FAQs

When should I dismiss using a C Corporation?

It’s Opposite Day! Take a look at this FAQ: When should I use a C Corporation for my business and if none of those apply, then you should probably steer away from a C Corporation [LINK TO What is a C corporation] due to the downsides of double taxation, where the income is taxed on [...]

August 9th, 2020|0 Comments

I’ve heard that California has limitations on what type of business can be operated through an LLC. Is that true?

True! California has placed a limit on what businesses can be operated out of an LLC. The general rule is no professionals, and though typically the rules point to any professional named in California’s Business and Professions Code, there are some exceptions. One exception is contractors; additionally, some “professions” that don’t require testing, experience, or certain skills may also be exempt.

July 12th, 2015|0 Comments

How long does it take to form a corporation or LLC, in California? What about other states?

California varies – sometimes it’s a matter of days, but sometimes, especially at the beginning of the year, it can take a couple weeks. You can always submit your documents on a rush (24 hours or even same day) basis. Other states? It really depends. Delaware’s quick.

July 12th, 2015|0 Comments

Will putting my business into a corporation or LLC help me save taxes?

It can, but not always. It’s not often the case that a business will put their business into an entity solely to save on taxes, although S Corporations for small businesses are frequently and legitimately used for that purpose.

July 12th, 2015|0 Comments

What’s a Tax Allocation?

A tax allocation is what happens in your tax world when you’re a partner in a partnership (or a member in an LLC taxed as a partnership). Partnerships themselves generally are not taxed; the tax obligations are “passed through” to its partners. So you might think: well, if the partnership doesn’t give (distribute) any money [...]

April 8th, 2020|0 Comments

How much additional overhead costs will I incur if I transfer my business into a Corporation?

In addition to the expenses you’ll incur for forming your corporation or LLC, there will be a number of expenses you should take into consideration when weighing the pros and cons of operating from an entity. Here’s a short list: an additional tax return (CPA fees), $800 minimum to the California Franchise Tax Board (regardless of [...]

February 19th, 2020|0 Comments

Does the Corporate Transparency Act require me to file a report on the ownership of my corporation or LLC?

Yes. WHAT IS IT? The Corporate Transparency Act (CTA) became effective on January 1, 2024. For the first time, the United States now will require certain legal entities to report to the federal government identifying information about the individuals who directly or indirectly own or control a company within the scope of the new legislation. [...]

November 6th, 2023|0 Comments

I keep hearing about having to pay $800 to the California Franchise Tax Board every year just because I formed an S Corporation or an LLC. True?

Not only is it true . . . it's worse than you think. When it comes to LLCs [link to what is an LLC], the FTB collects a tax (the FTB calls it a [ahem] "fee") above the $800 if the LLC's revenues meet or exceed $250,000. Here's a link to the graduated fee scale. The [...]

December 14th, 2022|0 Comments

What does it mean to “file” a corporation?

Actually, nothing. To bring a corporation into existence, you submit your Articles of Incorporation with the government agency responsible for processing that paperwork in your state. By submitting the Articles, or “Charter Documents”, and the act by the agency of approving same, you have formed a corporation. You can say “file”, if you want.

July 12th, 2015|0 Comments

Is there a lot of paperwork? Do I have to do it all?

There’s some paperwork . . . corporations tend to have more paperwork, which is why some people might immediately gravitate to LLCs, or nothing at all. And, yes, if you want to maintain your status as a corporation, and maintain your limited liability, don’t cut corners on the paperwork. It’s important.

July 12th, 2015|0 Comments