What are the most important considerations when starting a San Diego business? Are you considering the formation of a new company here in Southern California? There are many things to know as you work through the start-up process, and it helps to have an experienced business attorney and coach who has served businesses just like yours for almost four decades.
3 Key Takeaways about What You Need to Know About Starting a Business in San Diego or Anywhere in California:
- Starting a new business is much more complex than selecting a business entity and filing a some paperwork with the State of California.
- The corporate documents (shareholders agreement) (bylaws) (Operating Agreement in an LLC) establish how the company is going to be run, as well as the relationships between its owners and how profits are to be handled.
- The very reason to have a “business” is the protections of the corporate veil – separating the assets (and debts) of the company’s owners from the risks, liabilities, and assets of the business. Business is all about calculated risk and reward, and the corporate veil provides the ability to take those risks while protecting the owners of the company.
Helping to Form Thousands of California Companies
The Watkins Firm has helped to form and advise thousands and thousands of new California companies over almost 40 years of experience, and the odds are we have deeply informed insight into not only the pitfalls others in your industry have faced, but the fastest strategies to get your company up and running and generating a profit. How do you get your new San Diego business off on the right foot? What are the important issues associated with selecting the right entity, ensuring your corporate documents are effectively structured and process controls are in place?
Selecting the Right Entity
There are many decisions regarding the establishment of a new business entity. Should you choose to be an LLC, S-Corporation, C-Corporation a California Professional Corporation or a Management Services Organization or MSO? Each entity provides advantages and disadvantages. It is important to make an informed decision up front as it can be extremely challenging to change the nature of your corporate entity down the road. We are often asked “Why shouldn’t I just download forms from some legal website, pay the fees to California and get into business?” “Aren’t boilerplate forms less expensive?” “I’m bootstrapping this start-up and need to keep all the cash I have available for the company.”
We understand. We are small business owners ourselves. We have worked with small and mid-sized businesses, healthcare entities, and professional / medical practices for decades. The answer lies in the details. Starting with boilerplate corporate documents absolutely helps to keep your costs as low as possible. However, California law is quite complex – one of the highest regulatory states in the Union for businesses. Most forms you download or copy off the web simply don’t have the language required to stand up to California law.
Why Is the Right Entity Important?
While forming a corporate entity is one of the most important considerations when starting a San Diego business, it isn’t just about the name of a company or image. The LLC, or corporation protects you personally from liabilities generated by the company itself. That is why you have and need a corporate entity in the first place. You can do business under your own name. There are tax implications and all the liability will come right back to you. If you become involved in a dispute they can take your home, your assets, and all the money in your personal accounts.
Your new San Diego business entity exists to separate you, legally, from the company you are forming. It is a barrier that prevents creditors from coming after your personal assets and money if the business encounters a challenge, liability or lawsuit. If you don’t get this right, any creditor can “pierce the corporate veil” of your company and come after you (and your spouse) for all you have.
Proven Library of Successful Business Formation and Corporate Documents
Saving your startup capital is one of the most important issues when starting a San Diego business. All boilerplate forms require modification. We aren’t here to separate you from the money you will need to get your company up and running. We sit down with you to discuss your vision, your plans and how you see things now and in the future. Our job is to protect you while helping to lay the foundation for a successful business. To help you to understand all of the risks, and the literally dozens of options to consider as the boilerplate is modified to fit your unique circumstances. Most clients are quite surprised at the value our services provide.
The Watkins Firm has amassed an incredible library of business formation and entity-related documents, operating agreements (LLC), bylaws and shareholders’ agreements and other important business contracts you will need to get things up and running. We aren’t creating things from scratch – it’s just too expensive and unnecessary. We custom tailor documents from our extensive library to fit your unique circumstances while ensuring the appropriate protections are in place to not only fulfill federal, state and local laws and regulatory compliance issues, but to properly establish the guidelines under which stakeholders will operate and contribute to your new company.
Pro-Tip: “You’re giving birth to a living creature that’s been recognized by the United States Supreme Court. And so what it means is birth is what we call capitalizing. And so you have these corporate documents and you have to decide on how much ownership will be and who owns what. Then you decide about what potential ownership there are. Reserve shares, I mean other ways in which people can own it. And then you capitalize it. Either you capitalize it with cash or you capitalize it with goodwill or a combination or a property. But how you capitalize it can determine whether or not it’s a real company or you have all those protections of corporate veil and creditors and you’re personally shielded. So how you start it is very important. And thinking about it, we’ll send you on the right path to avoiding all kinds of pitfalls and trouble.
You need to carefully tailor the company documents, if you choose a corporation, and not all corporations are the same. If you choose a limited liability company, if you choose a partnership, a limited liability partnership, there’s all types of different variations. And then you can get into the nitty gritty based on your profession and all the regs and all the professional license requirements and all of the, depending on the kind of company, their resale license and permits. There’s all kinds of little things that your old business lawyer knows about <laugh> and can tell you about from the get go. As opposed to you finding out after you’ve made a few mistakes, and your in an expensive dispute or lawsuit.
And let’s talk about the corporate veil for a minute. Because the whole reason to have an entity is to separate you the person from the legal person of the business.
That’s a big one. I mean, especially if you’re going to be doing some big business, you’re going to have big liability or you could personally not have big liability. And also you can have an entity that can be sold at a substantial profit. It’s an asset that can appreciate (or depreciate). You can have an entity that can be sold in whole or bring in investors. If you do everything right, you get to do all these things. If you get a big opportunity and you didn’t set your company up correctly, then you can’t have your friend or a larger company with an extra (several) million dollars decide to invest or buy the company. You’ve got to rewrite everything and restructure everything and hope you didn’t make any mistakes. And all of a sudden that opportunity doesn’t look so like such a good deal to the investor or company interested in acquisition. And that person or entity who’s got the investment money will say, ‘well, this isn’t professional, it’s not organized, it’s not valuable, and they’re not really serious about doing business.’ And you’ll miss it all because you didn’t pay attention in the beginning when you formed a company.” – Dan Watkins, Founding Partner
Proven Experience and Insight into the Important Considerations When Starting a San Diego Business
We provide extensive consultation, guidance and legal services to new business clients. We help to ensure you are guided through the most important considerations when starting a San Diego business. We not only complete the corporate documents and all regulatory and business forms required to get you going, we provide sound advice and counsel based upon decades of helping business professionals and entrepreneurs just like you.
The odds are obviously against new start ups. Most will fail within the first five years. What are the factors which separate those who succeed from the many who do not? How can the Watkins Firm help to make sure your new business is best positioned to succeed and thrive?
We invite you to review our podcast Episode 34 – Business Formation, as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
Learn more about what it takes to form a solid corporate entity, and all we can do to advise and support your new San Diego business venture. Our goal is to help your business to become successful in the shortest possible time frame while helping you to avoid the traps and pitfalls that lead most businesses to fail. You are different. This is an exciting opportunity and we want to help.
Meet Daniel Watkins:
Daniel W. Watkins is a true people person who sincerely listens. He cares deeply about what others are going through. Dan enjoys digging into the facts and finding creative solutions to problems. He contributes his insights candidly and constructively.
Dan’s interest in people make him deeply invested in every relationship and his exuberant personality makes him a true litigator. Dan fights for his clients with a fierce and calculated commitment.
Dan has practiced in the areas of business, medical practices and healthcare business, high tech/science, real estate and employment defense law since 1987. He is a trusted litigation strategist and true trial attorney with over 50 jury and bench trials to his credit. Dan has successfully represented both large companies and individuals and achieved substantial victories in well-publicized trials throughout California and the U.S.
He is experienced in business and corporate formation and administration, as well as all forms of alternative dispute resolution, including binding arbitration and mediation.
THE ROAD TO BECOMING A BUSINESS LAWYER AND LITIGATOR
Dan has almost 40 years of experience working with, for and against some of the largest insurance companies in the country. He has successfully tried and litigated cases in the areas of Healthcare Compliance, Commercial Litigation, Unfair Business Practices, Fraud, Breach of Contract, Battery, Premises Liability, Product Defect, Medical Malpractice, Discrimination, Sexual Harassment, Construction Defect, as well as Unfair Competition, Defamation, and Trade Secrets.
In December 2003, Dan commenced litigation against Health South Surgery Centers-West, Inc and its’ subsidiaries, exposing the company’s extensive mismanagement and misconduct of its’ surgery centers. Dan has also been asked by some of California’s largest municipalities and corporations to conduct legally required investigations into matters involving alleged employment discrimination and harassment.
