If you are thinking about starting your own business, you’ve likely spent time researching the different types of business entities available, which include: a sole proprietorship, partnership, corporation or LLC. The most common business forms are corporations and LLCs because of the limited liability protection they provide to the business owners. Without professional legal guidance, it can be a rather difficult process to choose one form over another because their differences may seem subtle. During an initial consultation, a Tailored Legal attorney will meet with you to explain the critical and nuanced differences between each option and help you understand the long term implications associated, so you feel confident and secure with your choice of business form.
The rule of thumb is that a corporation is the best form for businesses that have active operations. A corporation will protect your personal assets from the liabilities of your business, it can help you reduce dreaded self-employment taxes, and it isn’t subject to a gross receipts tax, which limited liability companies must pay. Of course, every business is different and the best form for your business will be based on your individual circumstances. At Tailored Legal, we’ll help you decide if a corporation is best for your business, and, if so, we will complete every step necessary to form a California corporation. We will do it all for an affordable fixed price so you know what it will cost before we get started. To form your California corporation, we will prepare and file the following documents with the California Secretary of State, the IRS and the Department of Corporations:
- Articles of Incorporation;
- S-Corporation Election;
- SS-4 Application for Employer ID Number (EIN);
- California Corporations Code Section 215102(f) Limited Offering Exemption Notice.
We will also prepare your own internal corporate records, which the California Corporations Code requires you to maintain, including:
- Corporate Bylaws;
- Initial Organizational Minutes;
- Stock Certificates;
- Stock Ledger.
California corporations are required to elect directors and officers of the corporation. New business owners often have many questions about this process. We will answer your questions to ensure your understanding, and we will help you elect a board of directors and chairman of the board, as well as corporate officers, including the president, secretary and treasurer.
If timing is critical, we will expedite the processing of your corporation by utilizing the Secretary of State’s expedited filing service so that your corporation is up and running within just a few days.
As with all Tailored Legal services, upon completion of your legal matter, we meet with you to review the services, answer any follow up questions, and layout your next steps. Typically, this includes specific instructions for operating your business through a corporation. To ensure our clients receive the best quality care outside of the services of Tailored Legal, we offer our clients access to our professional network of San Diego’s brightest advisors, including bookkeeping, accounting and tax matters, payroll, financial planning, insurance, real estate and more.
Tailored Legal can complete the formation of your corporation so you can feel confident that it was formed right. Upon completion of our corporate formation services, you will immediately begin to see the benefits of corporate status, including limited liability protection, reduced tax obligations, and professional appeal.
It can be difficult trying to decide on your own whether you should form your new corporation as an S-corporation or a C-corporation. A Tailored Legal attorney can help you make the right choice. If you are starting a new small business on your own, or with just a few partners, you’ll likely choose to form an S-Corporation. S-Corps are common among small business owners and in addition to the other benefits of corporate status, they allow you to avoid the double taxation issue that plagues C-Corporations. C-Corporations are taxed first at the corporate level, then the owners are taxed again when they receive dividends or distributions from the corporation. By electing S-corporation status with the IRS, you will not be required to pay corporate income tax at the federal level. Instead, as a pass-through entity, the profits and losses and income and expenses of the business will be “passed through” to the business owners on their individual returns in proportion to their ownership in the business. To qualify for the S-corporation election, the shareholders of the corporation must meet certain qualifications. Additionally, the election must be made within 75 days following incorporation. As a result, if you are forming a new corporation, you shouldn’t delay in speaking to a qualified professional.
Sound complicated? It can be, but with the help of your incorporation attorney at Tailored Legal, the S-corporation election process is simple and straightforward. We’ll make sure your business meets the S-corp requirements and that your election is timely made. If you currently have a trusted CPA that advises you with the finances of your current business or your new business venture, we will work directly with that professional to help you make the right choice. Contact us for an initial consultation with a Tailored Legal attorney today to discuss the formation of your new corporation and to decide whether to elect S-corporation status.
A California LLC, which is short for limited liability company, is another form of business entity. Business owners can unnecessarily waste precious time trying to decide whether to form an LLC or a corporation for a new business venture. LLCs enjoy many of the same benefits of corporate status. When properly formed and operated, an LLC can provide you with limited liability protection, allowing you to operate the business without fear of exposing your personal assets to business debts. It can also provide tax advantages to you, and give your businesses a professional look and feel that may help you appeal to a broader client base and reach that next level.
LLC owners (which are referred to as LLC members) also have flexibility in tax planning. The LLC can elect to be taxed as a partnership, as an S-corporation, or as a disregarded entity. As an owner of the LLC, you will have flexibility in determining how to divide the distributions among all of the LLC members. Similar to the owners of an S-Corporation, LLC members avoid the double taxation to which C-Corporation shareholders are subjected. LLCs aren’t required to pay income tax at the federal level. However, like corporations and all other formal business entities in California, California limited liability companies are still required to pay the minimum franchise tax.
For a typical small business owner, many of the differences between LLCs and corporations can seem subtle and insignificant. Both forms will give you the limited liability and professional appeal you seek, and keep your business separate from your personal affairs. But don’t be fooled. In most situations, the difference between the two forms is significant and the decision regarding which form to choose shouldn’t be made without the assistance of an LLC formation attorney. The consequences of making this decision without professional assistance can be costly.
At Tailored Legal, our LLC attorney can help you decide whether to form an LLC and explain its unique advantages to you. You can request an initial consultation at no cost to you, and if you hire us to form your California LLC, we’ll do it at a fixed price so you can budget your business start-up expenses. To form your limited liability company, we will prepare and file the following LLC organizational documents on your behalf:
- Articles of Organization;
- Statement of Information;
- Operating Agreement;
- LLC Membership Records;
- SS-4 Application for Federal Employment Identification Number.
If you are serious about forming your new business and selecting the right business form, contact Tailored Legal today to schedule a meeting with a LLC attorney.