A company can usually be formed as
- a sole proprietorship,
- corporation or
- LLC (Limited Liability Company)
Certain licensed businesses in California can be filed as:
- limited liability partnerships or
- professional corporations
The decision as to what type of business structure would be best for your company includes such factors as how much liability protection from the businesses debts you want, your personal tax situation, and how formal or informal a business you want to form and operate.
- A sole proprietorship and general partnership offer the least liability protection but can be as formal or informal as the parties want.
- An LLC and a corporation offer more liability protection from the business's debts but are a more formal process to form and operate.
An attorney can explain
- how the different types of entities are formed,
- how they are legally required to operate, and
- your on-going legal requirements once they are formed.
A qualified attorney can also advise you on:
- which entity would be best for you based on the above factors,
- whether it is a licensed business,
- your future plans for owning or selling the company, or bringing in future investors,
- and other considerations.
A CPA should be consulted with regarding the tax structures for the different types of entities.