San Diego business formation and startup has become much more complex as many try to unlock business trends, as well as recent changes in the federal tax code. What entity is best suited to the business you intend to conduct? Pass-through income appears to provide an advantage to S Corporation elections, but is this the best option for your new company? Should an existing C Corporations consider the S Corporation election? The primary questions will center upon the nature of the business itself, the work product of the corporation and the nature of the primary shareholder or shareholders.
The Options for a Business or Corporation in California
San Diego business formation and startup relies upon the selection of the right business entity and the customization of corporate documents to fit your unique goals and objectives. If you are serious about business the process of getting your company formed and into business has become much more challenging and simply downloading forms from a legal website will not provide the protections the majority of new business owners are seeking.
An LLC is still an attractive option, especially for sole owners and small businesses. However, the decisions associated with cross-border, national and international business transactions must be balanced by the tax implications of how and where income is realized.
Should you select an S Corporation or C Corporation? What is the difference between the various types of entities? A C Corporation is usually tailored to be a larger entity and provides the ability to have more shareholders and establish a fiscal tax year instead of the traditional calendar year. This allows the business owners to accelerate or decelerate income and losses to increase retained earnings while reducing taxation. High income earners smaller ownership entities are often best served by an S Corporation. There is no “corporate tax” on an S Corporation as it is a pass-through entity.
Options for a Medical Practice or Healthcare Business Entity
A San Diego or Southern California medical practice or healthcare business can select any of the above entities or The California Professional Corporation or PC. The PC is an attractive entity for those in the medical or healthcare industries and other licensed professionals as it inherently provides additional protections for its shareholders which are not available through an S Corporation or C Corporation.
Your medical practice or healthcare business might also benefit from a Management Services Organization or MSO. The MSO provides most or all of the non-medical support services outside of the practice of medicine. This allows medical professionals to focus on providing exceptional healthcare and an outstanding patient experience. The MSO is usually designed to leverage outside capital and expertise to reduce operational costs while increase operational and service capabilities.
San Diego Business Formation and Startup at the Watkins Firm
The experienced San Diego business formation and startup attorneys at the Watkins Firm are well positioned to provide sound advice and business counsel in these important and exciting business decisions. Draw upon our more than 40 years of experience and service to the San Diego business, real estate, tech, medical practice and healthcare business communities.
Your entity is too important to trust to template forms from some download site. Your business entity exists to protect the owners, members or shareholders from liabilities associated with the business entity. The supporting documents such as the LLC operating agreement or the shareholder’s agreement become more critical both in terms of control as well as the distribution of income.
Your Watkins Firm attorney provides insight into each of the dozens and dozens of clauses and options in these important corporate documents. Taking the time to get it right now will pay off in terms of both money and time down the road. Ask your Watkins Firm lawyer about the experiences of those who did not get their operating agreement or shareholders’ agreement effectively developed before a dispute arose. Our goal is to position you for immediate and tremendous success right out of the starting gate.
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 about the many options and clauses associated with template forms and why it is so important to have sound legal advice and counsel when approaching business formation in a San Diego pandemic and beyond.
