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Incorporate Start a Business in California

START A BUSINESS IN CALIFORNIA

Choosing a Business Entity

The first and often most critical decision a business owner makes is the choice of business entity for their future business. Choosing the proper business entity means looking at your potential liabilities and tax considerations. In California you will most likely choose from one of the following:

California Sole Proprietorship

Simply stated, its you doing business as a single owner. A California Sole Proprietorship can be organized informally and is subject to virtually minimal regulation. Please click here for more information, or call the number above to speak to a business law attorney.

California General & Limited Partnerships

When you do business with two or more people for profit, it is a partnership whether you file or not. A California General & Limited Partnerships can be organized informally but a limited partnership can be formed to limit the liability of some members. Please click here for more information, or call the number above to speak to a business law attorney.

California Limited Liability Companies

When you do business with two or more people for profit, it is a partnership whether you file or not. A California Limited Liability Company combines the benefits and protections of a corporation but the ease and flexibility of a partnership. Please click here if you would like to form a California LLC for more information, or call the number above to speak to a business law attorney.

California Corporations (S-Corp & C-Corp)

The most popular business entity, the corporation, is widely used and allows for professional corporations and non-profit corporations. A California S-Corporation or C-Corporation requires the establishment of shareholders, directors, officers, and regular meetings and minutes.  Please click here if you would like to form a California LLC for more information, or call the number above to speak to a business law attorney.

OTHER TYPES OF BUSINESS FORMS

The particular circumstances there are other types of business forms, such as trusts, and partnerships or corporations. Limited liability companies are very popular, especially when used in conjunction with an S. Corporation election. In deciding an understanding the optimal type of entity will require that you compare each factor as it relates to your specific business and how it is managed and its ownership structure. regardless of which type of entity you choose, each particular form will have legal requirements and formalities that you must follow while operating your company.

Differences in Types of Business Entities

Every business form, whether it be limited liability company, or incorporation, or partnership will have its own formalities required by the state, some by the IRS but most are distinguished by the following:

  • the organization of the company and filing the proper paperwork with the Secretary of State is different for each type of business form;
  • obtaining funding for the company will differ in that some forms of business credit will bear the requirement that an ownership interest is contingent, or else owners will need to personally guarantee;
  • owners may not be managers in some types of business forms, and the restrictions in place will not allow majority owners to dictate decision-making in some types of business forms;
  • the personal liability of business owners differs in each business form;
  • losses and the distribution of profits are allocated differently in different business forms;
  • the transferability of interest and whether it will cause a termination is it differing factor in each business form;
  • one of the most important differences are tax consequences to the owners when operating or taking distributions from an entity, and certain tax realization events occur in the operation and dissolution of the company;
    finally, retirement and business succession planning can be different if the company is a partnership, or limited liability company, or corporation, trust, or limited family partnership.

REASONS TO INCORPORATE IN CALIFORNIA

Choosing a fancy type of business form to operate is not a prediction of success, but it does add credibility to your company and it could protect you in many situations. Choosing a proper business type will provide you and all of the other business owners in your company the ability to achieve certain tax results, limited liability, and will not restrict the owners from their own contracting and other businesses. Contact us to speak to a lawyer about which business entity type is right for you.

READ MORE STEPS FOR SAN DIEGO BUSINESSES

VISIT THIS LINK FOR MORE INFORMATION ABOUT STARTING A BUSINESS IN SAN DIEGO.  The entire reason for writing this article is to assist business owners in comprehending the different factors among the most popular types of business forms in California. This article serves to the differences that business owners should look at and understand when choosing the type of business entity for their new company. This article, no doubt, will be helpful but do not use it as your exclusive means to understanding the complex question of which business type to select. This decision is extremely important and readers of this article are encouraged to contact the business lawyer to discuss forming a California business entity as discussed above.  Also note this article is written to apply to California business owners, forming a business entity with the Secretary of State of California.

CONTACT ATTORNEY

Article By Email: info@californiasmallbusinesslaw.com

For more information or to schedule a free confidential consultation with a San Diego business attorney (Bio), call (619) 800-0676 or fill out the contact page of this website.  Your situation is unique. Do not rely exclusively on the above information; it is necessary that you speak with a licensed California lawyer about your particular matter.