State of California legislation makes it economical and advantageous to incorporate a business in California. The Prepaid Minimum Franchise Tax has been reduced for certain "qualified new corporations."
Currently, California corporations offer outstanding and unique opportunities for privacy, protection, and profits by taking advantage of California state business laws in the following areas:
- Protection from personal liability
- Stockholders names are not public
- An individual can be sole President, Secretary and Treasurer
- Corporate retirement plans are more liberal in some respects than IRAs and Keoghs,
- Ability to provide yourself with tax-deductible corporate fringe benefits such as health, accident, and disability insurance; life insurance; and a medical reimbursement plan
- Perpetual corporate existence
- Tax flexibility, control over how much individual income owner/employee will earn and report on federal and state tax returns; profits kept in the corporation may be taxed at lower corporate rates.
The corporation is traditionally the first line of defense in any asset protection strategy because of the long record of statutory and case law that supports the goal of achieving limited liability. This liability protection is available because of the way the law separates the corporation from any associated individual.
A corporation which has 75 or fewer shareholders and which meets other basic requirements may choose election of federal S corporation status. Generally, an S corporation has its profits and losses passed through the corporation to its shareholders. This means that profits and losses are not taxed to or deducted by, the corporation, but by individual shareholders in proportion to their stockholdings. The corporation sidesteps taxation on its profits and its shareholders get the tax benefit of the losses, credits, deductions, etc., of the corporation.
In recent years, California passed the Moscone-Knox Professional Corporation Act. The professions which may incorporate under the Act include: Accountants, Attorneys, doctors, Dentists, Nurses, Chiropractors, and Pharmacists, to name a few.
If you would like to meet and discuss these matters in more detail, please give us a call. We will be happy to discuss the best plan to accomplish these very important objectives.
