Businesses, by law, are required to adopt formalities within the corporation to ensure the company functions as a separate entity to themselves, independent of the company’s owners. A Limited Liability Company is also known as an LLC and is, for instance, set up as the entity itself and shields the individual owners from personal liability.
How An LLC Protects A Business Owner
The LLC acts as a formal institution that has the advantage of providing limited liability as well as the flexibility and tax bracket for the overall partnership, rather than on an individual. For a business owner, the LLC is one of the best choices when forming a business to protect them from personal liability.
An LLC is a formation of business that provides limited liability protection to individuals and sole proprietorships. It is not a full corporation, nor is it a partnership. It provides tax advantages to the owner of the business.
How the Corporate Entity Begins
The corporate entity’s presence begins with filing for a Certificate of Incorporation, also known as Articles of Incorporation. Corporations and other incorporated businesses are possibly subject to state franchise tax and to re-certify these certificates each year.
When you begin a company, you must choose an arrangement for this. What sets a company apart from all other kinds of companies is that a company is an independent legal and tax entity, independent from the men and women who possess, control and handle it.
As a result of this individual status, the proprietors of a company do not utilize their own tax returns to pay taxation on corporate earnings–the company itself pays such taxes.
Keep Behind The Corporate Veil
There are some instances where owners of a company dismiss the corporation, and instead, mix company and personal funds. If a business owner performs these actions within the business, it is known as a dismissal of the corporation’s formation. A business owner who dismisses the corporate form also makes major company decisions without having a meeting with the board of directors.
In addition, if the business has debt, a business owner who has dismissed the corporate form would be held liable for the business’ debts. The financial accountancy and evidence could be held against the business owner to say they pierced the corporate veil.
Contact Our Palm Springs Business Transaction Law Firm
To take the right steps in incorporating your company, contact one of our Palm Springs business transaction law firm attorneys for a consultation at (760) 322-2275.