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Entity Formation

A Business Lawyer Orange County on the Benefit of Consulting a Lawyer when Starting a Business

While it is certainly true that many new enterprises begin on a tight budget, and it’s prudent to avoid unnecessary expenditures, it may be a wise investment to seek the advice of a lawyer before you actually begin conducting business.

Choice of Entity

The type legal entity you select for your business should be based on your specific goals both immediately and in the future. The major factors you should consider are:

  • Personal liability
  • Taxation
  • Transferability of ownership or control of the business

However, because of certain California regulations, not every business can be operated in every form; for example, some businesses must be operated either in corporate or partnership form. Additionally, a sole proprietorship is not technically a business entity.

Common Choices

Although large companies traditionally have operated as a C-corporation, and many small businesses operate as sole proprietors, other options include:

  • Limited Liability Corporation: an LLC offers great flexibility for owners while also providing personal liability protection. An LLC has an operating agreement for its members, which establishes ownership interests, voting rights and the manner in which profits are earned. Profits or earnings are distributed directly to the members; the LLC is not taxed.
  • S-Corporation: this entity is typically the choice of a single shareholder. In some ways a hybrid between an LLC and a traditional C-corporation, an S-corporation allows taxes to flow through to the shareholder like an LLC but with the greater ease of transfer of ownership as with a C-corporation.

Contact a Business Lawyer Orange County for Legal Advice

Your long-term business success can be better secured by the decisions you make today. For advice on formation and questions on ongoing operations, call Daily Aljian, LLP, a business attorney Orange County, at 949-861-2524.