Which Business Entity Should I Choose When Starting A Business in California?

by | Feb 6, 2015

Which Business Entity Should I Choose When Starting A Business in California?

When starting a new business, careful consideration should be paid to selecting the type of business entity. Thorough business planning can minimize risks and have a significant impact on tax liabilities, protecting your personal assets and minimizing risks to yourself, your family, and your partners. Our estate and business planning division can help you make the correct decision when doing your initial planning, and help ensure the future of your business asset for generations to come.
In California, business entities include sole proprietorship, general partnerships, limited partnerships, corporations, limited liability companies (LLCs), and limited liability partnerships (LLPs). Not all of these business entities require state filing, and each will have varying levels of liability for those involved. Consulting with a business planning expert will allow you to carefully select the best entity for your business today while providing a clear path for the direction you will take your business into the future.
Over time, your business can change. There can be consequences associated with changing, or even failing to change, your original business structure. Proactive solutions for your growing business can help limit your liability before threatened or actual litigation arises.
The type of business you select can also have significant tax ramifications. For example, sole proprietorships and general partnerships are not taxed by the California franchise tax board, but limited partnerships, LLCs, LLPs and corporations are. Certain business entities can also be subject to double taxation, where taxes are paid first by the corporation, and then shareholders or investors are taxed on dividends. The difference between selecting a corporate business entity or an S-corporate business entity can mean the difference between single taxation or double taxation. Additionally, there are certain types of business entities that will cause a huge headache if you’re looking to raise capital, for example. Consulting with an experienced business planning expert will help you to navigate through these important, and costly, decisions.
Your business is likely to be your most significant asset and the asset most likely to be passed on to your future generations, so your business should also be included within your estate plan. With thoughtful estate planning, you can maintain management and control over your business and who it passes on to.
By consulting with our business and estate planning division before you set up your business, you can select the correct business entity to protect your personal and business assets, prevent possible liability and litigation issues. Our experienced team can guide you further through the possible issues such as contracts, employee wage and hour laws, and other problems that can affect your business. Contact us today to discuss your hopes, fears, and future dreams for your business, and let our team of experts guide you through your business planning.
 
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