Making the decision to start a new company is often one of the biggest steps in a person’s life. The next major decision in that process is determining which type of business entity is right for you. There are many different types of business entities, each with its own benefits and drawbacks. An experienced California business law attorney can help you decide which is right for your new idea. In the meantime, below is a brief summary of the main business entities you could establish in Whittier, California.
California Sole Proprietorships
This is the simplest business entity, which is appropriate when there is one owner and operator of the business. There is no need to register a sole proprietorship, which saves an owner money, but the owner is also responsible for all the company’s liabilities and debts. An owner can be held personally liable for the financial obligations of the business.
A partnership may be right for your new company if there are two or more owners. In a general partnership, the owners all actively manage the company as well as share equally in the profits and liabilities. However, in a general partnership, all partners share liability equally, even for another partner’s negligence.
In a limited partnership, there are two or more owners of the business but some owners manage the company while others are merely silent investors. Limited owners who are silent investors lack control over the management of the company but are also only liable for the amount they invested in the business.
California Limited Liability Companies
A limited liability company takes many of the benefits of other business entity types and combines them into a single entity. A limited liability company provides some individual protection against the liabilities of the business and gives owners the option of choosing how they would like to be taxed. There are also fewer requirements and formalities than more complex corporation entities.
A corporation, also known as a c-corp, is a legal entity that exists separately from a business owner. The owners are called shareholders, who each own stock in the corporation, and the board of directors manages the company. There are substantial tax laws and regulations that come with creating a corporation, but it also provides substantial protection for owners against business liabilities.
An S-corp or S-corporation combines the liability protection of a corporation with the pass-through tax advantages of a limited liability company or partnership. That means the business is not taxed as a corporation or subject to double taxation.
Contact Business Law Attorneys in Whittier CA Today
Choosing the right business entity for your new company in Whittier, California, is a big decision. Our experienced business law attorneys at The Law Offices of Omar Gastelum & Associates, APLC are here to help. Contact us today to learn more about the wide range of legal services we offer our business clients.