Deciding to start a business can elicit lots of different emotions. Once the excitement of the new business has worn off, the reality of necessary legal requirements begins to set in. By employing the services of an experienced local business attorney, Bay Area business owners will be equipped to handle any and all legal requirements to ensure their new entity meets all compliance checks. Read on for a primer on the different types of entities California business owners can choose when structuring their company.

Corporation

In California, a corporation is a type of legal entity that exists separately from any owners of the business. One benefit of a corporation is that the personal liability of its owners is typically limited. However, because corporations exist as separate entities, taxes are imposed on the corporation as well as on the shareholders.

Forming a corporation in California can be a consuming process, and business owners often choose to employ the services of an experienced local business attorney to help with the process. Our legal professionals can help business owners ensure that the appropriate forms, including the Articles of Incorporation, are completed and submitted to the proper agencies as efficiently as possible.

Limited Liability Company (LLC)

California business owners that structure their business as a LLC generally enjoy similar liability protections as a corporation. However, LLCs are taxed differently than corporations. An LLC is often treated as a “pass-through entity” for federal income tax purposes, meaning the LLC itself does not pay taxes on business income. Instead, the members of the LLC pay taxes on their share of the LLC’s profits.

An LLC can be managed by one or more managers or members. Application documents are filed with the Secretary of State. An operating agreement is also required when creating an LLC. This document, maintained at the office where the LLC’s records are kept, is meant to clearly outline an agreement among LLC members as to the affairs of the organization and the conduct of its business. Often, business attorneys are asked to help in ensuring these documents and procedures are followed properly.

Limited Partnership (LP)

In a limited partnership, the liability protection afforded to business owners is allocated relative to their involvement with the company. At least one general partner must be named. General partners act as the controlling partner and typically have unlimited personal liability for the LP’s debts and obligations.

In addition to one or more general partners, a LP can name limited partners. Limited partners’ liability is typically limited to the amount of control or involvement they have with the company. An experienced business attorney can help business owners determine how to best structure a limited partnership and ensure all necessary California forms, including the Certificate of Limited Partnership (Form LP-1) are filed with the state.

Getting Professional Assistance

Forming a business in the Bay Area can be a confusing process, especially for first-time business owners. For years, the legal experts at Coepio Legal have been assisting businesses throughout the Bay Area with a variety of necessary legal procedures to ensure their company is formed on solid legal footing.