08 Sep, 2017

Starting A Business In California

Frankly speaking, it is a little bit challenging in starting a business in California. This should not discourage you is you have selected California as your preferred business location. You only need to be patient because there are some thresholds that must be met. The following is the simple guide of starting a business in California. The Entity Options: When you want to start up business in California you should first of all figure out the best entity for the business you want to set up. The issues that must be addressed in this regard are risks, liability and taxes. RISKS- refer to the uncertainties that may arise in the business like being sued and help individually liable for the debts of the business and the obligations of the vendor. TAXES- refer to the idea or strategy of placing your business in such a way as not to avoid the tax but just minimize the incidence and rate of the taxes levied upon the business. This evaluation is very critical if you want to begin your business in the right footing of success. You can choose to set up S-corporation, sole proprietorship, limited liability company or general partnership. In California, the most recommended types of businesses are the S-corporation or the limited liability company. When starting a business in California, the sole proprietorship or the general partnership is not recommended because the owners and proprietors of the business are individually liable for all the business debts incase of suit against the business. If the sole proprietorship or the general partnership fails, the owners can also be held individually liable. Based on the above information on starting a business in California, you should only think of setting up limited liability or S-0corporation in California. Once you set up any of these in the manner required, the business will offer protection and act as shield between your own individual assets and the liabilities that can be incurred by the business. The S-corporation or limited livability company will be a legal person which has different and distinct entity from its owners. The business can sue and be sued in its own name and not that of the owner. In the S –corporation or limited labiality company, if the business is sued for debt or incurs labiality worth $ 600,000 for example, the creditor can only recover this from the assets of the business but not from the assets that you individually own. In the case of sole or general proprietorship, the creditor can recover the sum from the assets of the business as well as those of the owner of the business. Once you have chosen to set up S –corporation of limited liability company, you have to make the necessary application to secretary of state. The necessary internal documents will then be created and the necessary securities will be filed. Your business will then be registered by the California sate and the Internal Revenue Service. After this you should file local business license application; after getting this license you can now set up your business. The process of starting a business in California is somehow tedious and so it is recommended that you hire a California lawyer to guide and help you in the process.