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SpinDistribute.com Article Directory

The following article was published in our article directory on August 13, 2012.
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Why It Is Favorable to File for California Incorporation

Article Category: Legal

Author Name: John Pena

There are a couple of great reasons why business entities wish to file for California incorporation. For one, California LLC is seen as a user friendly legal business entity. And that is because of the following.

One of the most apparent reasons for companies desiring to form California incorporation is that it is a way they can use to decrease personal liability. In this set up, the owners and shareholders are protected against liabilities that may arise because of lawsuits and other concerns including being responsible for business debt. In this way, whatever happens to the company or even if it reaches rock bottom, you as an owner or a shareholder will not be obliged to pay for unresolved debt. Hence, your assets including your home, you bank savings, cars and other possessions are not at risk of repossession. This is definitely a big advantage and one of the most sought after benefits of individuals filing for California LLC.

A business that is incorporated enjoys more credibility. It actually benefits from the perception that corporations are more established, more prestigious and definitely more stable. This is the same reason why it becomes much easier for a corporation to borrow money in an effort to increase capital.

A corporation is still subject to tax. However, there is reason to believe that the company can save more money from tax expenses in a corporation as compared to a business set up for partnership or sole proprietorship. Expenses on healthcare, travel and other similar aspects are greatly reduced. Moreover, a corporation structure is more effective in putting together efficient retirement and pension plans.

It is undeniable that even big corporations may require the help of investors to grow the company's resources and to ultimately increase profitability. In most cases, business owners have to resort to borrowing money from financial institutions. With a corporate structure however, you will not have to go through that process of borrowing. You can grow the business capital simply by selling stocks.

A corporation is also extremely flexible. Amending the articles of incorporation proves to be much simpler and easier as compared to other business entities. And this is absolutely advantageous especially because some circumstances call for changes. And those changes may include changing the business name, the amount of authorized shares, the directors and other matters. Such changes may be crucial to the growth of the business.

Finally, through California LLC, you can establish an excellent business credit without affecting your personal credit profile and vice versa. In other words, your personal credit is separate from that of the business. No matter how poor your personal credit rating is, it is still possible for you to build a good company credit profile. You can count on the fact that it will not be tarnished by your own poor record. In which case, your company under California incorporation entity is still entitled to be granted with loans, lines of credit and other privileges you may not be able to enjoy as an individual in case you suffer from a bad credit.

Keywords: california llc, california incorporation

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