Incorporating your small business can have great benefits when it comes to everything from separating your business and personal assets to minimizing how much you personally owe in taxes. However, there are some serious misconceptions about what incorporating involves. Here are three myths about incorporating a small business in California.
Myth #1: Incorporating Your Business Means Zero Personal Liability
Incorporating can help protect your personal assets. If the business is on the hook for a huge loan and can’t pay, your personal home, car, etc. are safe. However, incorporating doesn’t clear you of all personal liability. For example, if you make a million dollars selling a diet pill based on fake scientific evidence, you can still be personally accountable to the FTC. Incorporating doesn’t protect a person from the consequences of breaking the law.
Myth #2: All Shareholders Must Be US Residents
This is only true of S corporations – a relatively rare incorporation type. Shareholders of C corporations and LLCs do not have to be residents of the United States. In fact, the incorporation process is identical regardless of residency (other than a slight difference in filing fees).
Myth #3: It Costs Too Much to Incorporate
Small business owners often worry that incorporating is an expensive process that is just for big companies. However, filing fees are minimal in the state of California. In fact, the biggest expense for companies that incorporate is often due to selecting the wrong business law attorney.
At Pokala Law, we assist small business owners with business formation at an affordable price. That means you can incorporate without needing the investment capital of a large company. To get started with incorporating your business, or to learn more about whether this is the right step for your brand, contact us today at 844-695-1487.