With both a Corporation or a Limited Liability Company (LLC), an owner is not personally liable for the debts or the actions of the business. If you do not incorporate or form a LLC, creditors can come after you personally for debts owed by the business. Both a corporation and LLC also adds legitimacy to your business venture. You will appear more attractive for outside investors, government contracts and future clients. It can also help with taxes depending on the type of business entity chosen.

You only need one person to start a Corporation or LLC.

If you have a partnership, corporation or LLC, you need an EIN. You should consider an EIN as a social security number for your business. An EIN can be applied for by submitting Form SS-4 to the IRS. This can be done online, by mail or by fax (yes, fax!).

If you have employees, workers’ compensation insurance is mandatory in California. You may also have to provide health insurance based on the size of your business. You should also have a general liability policy and maybe, an errors and omissions policy to further protect you from liability. Your insurance needs will vary depending on your business, your services, and the products you may sell. We recommend that you work with an experienced insurance professional to evaluate your insurance needs.

If you are not using your legal name for your business, you will need to get a Fictitious Business Name (d/b/a). You will also may need to register with the City where your business is located for local business tax.

The Articles of Incorporation is a document sent to the Secretary of State to start a new corporation. It typically does not have any rules for every day governance of the corporation.

By-Laws are a set of rules that govern the day to day actions of a corporation. Under California law, every corporation is required to maintain these by-laws at their principal office. These rules include the responsibilities for Officers and Directors, number of directors required for the corporation, voting procedures and how meetings are to be called and conducted.

A S Corporation is a type of tax classification for your corporation. When you initially incorporate, you will be classified as a C Corporation. With a C Corporation, you will be subject to double taxation. Any profits will be taxed at the corporate level and then the shareholders (the owners) will again get taxed. By electing to be a S Corporation, you can avoid double taxation and all profits or losses will pass through directly to the shareholders. With a SCorp, there will be no company level taxation.

In order to qualify as a S Corp, your company is required to have the following:

1. No more than 100 shareholders;
2. It cannot be a “foreign” corporation, your company has to be formed in the United States.;
3. All shareholders must be US Citizens or legal residents;
4. All shareholders must be individuals or trusts. A shareholder generally cannot be another corporation, limited liability company (LLC) or partnership; and
5. Your corporation can only have one class of stock. You cannot have classes of shares like “preferred shares.”

If your corporation does not fit under these requirements, you will not be eligible for S Corporation status.

Yes. Under California law, every corporation must have an annual shareholders meeting. In addition to the shareholders meeting, an annual board of directors meeting is usually held. Some corporate actions can be done without a meeting. Written records should be kept of all corporation actions, meetings, and consents.

A Buy-Sell Agreement is a contract between the owners of a company that manages the owner’s interest if the owner wants to sell, dies, is disabled or other events have occurred (e.g., bankruptcy, divorce). With a “Buy-Sell,” the other owners, or the company, can buy back that owner’s interest. If the company is a corporation, the buy-sell language is sometimes added to a Shareholders Agreement.

A Shareholders Agreement is a contract that outlines the relationship of the shareholders to the corporation. It can cover additional items not included in the By-Laws, from corporate management, transfer of shares, rights of first refusal and “Buy-Sell” provisions.

A Limited Liability Company (LLC) is a hybrid between a corporation and a partnership. With a LLC, you have the personal liability protection of a corporation with the less formal structure of a partnership. The owners of a LLC are called Member or Partners, not shareholders. Instead of owning stock (like a corporation), a LLC member owns “membership interests” or “units.” With a LLC, the owners can also choose to distribute profits differently than their ownership interest.

No. An LLC is not required to have meetings. Many owners of LLCs choose not to have regular meetings and agree to that in their Operating Agreement.

An Operating Agreement is an agreement between the LLC members that describes various rules including: the owners’ rights and percentage of ownership in the LLC, allocation of profits and losses, management and operations.

Articles of Organization are similar to Articles of Incorporation. It is the first document submitted to the Secretary of State to form your new LLC. It has very limited information such as your LLC name, address and agent for service of process.

On any revenue your company makes, your LLC or Corporation may be subject to income taxes at the federal, state and local level. The California Franchise Tax Board requires payment by your LLC or corporation of a minimum tax of $800 per year. This tax is mandatory whether or not your business makes any money. Your LLC or corporation may also be responsible for various sales taxes, use taxes, property taxes and employment taxes. You should consult with your tax advisor to ensure that you account for all tax payments.

If you have a corporation or LLC, a Statement of Information is a form that is filed with the State of California. If you have a corporation, you must file a statement each year. For LLCs, you need to file this form every two years. The Statement will contain basic information on your company including your address, the identity of your officers, managers and contact information for your agent of service of process. If your company’s information changes before a statement is due, you must file an amended statement with the State.

If you form or register a corporation or LLC in California, you must have a registered agent for service of process. An agent for service of process is an individual or corporation that is required to receive, on your behalf, lawsuits, legal claims, legal notices or tax notices. Your registered agent is listed in your company’s articles of incorporation, articles of organization and statement of information. The contact information for your agent is also provided on the Secretary of State’s website.

On average, it takes about 3-4 weeks. The process can take longer if there is a delay with the State of California or if the owners are negotiating terms for their agreements. If you are in a rush, we can expedite the formation by paying an extra fee.

Yes you can. However, online websites that form corporations or LLCs often offer generic and basic materials with little to no guidance. Most of the materials have to be completed and submitted by you. The corporations and LLCs prepared by our office are attorney prepared. You have a lawyer who customizes the corporation or LLC to fit your company’s needs, mission and vision. You do not have to worry about whether you are “doing it right,” as all legal documents will be prepared for you. You get the comfort of knowing that you are starting your business on the right foot. You also will have an attorney on your team you can contact to ask questions about your company.

We bill our clients hourly or on a flat fee. For projects where it is more difficult to know the actual time that will be spent (for example, negotiation of a business purchase), we will bill by the hour. For other projects, such as forming a corporation, we will generally charge a flat fee. Before we begin any work on a flat fee project, we will quote you a fee.

Unlike other law firms that bill for every client contact, we choose not to bill on every phone call, email or communication. If the phone call or email is short, we will not charge you. As with everything, there are exceptions. If there is a lot a time spent on a number of “short” emails back and forth, we may charge you. Our philosophy, however, is to keep communication open with our clients. We want you to reach out to us! We do not want you to avoid calling us because you are afraid you will receive a bill for a two minute conversation.

We send all our bills by email. You have an option to pay your bill online, by credit card or by check.

Yes. Although our main office is located in Southern California, we have a lot of clients whose business is located in other parts of the state. From San Diego to San Francisco, our clients span the length of the state of California. We even represent out of state companies, including international companies, who started businesses in California. When we are unable to meet our clients in person, we use various technological tools such as: GoTo Meeting, Zoom, Skype and Facetime for our meetings. We have held many board meetings, by GoTo Meeting, where board members are located in different states or are out of the country. With the wealth of technology out there, geography is not an obstacle to getting the work done.

Please contact us here, call us at (818) 539-2245 or email us at info@brunogroupinc.com

We would love to work with you!