LLCs Versus Corporations

As a business owner, one of the first decisions you will make is to choose a business entity type. California recognizes many different types of business entities. Each comes with both benefits and limitations, so it is important to work with an experienced California business lawyer to be sure that you select the business entity type that is right for your unique business. The right business entity type can give you flexibility in running your business, confer tax benefits, and ensure that your new business is run as effectively as possible. Learn more about the flexibility – and limitations – of LLCs and corporations in California.

Flexibility Of LLCs Versus Corporations

Many business owners are familiar with the benefits of an LLC. Because the company is created with limited liability, owners can not generally be held personally liable for debts of the business so long as they continue to meet LLC legal requirements. This means that the business owner’s liability is usually limited to whatever funds are invested in the business. Entrepreneurs are usually familiar with these benefits and instinctively want to form an LLC to avail themselves of these benefits. But an LLC is not the only business entity you can form. In some cases, a corporation might give your business greater flexibility to raise funds and conduct business.

In order to be publicly traded, a business entity must be a corporation. LLCs cannot be publicly traded under SEC rules. They can, however, have private equity funding, by which new members are given equity or management rights in exchange for their investments. If you intend to take your company public, it might be better to form a corporation from the start. It is also possible to dissolve an LLC and reform the business as a corporation if the company later decides to go public. Corporate owners and officers can also be protected from personal liability if they follow appropriate legal requirements. It is important to understand that an LLC is not the only business entity that can provide protection from liability. Discuss all business entity options with a business lawyer and a tax professional before selecting one for your business. These professionals can help you understand the pros and cons of each entity type, the tax implications for your business, and the flexibility that different options will provide.

The Right Corporate Lawyers For All Business Entities

The experienced Los Angeles business lawyers at Structure Law Group know how to select the business entity that is best for your unique circumstances. We have helped many California entrepreneurs set their businesses up with legal protection, leadership organization, rules of operation, and other assets that help new businesses run effectively from day one. Call (310) 818-7500 to schedule a consultation or contact us online. The investment of attorney’s fees at the start of your business can save you lost income, lost business opportunities, legal liability, and tax liability for years to come. Maximize the legal protection available to you, your investors, your employees, and even your family by getting legal advice before you start business operations.