Have an idea for a business? Where do you start transforming that idea into a business? Determining business formation is one of the first and most important steps to starting a business in California. It can make a difference in terms of taxes, liability, profitability, growth, and more. Getting it right from the very beginning is critical.
At The Law Office of A. E. Roberts, our business attorney will review your business idea with you and advise you on all your best legal options. From that point on, our business attorney will guide you through the process, proactively making sure you have all the forms, documentation, and other necessary information and strategies in place for a successful venture. Contact our business lawyer today at 951-961-0997 to schedule a free case evaluation.
How Do You Form a Business in California?
When forming a business, one of the first and most important decisions to make is the structure you will use. A business structure is the legal classification of a business that determines taxes, liability, and other legal rights and responsibilities.
A range of business structures is available, including:
- Sole proprietorship
- General partnership
- Limited partnership
- Limited liability company (LLC)
- Corporation
- Cooperative
The best business structure for your business depends on a range of different factors.
What Factors Influence Business Formation in California
Here are some factors to consider when choosing the best structure for your business.
Control
A major deciding factor when structuring your business is often the degree of control you want to retain over your business. This is especially true where multiple owners are involved.
A sole proprietorship allows for the fullest control. As the only owner and operator, a sole proprietor can run their business how they want to. In comparison, corporations are answerable to shareholders who elect a board of directors to manage the organization's day-to-day business.
Liability
Your business structure also determines the extent of your personal liability for the liabilities, debts, and obligations of the business. Some structures offer better protection against personal liability. However, liability and control are usually directly proportional. The less your personal liability, the less control you typically exercise over the business.
In a sole proprietorship, for example, the owner is personally responsible for the business's liabilities and debts. Their personal assets may be used to satisfy the business's debts. They can also be sued in relation to the business's activities.
In comparison, in a limited partnership, partners have a separate legal identity from that of the business and their personal liability is limited to their investment in the business.
Administration
The degree of administration of a business typically becomes more onerous as the complexity of the business structure increases.
Sole proprietorships and partnerships typically have the least complex paperwork, while corporations have strict reporting obligations and complex paperwork to file when forming and running the business.
Important Ways a Lawyer Helps Your Business in California
A business lawyer can advise you on a range of issues when forming a business.
1. Choosing the Right Structure for Your Business
Choosing the right structure is the key to building a strong foundation for your business and its future growth. A business lawyer can advise you on the pros and cons of each structure available to you, relevant to your circumstances.
This will help protect both your interests and your business's interests in the future.
2. Industry-Specific Advice
A business lawyer can give you advice specific to the industry in which you operate, as well as the product or service you're offering. This includes assisting you with understanding the applicable regulations and any necessary licenses or permits.
3. Drafting and Negotiating Legal Documents
Business formation typically involves the preparation of a range of documents, such as business registration papers, intellectual property registrations, and other commercial documents. A lawyer can assist you in accurately drafting these documents.
Importantly, a business lawyer can draft legally binding contracts or negotiate the terms of a contract to benefit you and your business. These are essential to many aspects of running a business, for example, partnership agreements.
Contact a Business Lawyer in Riverside, San Bernardino and San Diego Counties Today
If you are considering starting a new business in Riverside, San Bernardino and San Diego Counties, our business lawyer can help you make strategic decisions. Contact The Law Office of A. E. Roberts today to schedule a free case evaluation. You can either fill out our online form or call us at 951-961-0997. We look forward to helping make your new business a successful one.
