New business owners these days have enough to be concerned with besides their “legal entity”. Should I incorporate?...Can I be an LLC?...Just what is an LLC?.. Do I need a Partnership agreement if I have a partner? Do I need a shareholders’ agreement if there is more than one shareholder?...These questions are the most common when someone wants to make sure they are legally protected.
First, what do you need to protect? Unless you have more than $75,000 equity in your primary residence or if you have other investment property (including other businesses), you may not need to incorporate or form an LLC. You could be a sole proprietorship.
Here are the possible forms of doing business: sole proprietorship, general partnership, joint venture, limited partnership, limited liability partnership, limited liability company (LLC), S- Corporation, C-Corporation , Non-Profit Corporation, Professional Corporation.
In this short space, it is not possible to give all of the details, but generally speaking you should either incorporate or file an LLC if you want protection of your personal assets separate from your business. Both a corporation and an LLC require filings with the Secretary of State, payment of minimum taxes of $800 per year, keeping funds segregated (no paying your house payment out of your corporate bank account), and signing documents .
The difference between a corporation and an LLC is that an LLC does not require annual minutes, although you can opt to do them, and you can choose to treat your LLC like a partnership from a tax perspective while still providing protection from personal liability just like a Corporation does. Certain professions that are licensed by the State of California, such as Contractors, Cosmetologists, Auto Repair Shops, eg. cannot be LLC’s and must incorporate. You can be a single member LLC.
If you do not have a partnership or shareholders’ agreement in California, your partnership or corporation will be subject to the California Partnership Act, and the laws related to Shareholders’ agreements in the Corporations Code.
Alvis Frantz and Associates, A PC, located in East Contra Costa County emphasizes business, real estate and construction law as wells as trusts, estates and probate. You can reach us at info@alvisfrantzlaw.com or visit our website http://www.alvisfrantzlaw.com/ .
The information above is for general information only. It is not a substitute for seeking legal advice. Alvis Frantz and Associates A Professional Law Corporation - 2010 All Rights Reserved
