California Articles of Incorporation and other paperwork and fees to the California Secretary of State, who will review the articles and files for further procedures.

California imposes a franchise tax on both domestic and foreign corporations. This is for the privilege of doing business in the state. Franchise tax is a tax of net income. For corporations the rate of net income is 8.84%. California's minimum franchise tax law was changed to favor new corporations. According to the new law, the corporation gets a first tax break on incorporation. And the second tax break will be on the corporation's first tax year. A corporation is liable to pay a minimum franchise tax of $800 in its second tax year.

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California Corporations provides detailed information on California Corporations, California Department Of Corporations, California Corporation Commissions, California Corporation Searches and more. California Corporations is affiliated with Delaware Division Of Corporations.

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