California Corporation Requirement Attorneys
Our California business law attorneys are experienced in advising clients on the business implications of corporate compliance. This allows clients to make their decisions with full knowledge of the business and legal consequences. Nothing can hurt a business more than uninformed or un-examined decisions—our business law attorneys work with our clients to prevent this problem from ever coming up.
What are California Corporation Requirements?
Once you form a California corporation, you must undertake certain steps on an ongoing basis to keep your business in compliance with both California rules and requirements as well as the requirements of showing you are an established business. These steps are also important in preserving the limited liability a corporation provides its owners.
Annual Report and Franchise Tax
California requires corporations to file a Statement of Information annually. The fee for the Statement of Information is $25 and is subject to change. California also has a minimum annual franchise tax of $800 due the 15th day of the third month after the close of the year. This is assessed regardless of the corporations profitability and can increase in increments if the corporation makes over a certain amount.
California Corporation Records
California Corporations are required to keep the following items at the principal executive office or principal business office in the State of California:
- Bylaws
- Minutes of director and shareholder meetings
California LLC Requirements
After forming a limited liability company (LLC), you must undertake certain steps on an ongoing basis to keep your business in compliance. These steps are also important in preserving the limited liability an LLC provides its owner(s).
California requires LLCs to file a Statement of Information biennially. The fee for the Statement of Information is $20 and is subject to change. California also has a minimum franchise tax of $800, which is due within three months of incorporation and annually thereafter. This is assessed regardless of the corporations profitability and can increase in increments if the LLC makes over a certain amount.
Piercing The Corporate Veil
The limited personal liability of a corporation or LLC isn’t iron clad. In the event the business ends up owing more money to a creditor than it has the ability to pay, the creditor will then look to the business owner. Under a legal theory known as “piercing the corporate veil,” if the business was not properly conducted as a corporation, a court may determine that the corporate form is just a sham and hold the business owners personally liable. A corporate veil is designed to shield your personal assets in the event your business is found liable for lawsuit judgment, liens, or collection of outstanding debts.
However, your corporate veil only works to keep your personal assets from reach of these judgments if your businesses are maintained properly and the proper formalities are regularly observed. For example, factors such as fraud can lead a court to decide to pierce your corporate veil, but in the absence of such clear cut violations courts look to compliance factors and your good faith attempt to help establish the validity of your corporation and its veil.
It is possible to prevent this from happening to your corporation. Just make sure you conduct business as a corporation would. A StoneCrest Law Firm business attorney can also help keep you on track.
Follow The Rules
In addition to following the requirements detailed above you should also follow the rules of the corporation, known as the Bylaws. These will specify how and when shareholders’ and directors’ meetings are to be held. It is important to have these meetings and keep them properly recorded. We have an annual service that can help you with this.
Any major business decisions, such as taking on a large debt, merit a board of directors meeting and certain forms. This doesn’t have to be anything more than a brief meeting where all of the directors sign a copy of the minutes with a resolution documenting what the decision is. The meeting can also be conducted via conference call and faxes, if all of the directors can’t get together in the same place. We can assist you with taking these meeting minutes and making sure that you have the appropriate records in your corporate binder.
Keep Corporate Records
You should keep a corporate record book that contains your stock ledger, minutes of shareholders’ and directors’ meetings, copies of corporate filings, and any other corporate records. This record keeping is further evidence that you have been operating your business as a corporation.
Make Sure Others Can Tell That the Business is a Corporation
This is one of the most important aspects of protecting yourself from personal liability. It is one thing for a creditor to claim that you should be responsible if he thought he was dealing with you as an individual business owner. It is a much harder claim to make if it should have been obvious to the creditor that your business was a corporation. Make sure to use your full business name in business dealings and in all contracts that you enter into. For example don’t enter into a contract simply as A. Williams, or A. Williams Services. Make sure the contract says A. Williams Services, Inc. When you sign the contract don’t sign it Adam Williams, sign it as A. Williams Services, Inc. by Adam Williams, President. The other party to the contract will have a hard time claiming that it didn’t know it was dealing with a corporation that way.
Keep Business and Personal Finances Separate
This is another key factor in protecting the corporation. You must keep the finances of the corporation separate from your own. The corporation should have its own bank account. Business expenses, including your salary, should be paid from the corporate account. Likewise, you should not pay for personal expenses from the business account. If you want to take profit from the corporation to spend on personal items, you will have to declare a dividend. If you are not used to conducting business as a corporation, it may seem like a lot to keep track of, but conducting the business properly can protect you from personal liability. A lawyer who practices in the area of business law, can lead you through the legal requirements to properly conduct your corporate business.
All of these above discussed requirements can be confusing and are time consuming. In addition, you cannot afford to get behind on them. You spent the time and money forming your business now you need someone who understands compliance formalities well enough to ensure your businesses protection and peace of mind.
The experienced business law attorneys at StoneCrest Law Firm are capable of offering the following services for you:
- Tracking and notification of required state filings
- Validation of your company’s current status with the State
- Generation of required compliance report forms
- Documentation forms for official meeting notices and minutes
- Alerts to notify you of meaningful events pertaining to your company based on the states in which your company is formed and if applicable, qualified to do business.
The attorneys at the StoneCrest Law Firm understand the complexities of keeping a corporation or LLC compliant, we can keep track of and notify you of critical compliance events, and provide access to important forms needed to properly document them. We will notify you when your state annual reports are due. All these alerts are conveniently emailed to you or anyone else you choose to be associated with your business.
Compliance requirements monitoring is available for clients who form their business entities with the StoneCrest Law Firm. Special pricing is offered to existing clients, but non-existing clients may sign up as well.
If you are interested in purchasing this helpful service to keep your corporation or LLC intact, please contact us today and we will get you set up.
Experienced California Business Law Attorneys
We are experienced California Corporation Lawyers. We have helped many individuals and companies with their business planning and incorporation needs. Our California Corporation lawyers offer affordable business formation and business incorporation packages and great advice and strategy regarding business law, asset protection, buying or selling a business, business disputes, contract drafting, and annual corporate requirements. Our California corporation lawyers can help you protect your personal assets and give you the great legal advice and strategy needed to get you the results you want. Contact us today to schedule your complimentary attorney consultation by clicking HERE or by calling 916-999-1376. We look forward to helping you with all of your California corporation needs.
