| Most individuals choose to incorporate their business in | | | | separate liability for corporate debts, creating a |
| California as it can shield their personal assets. | | | | separate legal entity for personal protection, building |
| Personal liability protection and tax saving are the | | | | corporate credit, anonymity, tax savings, law suit |
| major reasons for incorporating in California. The risk | | | | protection , small claims court benefits, perpetual |
| of losing your personal assets is high when you have | | | | duration, deductible employee benefits and the ease of |
| a single proprietorship or partnership. But incorporating | | | | raising capital. Incorporating in California is possible by |
| in California involves creating a separate legal person | | | | submitting formatted California Articles of Incorporation |
| for protecting personal assets. As a shareholder, | | | | and other paperwork and fees to the California |
| director and/or officer it is possible for you to have | | | | Secretary of State, who will review the articles and |
| control over your own California corporation. | | | | files for further procedures. |
| Three types of corporations can be formed in | | | | California imposes a franchise tax on both domestic |
| California. They are non-profit corporations, profit | | | | and foreign corporations. This is for the privilege of |
| corporations and foreign corporations. A profit | | | | doing business in the state. Franchise tax is a tax of |
| corporation is a legal entity that exists separately from | | | | net income. For corporations the rate of net income is |
| its owners. California nonprofit corporations include | | | | 8.84%. California's minimum franchise tax law was |
| religious, charitable, social, educational and social | | | | changed to favor new corporations. According to the |
| organizations. These organizations come under the non | | | | new law, the corporation gets a first tax break on |
| profit corporation law. A foreign corporation in | | | | incorporation. And the second tax break will be on the |
| California is incorporated by any jurisdiction other than | | | | corporation's first tax year. A corporation is liable to |
| California to transact business. | | | | pay a minimum franchise tax of $800 in its second tax |
| The main reasons for incorporating in California are | | | | year. |