Come_In_Were_OpenCorporations are appealing for a lot of reasons: there are numerous tax benefits, they offer a sense of protection by legally separating the business owner from the business entity, and they’ve been around for so long that, if done correctly, they’re known as a rock-solid business structure.

Though, often, new small business owners are wary of incorporating because of the paperwork and overall responsibility that comes with filing a corporation. A lot goes into the maintenance of a corporation: corporate meetings, annual elections, corporate minutes, among other paperwork. And if you fail to keep up with these practices, your business could fall into bad standing with the state and even be at risk of dissolution.

Thankfully, there is a way to get the perks of a corporation but the flexibility and ease of an LLC- the statutory close corporation. The statutory close corporation falls under California Corporations Code section 158. Just be sure to  have less than 35 shareholders to qualify. And keep in mind that California Corporations Code Section 300 states, “The failure of a close corporation to observe corporate formalities relating to meetings of directors and shareholders in connection with the management of affairs, pursuant to an agreement authorized by subdivision (b), shall not be considered a factor tending to establish that the shareholders have personal liability for corporate obligations.”

Additionally, not only does a close corporation waive the corporate formalities, but the shareholder agreement should also address things like restrictions as to whom a shareholder can sell his stock to, or requiring a shareholder to sell his shares in case of embezzlement or breach of fiduciary duties.

So it is possible to get all the benefits of a corporation while not having to worry about the repercussions that come along with failing to keep up with all the paperwork.

Ask us about statutory close corporations today! Visit us at MyCorporation.com or give us a call at 1 877 692 6772!

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