Experienced Orange County Corporate Tax Lawyer Ready To Assist You
Corporate law refers to the body of law that governs the rights, relations, conducts of companies, corporations, or businesses. Corporate law lawyers often handle legal matters that relate to the life cycle of a corporation; for example, the formation, funding, governance, and dismantle of a corporation.
We advise businesses on legal obligations, rights, and responsibilities, including business issues, corporation and S corp formation, LLC formation, non-profit formation, and multiple state sales tax issues.
Business Advisory Services
We are renowned for our unique business strategies that have helped numerous clients for more than ten years. We have streamlined and developed overall business strategies for clients, and thorough planning has helped our clients achieve their goals through the constant revaluation of business objectives. It is important to remember that a business plan and strategy is not just a document shared with shareholders and investors; it requires constant modification and accountability.
Working with our team of professional Orange County corporate tax lawyer is a step in the right direction. We can assist in reviewing your monthly, quarterly, or annual financial statements and review any future tax issues or liabilities. Our knowledgeable San Diego corporate tax attorney takes pride in our ability to explain accounting and tax issues to clients in a manner they will understand and grasp. Our background, education, and experience have led to so many companies achieving their legal, financial, and strategic goals. Speak with the experienced Orange County corporate tax attorney at Allison Soares, Attorney at Law to know more.
Business to Business Disputes
We offer assistance to businesses to help them resolve commercial and business issues prior to litigation. Disputes develop for many different reasons. Our vast experience in legal issues will be an added value to you and your team and also help prevent future legal or tax issues. Our Orange County tax attorneys have been successful in providing tactical and legal strategies to address many legal and tax issues in a timely and cost-effective resolution. If we are not able to resolve your matter, we have referral partners and successful trial lawyers who will help you.
How to Keep My Corporation in Good Legal Standing
There are three major annual items that must be followed in order to keep your corporation in good legal standing.
1. File a tax return with the IRS and the State of California
If a newly created California corporation has a loss in its first tax year, there is no minimum franchise tax ($800) due for the first year. However, if there is income in the first year, that income becomes taxable in the quarter that it is earned.
The tax on your second and subsequent year’s tax returns is subject to the greater of the minimum franchise tax of $800, or your corporations’ net income multiplied by its appropriate tax rate. The estimated tax is due within the first 3.5 months of your accounting year and must be paid even if the corporation did not conduct business in California. The tax is subject to penalties and interest if it is not paid on time.
2. File a Statement of Information with the secretary of state
Every domestic stock and agricultural corporation must file a Statement of Information with the California secretary of state within 90 days after the filing of its initial Articles of Incorporation, and annually thereafter during the applicable filing period.
The applicable filing period for a domestic corporation is the calendar month during which the initial Articles of Incorporation were filed and the immediately preceding five calendar months. A corporation is required to file this statement even though it may not be actively engaged in business at the time this statement is due. Changes to information in previously filed statements can be made by filing a new form in its entirety.
You may receive in the mail or via email a FAKE STATEMENT OF INFORMATION form which requires you to pay a fee of $250. Note that the regular fee for filing a Corporation Statement of Information with the California Secretary of State is $25, not $250. Be aware of the fraudulent activity and do not pay any fee without consulting an experienced tax lawyer office.
3. Keep meeting minutes for annual shareholders and director meetings in the corporate book
Every corporation is required to have annual shareholders and directors meeting. In order for these meetings to occur, there must be a waiver of notice for each meeting sent to the directors and shareholders at least 10 days prior and no more than 60 days prior to the proposed annual meeting. During the meetings, the secretary of the company must record the substantive information. The meeting minutes should include the date, time, place, and any shareholders/directors that were present in the meeting. The meeting minutes should be located in the corporate book and kept for future records.
Additional Corporate Law Requirements
Generally, California corporate law encourages business ventures and entrepreneurial activity by limiting liability exposure to the assets of the corporation, should a corporation be sued. However, this is not absolute protection. Courts can and will disregard the corporate entity, allowing for individual shareholders, directors, or officers (i.e. the “alter-egos”) to be held liable in certain circumstances. This is known as “piercing the corporate veil.”
California courts can pierce the corporate veil when both of the following two requirements are met:
1. Unity of Interests – The shareholders in question have treated the corporation as their “alter ego,” rather than as a separate entity
2. Inequitable Result – Upholding the corporate entity and allowing for the shareholders to dodge personal liability for its debts would “sanction a fraud or promote injustice.” In California, courts apply a factor-by-factor test to determine whether “alter-ego” liability is appropriate. These factors include, but are not limited to, the following:
- Absence or inaccuracy of corporate records
- Concealment or misrepresentation of members
- Failure to maintain arm’s length relationships with related entities
- Failure to observe corporate formalities in terms of behavior and documentation
- Failure to pay dividends
- The intermingling of assets of the corporation and of the shareholder
- Manipulation of assets or liabilities to concentrate the assets or liabilities
- Non-functioning corporate officers and/or directors
- Significant undercapitalization of the business entity (capitalization requirements vary based on industry, location, and specific company circumstances)
- Siphoning of corporate funds by the dominant shareholder(s)
- Treatment by an individual of the assets of the corporation as his/her own
- The corporation being used as a “façade” for dominant shareholder(s) personal dealings; alter ego theory
In practice, the alter-ego doctrine is usually applied where the shareholders have not respected their corporation’s separate identity. This means that it is vitally important that you, as the owner of a corporation, take the following steps:
- Have a separate corporate bank account and never co-mingle personal and business funds.
- Have annual meetings of shareholders and directors and maintain minutes for all meetings which document all major business decisions.
- Maintain a corporate book with the bylaws, and a stock transfer ledger, and amend these documents as appropriate and necessary.
- Issue shares of stock to all shareholders.
- File the Statement of Information annually with the California Secretary of State.
- Ensure that all contracts related to the business are entered into by the corporation, signed by an appropriate officer or director of the corporation, and are never signed by you as an individual.
- Ensure that all invoices sent out by the company are in the company name.
- Set up a business office.
- Ensure adequate business capitalization, i.e. ensure the company has enough money and equipment necessary to start and continue operations.
Remember that if a judge cannot distinguish between what belongs to the business and what belongs to you individually, and you cannot provide proof that all formalities have been followed, a judge can “pierce the corporate veil” and award your personal assets to any plaintiff who sues you.
Speak With a Trusted Orange County and San Diego Corporate Tax Lawyer Today
No matter what stage of growth your business is in, having an experienced Orange County corporate law attorney at your side will help you to smoothly maneuver through the landmines of corporate ownership.
Allison Soares practices the following legal areas:
- EDD audits, appeals, and collections
- IRS tax matters and audits
- CDTFA audits
- FTB audits
- Business law (business advisory services)
- Business formation
- Corporate law
- And other business tax matters in California
Let us help you plan for success by calling today to set up a consultation, or contact us online. We look forward to helping you take your corporation to the next level.