If you’re ready to form an LLC or a corporation in Southern California, then it’s time to reach out to Law Offices of Torrence L. Howell. We can provide expert advice and legal assistance that ensures your rights and finances are protected. Read on to learn about your options and how we can help, and then reach out to us at (909) 920-0908.
The basics of an LLC
It’s common for a person to describe an LLC as an option that brings together the best parts of a general partnership with the best parts of a corporation. An LLC isn’t separate for taxing purposes, which means that a partner doesn’t get taxed two times on the profits they earn from the business. However, they are still protected personally in the event the company isn’t able to pay its debts or is sued. An LLC is a relatively simple corporate structure that gives you the protection you want without having to deal with a wealth of recording keeping requirements.
LLCs are often chosen by companies that intend to ho0ld appreciable assets in their business and don’t want to end up paying taxes on them twice, want to ensure that they are not personally liable for their business debts, don’t have a problem recording business profits and losses on their own income taxes, and will have only a few investors and most of those investors are involved directly in the business.
The basics of a corporation
On the other hand, a corporation is an independent legal entity. The advantage of this is that the corporation is responsible for 100% of the business debts. However, that also means that the company must pay its own taxes. As a result, partners will see the income from their corporation taxed two times. First, when the company earns it and second when those profits are paid to the partners. Corporations are also more expensive and can be more complex to set up compared to LLCs.
Corporations are often chosen by companies that intend to issue stock, want to ensure that owners get specific fringe benefits, aren’t bothered by the additional rules that regulate the required documentation of decisions and activities of the corporation, aren’t concerned with double taxation, want to leave the business to their heirs via gifted shares, and want to take advantage of splitting income on businesses that are very profitable.
The advantages of working with a business law attorney
It’s not legally required for you to hire a business law attorney to set up either a corporation or an LLC but it does help. You don’t want to miss an essential step or leave out components on your operating agreement. Doing this process incorrectly can lead to extra fees and even criminal action if the error is seen as deliberate. Don’t risk a company you haven’t even formed yet. Don’t be hurt by actions you take to try and protect yourself. Contact Law Offices of Torrence L. Howell at (909) 920-0908 to get a free consultation with a business law attorney.