California Business Entity Formation Lawyer
The entity formation attorneys at Rounds & Sutter have years of experience providing considered legal advice and comprehensive legal representation to California company founders, business owners, and business operators. We take the time to review your finances, your experience, the nature of your business, your investment opportunities, and help you review your options in order to set you up for long-term success. We’ll walk you through every step of forming your new business, from picking a name and business structure, to obtaining financing, building out your startup documents, and filing with county, state, and federal offices.
Our Business Formation Lawyers Are Ready to Help You
Rounds & Sutter offers comprehensive legal advice and representation for entity formation in California. We’ll walk you through the steps necessary to form your business, including:
- Choosing an entity type
- Choosing and registering your company name
- Drafting appropriate foundational documents including articles of incorporation, bylaws, operating agreements, shareholder or partnership agreements, and employment contracts
- Registering with local, state, and federal agencies
- Setting up regulatory reporting compliance practices
- Reviewing and negotiating financing documents
- And much more
Choosing Your Entity Type
One of the most important steps in establishing your startup is choosing the appropriate type of business entity. There is no one correct answer for all businesses; the best entity type for your business depends on several factors, including the size of your business at the start, your expected level of investment, the number of business partners and investors at the start and in the near future, your expected growth rate, and other considerations. It’s possible to convert your business from one structure to another down the line, but your starting entity will dictate a number of factors for at least the near future.
The primary driving factors for choosing an entity type are how the different structures affect liability and taxation of income. Depending on which structure you choose, you’ll face different rules concerning formation, ownership, transformation of ownership, dissolution, as well as owner liability and taxation. Generally, you’ll be choosing between the following entity types:
- Sole Proprietorships. A sole proprietorship means you are the sole owner and operator of the business. Business income is taxed as personal income, and the owner is directly liable for business liabilities, meaning your personal assets can be attached to your business liabilities. There are next to no formal requirements for formation and operation, meaning it’s the easiest option for forming a business but also leaves the owner most vulnerable to liability.
- General Partnerships (GPs) are much like sole proprietorships except with two or more owners. There are limited formalities, owners are taxed on their share of business profits (as opposed to the business paying business taxes), and the partners are directly liable for business debts and other liabilities. The partners can choose instead to form a Limited Liability Partnership (LLP), which offers protection from liability like a corporation but does carry additional formation and filing administrative requirements. LLPs are designed for certain professions such as law and accounting. A Limited Partnership (LP) has a combination of both general and limited partners, useful for when one partner is merely offering financing while the other partners actually run the business.
- Limited Liability Companies (LLCs). LLCs are a hybrid between a corporation and a partnership or sole-proprietorship entity. Income is taxed to the individual owners like a partnership or sole proprietor, but owners are protected by limited liability, like a corporate shareholder. LLCs carry additional filing requirements and other formalities for transferring ownership and other operations, but they are among the most flexible types of entities.
- Corporations are legal entities separate from the owners, investors, and managers. Business debts belong to the corporation. Large corporations are known as C-Corporations, with profits being taxed at the business level, while smaller companies can opt to file as S-Corporations and benefit from partnership-like taxation. Corporations offer many benefits, especially as the business grows larger, but they do carry significant formation, filing, operational, and other legal requirements.
Build Your California Business With Help from Seasoned Entity Formation Professionals
At Rounds & Sutter, we offer personal, tailored service to California entrepreneurs looking to establish their businesses. We’ll help you review your options and take the steps necessary to get your new business up and running. Whether you are an established investor in need of efficient and detail-oriented business formation services or a first-time entrepreneur who would benefit from the advice and representation from experienced business lawyers, Rounds & Sutter is ready to help. Contact Southern California entity formation legal offices in Ventura, Santa Barbara, San Clemente or Westlake Village for a free consultation.