‘Tis the Season … to Incorporate

With the new year approaching, now is the time to finally create a corporate entity for your business. Here are the top four reasons why NOW is the time:

1. Corporate forms help your business succeed

Without a doubt, incorporating your business helps your business to succeed. Part of this is marketing and public relations; part of this is how other businesses view your business. Incorporating is generally not too expensive, but some cost is involved. If your business can find the money to incorporate — including the annual maintenance costs — then your business is succeeding. As the saying goes, “you have to spend money to make money.” With respect to other businesses, they know the importance of incorporating. When you incorporate, you are “joining the club” of knowledgeable and sophisticated business owners. Putting this in bullet-point form:

• Your existing clients and customers will see your incorporation as a sign of success
• Incorporating is a sign of a successful business, thus attracting new clients and customers
• Other businesses will take you seriously — you are the type of business they want to associate with

2. Lenders and investors will take you seriously, too

In a similar way, incorporating will “open” financial doors to investors and lenders. Many lenders will not make small business loans unless the business is incorporated. This is true for many investors, too. Again, part of this is a matter of sophistication. As discussed below, the corporate forms serve vital legal purposes such as protecting your personal and family assets, allowing ease of transfer, and giving your business the potential for “immortality.” Business owners who understand these issues are the types of owners who are worthy of loans and investments.

3. Corporate forms help protect you and your family

There are several corporate forms that can be chosen. The most common are corporations and limited liability companies. If you are a professional, then California law allows for various professional corporations as long as all of the owners meet certain requirements. A good San Diego corporate attorney can provide advice and counsel on which form is best for you.

Whatever form you choose, as long as you maintain the corporate formalities and operate the corporation properly, the corporation will shield your personal and family assets from business debts and liabilities. That is the main purpose of a corporation. The corporation becomes a legal entity separate and apart from its owners. If you run your business through a corporate entity and if something happens like a slip and fall or other accident, then any adverse judgment is paid from the assets of the corporation — not from your personal assets or the assets of your family.

4. Ease of transfer and potential “immortality”

Finally, a corporate form provides a relatively easy method of transferring ownership and provides the potential for your business to continue many years into the future. As Section 200(c) of the California Corporations Code states, “The corporate existence begins upon the filing of the articles and continues perpetually …” There are many examples of corporations that have outlasted their founders. Ford Motor Company is just one example. Part of building a business is building something that can be passed to your children and grandchildren; something that will stand the test of time.

California Corporations: Contact San Diego Corporate Law Today

If you need legal advice related to setting up your corporation, limited liability company, or other corporate entity, call trusted business attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard has been named a “Rising Star” for 2015-2018 by SuperLawyers.com. Contact Mr. Leonard at (858) 483-9200 or by email.  Mr. Leonard proudly serves business owners and residents in San Diego and in the surrounding communities.

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