California Tax Boutique offers personalized business startup services. We help with entity selection, filing the appropriate paperwork with the Secretary of State, obtaining an EIN number, DBAs, business licenses, reasonable compensation, discuss the various options for sales taxes, payroll, bookkeeping, and best practices to save your new business money. We can also help with business dissolution and revival of a suspended entity.
Before you schedule an appointment, take a look at this simple table to help familiarize yourself with the different entities.
|Formation||Articles of Organization||Articles of Incorporation||Articles already filed under entity|
|Internal Governance||Operating Agreement||Bylaws, Shareholder Agreement||Depends on entity structure|
|Owners Own||Interest||Shares||Depends on entity structure|
|Owners Take||Owners Draw||Dividends||Shareholder Distributions|
|Federal Tax Rate||15.3% self-employment tax + individual tax rate||21% + dividend tax rate||Payroll tax + individual tax rate|
|CA Annual Fee||Starting at $800||Starting at $800||Starting at $800|
Not sure whether your business is financially ready to register as an entity? You can always operate as a sole proprietorship until you have an idea if you will make money and how profitable you'll be. By operating as a sole prop, you still get to deduct all your business expenses and you also get to avoid paying the $800 annual California Franchise Tax. Once you have an idea of where your business is headed, we can re-evaluate whether becoming an entity best suits your needs. Below is a summary of the benefits, or lack of benefits, while operating as a sole prop:
|Employer Identification Number (EIN)||Yes, but under your SSN|
|Process Payroll||Yes, provided you have a EIN, and only for employees, not for yourself|
|401k, SEP IRA||Yes|
|S Corp Election||No|
|Tax Rate||15.3% self-employment tax on net income + individual tax rate|
|Ability to Deduct Expenses||Yes, same as any other business.|
|California Franchise Tax||No|