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Business Formation
One of the most significant decisions a business owner needs to makes is the legal entity through which the business will be conducted. Forms of entities available in California provide different levels of asset protection for the business owner, tax advantages and disadvantages, complexity or simplicity of management, and other characteristics. In addition to sole proprietorships, LLC, Corporation, and Non-Profit are small business entities available in California.
LLC Formation Services
Limited liability companies are non-corporate business entities with one or more owners called members who usually don’t have personal liability for the debts of the LLC. An LLC has the limited liability advantages of a corporation and the tax advantages of a partnership.
The Swenson Law Firm offers a variety of options for business people who think an LLC is the right entity to carry out their venture through.
Corporation Formation Services
A corporation is an entity that offers limited liability to the owners, who are called shareholders. The shareholders are typically not liable for the corporation’s debts and obligations just because they are the owners. Corporations are usually taxed as separate entities and the dividends taxed again when they are paid to the shareholders (known as double-taxation). However, some corporations may meet certain requirements to elect S corporation status, which means that the corporation’s net income, losses, and tax credits are “passed through” to the shareholders.
The Swenson Law Firm offers a variety of options for business people who think a Corporation is the right entity to carry out their venture through.
Non-profit Formation Services
People start non-profit entities for innumerable reasons. Most people who are thinking about starting a non-profit are often surprised to learn that “non-profit” and “tax exempt” are two completely different concepts. Not all non-profits are tax-exempt and not all tax-exempt entities are non-profit.
Non-profits utilize the same basic entity structures as for-profit entities (i.e. – corporations, LLCs, and unincorporated associations) but there are more restrictions on activities the entities may engage in and there are specific language requirements that must be in the by-laws and other filing documents.
Blog Posts Related to Business Start-Up
Selecting the Right Legal Entity- /selecting-right-legal-structure-business/
Additional Blog Posts Related to Business Start-Up
- Start Ups and Your Business Name- /start-ups-business-name/
- What to Include in a Letter of Intent- /include-letter-intent/
- The Importance of an Effective Letter of Intent- /importance-effective-letter-intent/
- Important Written Agreements Your Business Needs- /important-written-agreements-business-need/
- Mistakes to Avoid in Mergers and Acquisitions- /mistakes-avoid-mergers-acquisitions/
- Essential Legal Advice for your Start-Up /essential-legal-advice-start-company/
- How Start Ups Can Avoid Legal Mistakes- /start-companies-can-avoid-common-legal-mistakes/
If you have additional questions related to forming your business or would like to enquire about our legal services contact The Swenson Law Firm today. We are happy to help you.
The Swenson Law Firm has the capability to meet with you face-to-face or virtually. The Swenson Law Firm has clients doing business in and outside of California, as well as internationally.
Business Formation & Setup Frequently Asked Questions
What type of business entity should I choose in California?
The "best" entity depends on your tax goals and liability needs. Most California small businesses choose between an LLC (for flexibility and ease of use) or an S-Corporation (which can provide self-employment tax savings for profitable businesses). Professional practices (like doctors or accountants) may be required to form a Professional Corporation.
What is the difference between an LLC and a corporation?
An LLC (Limited Liability Company) offers a more flexible management structure and fewer "corporate formalities". A Corporation is more rigid, with a Board of Directors and officers, but it is often preferred if you plan to seek venture capital or eventually go public.
How do I register a business in California?
The process typically involves:
- Filing Articles of Organization (for LLCs) or Articles of Incorporation (for Corporations) with the California Secretary of State.
- Obtaining an EIN from the IRS.
- Filing an initial Statement of Information within 90 days.
- Registering for state taxes with the Employment Development Department (EDD) if you have employees.
Title or Question
Describe the item or answer the question so that site visitors who are interested get more information. You can emphasize this text with bullets, italics or bold, and add links.Do I need an attorney to start a business?
While you can file the paperwork yourself, an attorney ensures your foundational documents (like Operating Agreements) actually protect you. Poorly drafted "DIY" formations often lead to the "piercing of the corporate veil," which leaves your personal assets at risk.
What licenses are required to operate a business?
Most businesses need a local business license from their city or county. Depending on your industry, you may also need state-level professional licenses (e.g., Contractors State License Board), a "Seller's Permit" for sales tax, or health department permits.
