San Ramon Business Formation & Incorporation Attorneys
Reliable & Experienced Legal Counsel in Your Corner
Although starting a business is very exciting, it can also be very overwhelming if you aren’t familiar with the laws that might impact your investment. From the moment you begin any business, you can potentially be exposed to the debts and liabilities of that business. However, if you choose the right business entity and formally register your company, then it can help limit your personal exposure.
At Santaella Legal Group, our team of dedicated legal professionals is committed to helping clients throughout San Ramon and the surrounding areas find the best formation options for their businesses. When you choose our law firm to represent you, we will take the time to become familiar with your situation so that we can fully explain the benefits and risks of each structure to ensure that you not only understand your business formation, but that is properly set up as well.
Why It’s Important to Register Your Business
In order to create a business entity, you’ll need to file appropriate legal documents, pay required filing fees and, in some cases, meet additional “publicity” requirements. Such requirements vary based on the type of business formation you choose, as well as the state in which you form your new entity.
You can experience the following advantages if you decide to formally register your business with assistance from an experienced lawyer:
- Limited Liability: Establishing a separate entity for your business creates a legal distinction between the individual owners and the business itself. This separation shields owners from liabilities arising from the debts and other issues of the business.
- Tax Benefits: Choosing the proper entity form and tax structure for your business can mean significant savings.
- Reputation: Doing business as a legal entity legitimizes your business from the perspective of key stakeholders and third parties, such as customers, vendors, investors, and others.
Which Entity Option Is Right for My Business?
C Corporation (C CORP)
A C Corp is a legal entity that formally separates owners (the shareholders) from the corporation, such that shareholders are not personally liable for the debts or liabilities of the corporation. C Corps are subject to “double taxation,” meaning the corporation is taxed on its net income, and shareholders are also taxed when the profits are distributed. If you plan to raise outside investment or have aspirations to take your company public, then a C Corp is traditionally the right entity form.
S Corporation (S Corp)
An S Corp is formed by filing for special tax status with the IRS. S Corp status provides pass-through taxation, which means there is no tax at the corporate level, only when profits are distributed to shareholders. This tax-status causes significant limitations on who may be a shareholder, the number of shareholders, and the stock classes.
Limited Liability Company (LLC)
An LLC combines the limited liability of a corporation with tax efficiency (i.e. no double taxation) and operational flexibility. Although LLCs offer greater tax benefits and flexibility compared to corporations, there are the following limitations:
- Tax and accounting complexity
- Unattractive for outside investors
- Limitations on capital structure
Sole Proprietorship
A sole proprietorship isn’t a separate legal entity at all; rather, it is an unincorporated business run by one person. Because forming a sole proprietorship requires no formal action, it is the simplest and least expensive business form. Sole proprietorship status automatically results from conducting business activities but creates no legal separation between you and your business. In a sole proprietorship, you are personally liable for all activities of the business: all expenses and debts of the business are yours, as well as the tax obligations.
General Partnership
A general partnership is an association of two or more people running a business as co-owners. General partnerships can be formed by entering into a partnership agreement or by default when two or more partners act in concert. The partnership functions as a separate entity, but the liability of each partner is unlimited, both with respect to their own acts as well as acts of other partners.
Limited Liability Partnership
A limited partnership is a variation on the general partnership. The entity consists of a combination of general partners, who manage the business and take on liability, and limited partners, who usually contribute capital, but only have limited liability. Unlike an LLC, there must be at least one managing partner who bears liability for the partnership’s actions.
Nonprofit Corporation
If your company’s mission will be to support a charitable cause, you’ll want to consider forming a nonprofit corporation. Businesses registered as nonprofit corporations receive the following benefits:
- Obtain private and public grants
- Low-cost postage rates
- Exemptions from income, sales, and property taxes
- The ability to receive tax-free donations
To receive all these benefits, a nonprofit must be registered with its state of operation and file for (501(c)(3)) tax-exempt status with the Internal Revenue Service. Every 501(c)(3) organization is classified as either a public charity or a private foundation, depending primarily on the level of public involvement. A private foundation is typically funded and managed by its own trustees or directors, while a public charity derives its funding from the general public.
FAQ: Business Formation
Question #1: When should I form my company?
A: It’s important to speak with a lawyer early about forming your company, as the circumstances of each individual case will affect proper timing.
Quetsion#2: Which entity should I choose for my company?
A: Generally, operating as a C-corporation is the best route if you aim to take on investment, and ultimately go public. If you have other goals for your business, other business forms may be better suited to you. You should consult with a lawyer about the best entity for your company.
Speak to Our Legal Team in San Ramon
If you need advice regarding important decisions that will affect your business, then please don’t hesitate to reach out to our legal team at Santaella Legal Group, APC to speak to a seasoned lawyer. With our comprehensive legal services and extensive knowledge of the law, you can feel confident knowing your best interests are protected.
Give us a call today at (888) 698-3951 to request your case consultation.
