How can an experienced, proven California and San Diego business formation attorney from the Watkins Firm help to establish your company while laying the groundwork for success now and in the future? Business formation and planning is an exciting and detailed process for any would-be entrepreneur. Business formation and the advise of your startup attorney can be the difference between the more than 80% of new companies that fail in the first five years, and a successful business that will prosper, increase in value and provide substantial financial returns.
Key Takeaways About What to Look For in a California and San Diego Business Formation Attorney:
- The right entity and sound advice and counsel from an experienced business startup attorney can be the difference between profitable success, and the 80% of new companies that fail in their first 5 years.
- The whole reason for a business entity is the protections of the “corporate veil” – this separates the owners of the company from the risks and liabilities of the business entity itself.
- Your corporate documents describe not only how the company is to be run, but the relationship between the owners of the business and how money is to be handled.
- The failure to properly structure the key corporate documents and monetary disputes are the two leading reasons for business litigation and ultimately the failure of a new company.
The Corporate Veil
Why do you need a business entity in the first place? Your California and San Diego business formation attorney from the Watkins Firm brings more than 40 years of experience to provide sound advice and legal services at business startup.
While the specific selection of your entity is based upon the nature of your business and its operations, the primary purpose for establishing a business entity is what is known as the “corporate veil.” A business is actually a separate being from those who own it in the eyes of the law. Business is all about taking prudent risk, and the primary advantage of a corporate entity is that it separates you personally, the owner(s), from the liabilities of the business you are about to form. The corporate veil protects the personal assets of business stakeholders (and their spouses) from the creditors of the business itself. The corporate veil isn’t just something which is formed when you incorporate. It is something which must be protected at every step of your business journey.
California Has Unique Requirements to Consider During Business Formation
California is known as one of the most challenging environments in which to do business, especially for an employer. One of the first decisions is which state to incorporate in. Many online platforms and out-of-state attorneys might believe that incorporating as a Delaware corporation and registering your company in California and other states where your business will be conducted is the only option.
Your skilled California and San Diego business formation attorney from the Watkins Firm will spend a lot of extra time with you at the outset of your enterprise. You can draw on more than 40 years of genuine business experience in companies of all sizes and from virtually every vertical market. Ask about our “Startup Package” which is specifically designed to minimize the impact on your budget while providing extensive insight, counsel and legal services required to complete planning and get your business entity up and running.
Choosing the Structure of Your Entity or Entities
When it comes to choosing a corporate structure, there are multiple options to consider including a partnership, sole proprietorship, C Corporation, S corporation, and Limited Liability Company or LLC. California offers a “Professional Corporation or PC” which is a unique and specific entity for licensed professionals such as medical professionals, dentists, lawyers, CPAs, architects and engineers. Those in the medical and healthcare field should ask your skilled San Diego business formation attorney at the Watkins Firm about a Management Service Organization or MSO.
Each corporate entity has its own set of formation rules and tax implications. Different entities provide different flexibilities based upon the nature of how and where you intend to do business, the timing of income and associated taxation through a fiscal year versus a calendar year, whether you are a local company or will conduct interstate or international business and how you intend to grow.
The Secret Sauce: Corporate Documents and Business Succession Planning
Like the download sites and online platforms, the Watkins Firm has an extensive proprietary library of corporate documents which have been proven here in San Diego and throughout California over the past 40 years. They are constantly updated to reflect changes in federal, state and local laws and reflect the unique issues associated with conducting business here in California.
We save our clients money by taking an existing set of corporate documents and carefully crafting them to reflect our client’s unique circumstances and needs. Our clients receive battle tested, proven documents which are tailored to their specific requirements while remaining competitive and cost-effective.
However, the secret sauce, the insider secret of any corporate entity consists of a set of corporate documents. These documents must be tailored clause by clause (and there are over 100 of them) to reflect your specific goals and objectives. The “operating agreement” in an LLC, or the shareholders’ agreement and bylaws in an S Corporation, C Corporation, PC or MSO.
These crucial documents not only structure how the business is to be operated, but address critical issues such as “succession planning” or what happens in the event of an unforeseen episode in the life of a business owner or stakeholder. What happens if a member or shareholder dies or becomes incapacitated? What happens if one of the stakeholders files for personal bankruptcy or is unable to meet a capital call? What are the voting rights and how and when will money be distributed?
The corporate documents are the “secret sauce” which separates those businesses which survive and thrive from those who encounter serious challenges down the road resulting in substantial business disruption and litigation.
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
Why Do You Need an Experienced California and San Diego Business Formation Attorney From the Watkins Firm?
Why do you need an experienced California and San Diego business formation attorney from the Watkins Firm? How can more than 40 years of actual real-world experience add insight, power and strength to your new company?
If you are serious about your new business there are important plans to be formed, details to be attended to, decisions to be made and actions to take (not to mention the challenges that await once your new business is launched).
The conversation begins with a substantive, free call with Dan Watkins or one of our senior attorneys. This call will cost you nothing, but is sure to answer many of your questions and help you to understand the difference between downloading some forms, paying a fee and going for it versus a well-informed plan of action, as strong entity and a business relationship you can and will draw on in the months and years to come.
What is the difference between the vast majority of new businesses which fail in the first five years and those who not only survive but thrive? Ask Dan. After more than 40 years of genuine real-world business experience you are sure to receive genuine, sound advice and counsel and the services you need to succeed.
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.
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.
