A Costa Mesa business attorney must explain the corporate formalities that businesses must follow. Additionally, he or she can describe the characteristics of corporations.
For corporations, the owners’ personal assets are protected from interception by the corporation’s creditors. For example, if a court awards a judgment to a creditor against the business for $250,000 and the business lacks the funds to pay this award, the individual owners’ personal assets do not have to be forfeited. Any money invested in the business is fair game, however.
While this is the general rule, there are times when the corporate owners can be personally liable. For example, if he or she personally injures someone, personally guarantees a loan, does not deposit taxes that he or she withholds from the wages of employees or acts fraudulently and causes harm. The corporate veil can be pierced if the owner does not maintain the corporation as a separate entity.
Corporate Income Tax
Owners of the corporation must pay taxes on the income that they earn for working for the corporation, such as salary and bonuses. The corporation pays taxes on any profits that the corporation yields after all salaries, bonuses and expenses have been paid. The corporation files Form 1120.
A Costa Mesa business lawyer can explain that in order to form a corporation, the business owners must file articles of corporation with their state government. This includes providing basic information about the corporation. Additionally, the corporation must have bylaws that set out the rules of the business.
If you would like more information about corporations, contact a Costa Mesa business lawyer from Daily Aljian LLP.