The end of the year is a time for organizing as many businesses meet with advisors and review the year. They look at the wins and losses from the year and plan to do better in the year following.
If you decide that your business qualifies for tax breaks and other benefits if you incorporate, then now is the time to make a move!
For businesses that choose to incorporate, you can take advantage of California’s 15-Day Rule.
What Is California’s 15-Day Rule?
In California, if you incorporate your business on the final 15 days of the year, December 17-31, you will not have to file a corporate tax return or pay the minimum $800 franchise tax for the current year.
When you incorporate your business at the end of the year, your business will be ready to hit the ground running on January 1. Alternately, waiting until January to incorporate your business will put you in the queue with thousands of other corporations, and you may have to wait before you start operating.
One crucial stipulation with the 15-Day Rule is that your business cannot make any money during the last 15 days. Therefore, if your company does not operate during the last two weeks of the year, this rule won’t be consequential.
Other Ways to Get Ahead
Take advantage of this time if your business is slow through the final few weeks of the year. You have the opportunity to look back and learn from the past. How can you maximize those weeks?
- Review your sales goals and results for the current year
- Set new goals for 2022
- Send thank you gifts to your clients
- Ask customers to fill out a survey
- Use customer feedback to implement new policies and show your clients you are open to suggestions
- Thank your employees
- Ask employees to fill out anonymous surveys
- Look for common themes and self-reflect to better manage in the upcoming year
Hiring a small business lawyer will help you make the right moves for your company. When you evaluate all aspects of your business plan: taxes, revenue, customer service, and employee management, you can come out even more successful in 2022.
At Shoup Legal, we want to answer your questions regarding California’s 15-Day Rule. Is this a time that you want to take advantage of and incorporate your business? We are here to help. Contact us at (951) 455-4114 or email us at [email protected] to get started.