Do you need help choosing an entity for your San Diego start-up or new business? Why do you need an entity if you intend to conduct business in San Diego or anywhere in the State of California? Why shouldn’t you just conduct business as yourself?
The genuine answer is liability. Any individual who conducts business on their own is personally liable for any debt or liability which arises as a result of the “business” involved. This means any creditor can come after you (and your spouse) personally for any business debt and that your personal home and assets are exposed in the event of any dispute or lawsuit.
Choosing an entity for your San Diego start-up should be based on the nature of the business you intend to conduct. The experienced San Diego business formation attorneys at the Watkins Firm have advised entrepreneurs and companies here in Southern California for several decades. There are several specific types of entities including an LLC, a partnership, an S Corporation, a C Corporation and a California Professional Corporation. Which is best for your unique circumstances?
Generally speaking, a single owner start-up company should most often consider an LLC or an S Corporation. Both are “flow through” entities which pass income directly through to the owner(s) which would be known as “members” in an LLC or “shareholders” in an S Corporation. One of the greatest advantages of working with the experienced San Diego business attorneys at the Watkins Firm is the value of the advice we bundle into our competitive rates for start-ups. Our attorneys have decades of experience and one of the first moments this comes into play is in the “corporate documents” of your new entity.
You see, those who attempt to download their corporate entity start-up forms from some “legal” website get generic, boilerplate forms. If you want an attorney to answer questions or help you to customize them to fit your unique circumstances and protect your own interests going forward it costs extra. The “operating agreement” in an LLC and the “shareholders’ agreement” in an S Corporation should be carefully crafted. There are literally hundreds of optional clauses here. This is especially true if there is more than one owner in your new business. You want to protect your interests as owners now and in the future.
The primary advantage of a C Corporation is the ability to have a lot of shareholders down the road, interstate and international commerce and/or the ability to customize your year-end date. Flow through entities operate on a calendar year. The C Corporation can set whatever date it chooses as it’s year end. This allows for a lot of creativity when it comes to the realization of income and associated taxation. For example, a year end of March 31 would allow a high wage earner to delay income to January 2 of this year, and not pay taxes on it until April 15 of the following year.
Finally, A California Professional Corporation is an excellent choice for those who are licensed by the State of California. It provides some strong advantages for licensed professionals such as doctors, engineers, lawyers, architects, optometrists, pharmacists and psychiatrists.
The process of choosing an entity for your San Diego start-up is highly fact and circumstance specific. Choosing the right business attorney can be one of the most important decisions you make. Our business attorneys become valuable advisors to our clients. We invite you to review the strong recommendations of our clients and the legal industry and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
