California Business Formation Attorney
A sole proprietor has complete control over his or her business. The business owner receives all of the profits and is responsible for paying all business debts and liabilities. San Diego County requires sole proprietor business owners to file a fictitious business name statement. If the business is operated within an incorporated city of San Diego County, the owner must obtain a business license. Depending on the type of product or service sold to consumers, the owner may need to obtain additional state and local permits. A huge downside to operating a business as a sole proprietorship is the unlimited liability of business debts the owner is subject to paying. There are less legal protections in place as well. If the business owner is sued, his or her personal assets may be seized to enforce a judgment.
Contact our law office for more information about the legal requirements of operating a sole proprietorship in San Diego County.
A corporation is the most prominent form of operating a business. The corporation continues so long as its charter is valid. The corporation is owned by stockholders. The percentage of ownership is proportionate to the number of shares owned by each stockholder. A corporation can be owned by one individual (ownership in 100% of shares) and classified as a C-Corporation or S-Corporation. S-Corporation income is passed to stockholders. The stockholders must pay personal income tax on their share of earned corporate profit. The S-Corporation does not pay federal income taxes.
A C-Corporation in contrast is required to pay federal taxes. Stockholders must pay income tax on earned dividends. There are many benefits in creating a California corporation. San Diego Esquire can help you incorporate your business. Contact us for more information.
A Limited Liability Company is similar to a corporation and partnership. It combines the pass through treatment of a partnership and limited liability protection are extended to shareholders. This means the LLC is responsible for the company’s debts and legal obligations (not the shareholders). An LLC is usually operated by two or more managers/members. An LLC must be formed by at least two members. An operation agreement governs the LLC members and the company. To create an LLC, the business owner must file a written statement with the California Secretary of State. Additional documents must be filed annually to maintain the LLC. Contact San Diego Esquire for more information on how to create an LLC in California.
A partnership is a business in which two or more people share ownership. Each person contributes to various aspects of the business. This includes money, property and the division of labor. Never enter into a partnership without executing a written agreement. A well drafted partnership agreement should address how business decisions will be made, how partners will divide profits, resolve disputes, bring in new partners, and dissolve the partnership.
There are three different types of partnerships: general, limited and joint.
In a general partnership, duties are equally divided between the partners in regards to profits, liability, and the management of the company. If the partners choose to have varying degrees of contributions, the percentage assigned to each partner must be memorialized in an agreement. A limited partnership is more complex than a general partnership. Partners have limited liability and input towards management decisions. A partner’s engagement is limited to the extent of his/her investment. Joint ventures are idea for projects of limited duration. Two companies partner for a specific project. Our partnership business formation fee starts at $375. Additional fees may apply depending on the complexity of the partnership.
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