Articles Cristi Michelon Vasquez Santa Barbara Attorney

Corporate Simplicity

By Cristi Michelon Vasquez on Sep 13, 2018 at 12:00 AM in Entity Formations

Business Simplicity - A Matter Of Efficiency And Growth Potential

Many small and growing business owners are bogged down in the day to day activities that are required to keep their business running strong. Wouldn't you jump at the chance to be more efficient at those daily tasks and provide more growth potential for your business? The structure of your business provides the building blocks necessary for you, the owner and rainmaker of your company, to focus on the important areas of your business - efficient management and business development.

Incorporation provides a streamlined approach to maximize your growth potential and the longevity of your business. Incorporation is the beginning of a new way of looking at your business. It is creating a relationship with money and your business that takes on an entirely different meaning. Once a small business that is already in operation, or a new business that is getting ready to begin operations incorporates, an asset of value has been created. Once incorporated, you have created and formed an entity of value that can be sold, invested in, contract for business, and best of all, make money. Now that your business structure has been simplified, you can spend more time and energy focusing on profit generation.

For small business owners, one of the most surprising aspects of corporate formation is the ability for the corporate structure to ensure that you create a budget, pay yourself, pay your taxes and plan for your future. A corporate structure allows you to be complete with your goals and be out in front of your daily, monthly, and yearly needs. It also allows you to save money. You will be able to keep track of your business expenses and related endeavors that often get lost as a sole proprietor. In addition you will be able to deduct your self employment taxes that may have simply been a cost of doing business for years. Often, the myth of corporate formation being costly, complex, and too hard for a small businesses to understand, is perpetuated by those who have not heard the secrets about the simplicity that corporate structure can add to your business. Corporate formation is a streamline way of simplifying your business structure, adding a layer of liability protection, and continuity to your business. Most hard working entrepreneurial business owners are not looking for the easy way out - they are looking for the most efficient, cost effective, and sensible way to run their business. Forming a corporation allows a small business owner to maintain management and control through the election of a board of directors and appointment of officers. Liability protection is increased and shareholders, directors, and officers are not liable for the debts of the corporation unless they personally guarantee those debts. This allows individual owners of the corporation to build individual wealth with lower risk and greater asset protection.

Interest in a corporation is easily transferrable. There are no statutory limits on the right to transfer stock and transfer does not affect the status of the entity. While, stock transfer can be restricted by the Articles or Bylaws of the corporation, these limitations are up to you - the creator of the enterprise. This allows you to determine when and how you choose to transfer or sell your business. It also allows you the ease of generating additional capital for your business through investors. This can be done through capital contributions by share holders and loans from third parties via equity, debt or hybrid securities.

Another important factor for a corporate shareholder to realize - forming a corporation can be forming a legacy. A corporation continues indefinitely until terminated by the affirmative act of its shareholders or by judicial decree. Corporate existence does not terminate when the initial entrepreneur decides he or she would like to be less involved in the company. A corporation can continue to be a money making adventure for its creator well into retirement. This simple and easy to understand structure can provide wealth for a lifetime.