What You Need To Know When Starting A C Corporation

One of the most common types of corporations is a C Corp.

A C Corp creates a separate legal structure that helps shield business owners’ personal assets from judgments against the company.

 

C Corporations have specific structures that include shareholders, directors and officers. There are many advantages to forming a C Corp:

  • A business owner protects his or her personal assets from the business.
  • Your business will be able to exist even if the owner leaves the company.
  • A C Corp has no limit on the number of shareholders.
  • You have unlimited growth potential through the sale of stock.
  • You get to take advantage of certain tax advantages such as tax deductible business expenses.

However, a C Corp’s profits are taxed when they are earned and taxed again when distributed as shareholders’ dividends – also known as “double taxation”. Shareholders in a C Corp cannot deduct corporate losses, which is possible to do with an S Corp.

If you are interested in forming a C Corporation for your business, call The Law Offices of Page, Lobo, Costales and Preston. We have helped many businesses form C Corporations and S Corporations and can help you too!

How To Set Up A New Small Business

Setting up your own business?

Congratulations! Owning your own business is exciting and rewarding. Page, Lobo, Costales and Preston APC would like to share some tips for starting up your own business.

 

Page, Lobo, Costales and Preston APC helps small businesses get setup legally and would like to share some questions and answers for all you entrepreneurs out there. If you are setting up a new business, call The Law Offices of Page, Lobo, Costales and Preston.

Q: What type of business entity should I setup my business as?
A: You can begin as a “sole proprietor” to start doing business. It is easy and inexpensive to start as a sole proprietor however there is no legal protection for your personal assets. This means you have no limit to your personal liability for business failures or mistakes. If you want to limit your liability, set your business up as a corporation instead.

Q: Do I need a Federal Tax ID number?
A: If your business is a corporation, an LLC or has employees you need a Federal Tax Identification Number. Even if you are a sole proprietor you might want to get an EIN. If you do not have one as a sole proprietor, you can use your social security number however an EIN is more professional and less risky than giving out your SSN.

Q: What is a resale license?
A: A resale license will enable your company to purchase goods or materials for manufacture or resale without paying sales tax.

Q: Do I need to file a fictitious business name?
A: If you use any name other than your own, you will need to file a “doing business as” name. This will enable the public to know who is actually operating the company.
Have questions about setting up your business? Call us to get answers: 951-461-2500.

 

The Advantages and Disadvantages Of Various Business Entities

Page, Lobo, Costales and Preston understand the importance of setting up your business correctly.

We would like to share some of the various advantages and disadvantages of several business entities out there.

business entitiesSole Proprietorship: Pros

  • No fees associated with creation of the business entity
  • Business and owner are legally the same entity
  • Owner may deduct a net business loss from persona income taxes
  • Easy to create and maintain

Sole Proprietorship: Cons

  • Owner must pay personal income taxes for al net business profits
  • Owner is personally liable for any debts, judgments or other liabilities of the business.

General Partnership: Pros

  • No fees associated with creation of the business entity
  • Easy to create and maintain
  • The owner may report their share of net business losses on their personal income taxes

General Partnership: Cons

  • Owner must pay personal income taxes for al net business profits
  • All the owners together are jointly and personally liable for any debts, judgments or other liabilities of the business

Regular Corporation: Pros

  • Some benefits may be deducted as business expenses
  • Owners and business may be able to lower taxes by splitting the business profits among owners
  • Owners of the business enjoy limited liability for the business’ debts, judgments and other liabilities

Regular Corporation: Cons

  • A Corporation is more expensive to establish than a sole proprietorship or partnership
  • A Corporation must pay its own taxes as a separate tax entity

S Corporation: Pros

  • Owners share net profits of the business and report their share on personal income taxes
  • Owners share net business loss and can offset other income by reporting this loss on personal income taxes
  • Enjoy limited liability for the business’ debts, judgments and other liabilities

S Corporation: Cons

  • More expensive to establish than a sole proprietorship or partnership
  • Paperwork is more complicated than paperwork required for a LLC, but has similar advantages
  • Some benefits are only given to owners who have more than 2% of the business’ shares

Limited Liability Company (LLC): Pros

  • Owners of the business enjoy limited liability for the business’ debts, judgments and other liabilities, even if the owners engage in significant control of the business
  • Profits and losses can be allocated to the owners along different lines than ownership interest
  • Owners choose how an LLC is taxed – either as a partnership or corporation

Limited Liability Company (LLC): Cons

  • More expensive to establish than a sole proprietorship or partnership

Do you have questions about setting up your business entity? Please call us!