Are you searching for an experienced business attorney for a new business formation in San Diego or anywhere in California? What corporate entity should your new company select? Why is it valuable and cost-effective to work with the business formation attorneys at the Watkins Firm versus trying to do everything yourself?
Key Takeaways about New Business Formation in San Diego:
- One of the most important decisions when starting a new company is the selection of the appropriate business entity. The “corporate veil” is an important shield that separates your personal monies and assets from any debts or liabilities associated with the risks and process of business.
- The primary business entities in California are an LLC, S Corporation, C Corporation, Professional Corporation, or a Management Services Organization or MSO.
- The corporate documents including the operating agreement for an LLC, or the bylaws and shareholders’ agreement of a corporation provide important details about the relationships between the owners and investors of the company, their rights and obligations, as well as how the company itself is to be run.
The Selection of Your Corporate Entity
One of the most important decisions when starting a new company is the selection of the appropriate business entity. Your corporate entity isn’t just some name you’ll conduct business under. It is an important shield that separates your personal monies and assets from any debts or liabilities which arise during the conduct of business over the coming months and years. The reasons to protect your personal funds and assets from business debts should be obvious, but this is especially true when there will be more than one owner, member or shareholder.
Your personal assets and liabilities should be totally separate from your business assets and liabilities. In fact, commingling business and personal funds or assets can be a serious issue and could cause a serious internal dispute or vulnerability to business creditors.
Financial and legal liabilities are unfortunately an issue for any successful company. Business disputes aren’t a matter of “if,” they are a matter of “when.” How you structure your new business startup in San Diego from the outset will make a substantial difference in the protections of the corporate veil you’ll need down the road.
The primary entity options in California are primarily:
- Limited Liability Corporation or LLC
- S Corporation
- C Corporation
- Professional Corporation or PC
- Management Service Organization or MSO
Each entity is designed to provide to facilitate specific types of business while providing specific operational and even tax advantages.
Corporate Documents for Your New Business Startup in San Diego and Southern California
The experienced business attorneys at the Watkins Firm are prepared to guide you through the process. One of the most important steps for any new business formation in San Diego and throughout California is to ensure that your new corporate documents position you (and any partners or investors) for the greatest opportunity for success. The corporate documents including the operating agreement for an LLC, or the bylaws and shareholders’ agreement of a corporation provide important details about the relationships between the owners and investors of the company, their rights and obligations, as well as how the company itself is to be run.
Most young or new entrepreneurs do not understand or value the perspective a seasoned attorney will contribute. We are like a coach. Every professional athlete has a coach, and you should have a trusted advisor to guide you through this important time. We are not here to drain your resources. We understand that most new companies are bootstrapped – formed out of the personal resources of their owners.
Money is tight, and we understand that. We invite you to a conversation. If you are considering a new business startup in San Diego or Southern California we invite you to call us for a free and substantive consultation at (858) 535-1511.
We will provide insight based upon more than four decades of service to the San Diego business community. It won’t cost you anything. Learn about our experience in your industry and how we can help you to benefit from the experience of others. We will draft a game plan, provide solid insight into each corporate structure and develop a budget you can afford before you ever invest a cent.
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
We invite you to listen to our Podcast Episode 2 – Starting a Business, review the strong recommendations of our clients and contact the Watkins Firm or call (858) 535-1511 for a complimentary consultation today. Learn about the substantial amount of time and money we can save you while providing valuable insight into your new venture.
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.
