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Starting a Business? Choose the Right Business Entity in California

January 1, 2019


For aspiring entrepreneurs with dreams of creating their own path, forming a corporation in California is a great way to bring those aspirations to reality. In addition to being the largest entertainment and technological hub in the country, California is home to the highest number of new business owners than any other state in the country.


Before taking the steps required to start a business, considering the structure of your business is important. A team of knowledgeable business law attorneys in Los Angeles can help you with any questions you may have.


Choose the Right Business Entity


There are a few options available if you want to form a business in Los Angeles, Santa Monica, or anywhere else in California. The type of business you create is referred to as your “legal business entity” and will define how your company will be treated by the IRS, the state, and other official organizations that regulate such matters.


Regarding new entrepreneurs, most have the option of forming one of the following:

  • A sole proprietorship and a partnership are the fastest and most simple business types. Though efficient to start, they do not offer any special benefits or protections to the business owner. So, if your company is faced with a lawsuit, sole proprietorships and partnerships leave your personal assets defenseless.

  • LLCs or Limited Liability Companies are a much better option, especially for businesses that are smaller. They too are easy and quick to create. Administration is not expensive and the laws governing their taxation are simple. The key benefit is that your personal assets are not vulnerable and have a significant measure of protection if you get sued.

  • S Corporations are also a good option for many types of business. More complicated than an LLC, the legalities, tax laws, compliance, and regulations do provide greater tax advantages for the principals.

  • The most intricate form of a company is the C Corporation. This type of business structure is better left for those who want to form a large organization. It is also mandatory if the organization will offer stocks to be traded on the public market. C Corporations have many more legal, regulatory and compliance requirements and the filing of taxes is not as efficient as an LLC or S Corporation.


Other structures include Limited Liability Partnerships, B Corporations, and nonprofits. However, these business types may not be the best option for the majority of people launching an entrepreneurial venture.


Experienced Business Law Attorneys in Los Angeles and Santa Monica


For years, the business law attorneys at Verhagen Bennett have provided expert counsel to new and established corporate entities by collaborating with an esteemed network of financial and legal professionals. The business landscape is complex so you will need a team of lawyers who will provide clients with the expertise needed to craft innovative solutions.


If you need assistance gaining access to the marketplace, call (310) 917-1064 or schedule a consultation to learn how we can help you reach or organizational goals.


(image courtesy of Simon Abrams) 


or questions or comments about this post, please email us directly at: info@VerhagenBennett.com


© 2018 Verhagen Bennett LLP — This article is for general information only. The information presented should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.

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