Business Entity Formation & Startup Legal Counsel
Business Entity Formation | Choosing the Best Business Structure for Your Company
The decision to start a new business in Northern California is a major accomplishment, but it is only the beginning. Choosing the best way to structure your new business can have as much of an impact on your success as what type of products or services you are offering. This is true for both for-profit companies and nonprofit organizations. Our law firm has successfully helped many eager entrepreneurs navigate the business formation process.
As a business owner, you can potentially be exposed to the debts and liabilities related to your business. Choosing the right business entity and formally registering your company can help to limit your personal exposure. There are many types of business entities available for your new business, and hiring an experienced business formation attorney is the best way to choose the best business structure for you.
Business Entities for Startups and Entrepreneurs
There are many types of business entities available to structure your business. Each business structure provides unique benefits and limitations. Our business attorneys will provide you with the best legal advice to decide which business entity is right for you. The most common for-profit types of business entities are described below.
- Ownership of all expenses
- Responsibility of accrued debts
- Business taxes brought on to the company by any of the partners
This makes a general partnership a risky business entity. Additionally, if one partner leaves the business, the partnership is dissolved and a new business entity will need to be created.
Limited Liability Partnership (LLP)
Limited Liability Company LLC
Public Benefit Corporation
- Requirement of a public benefit purpose
- Directors have greater protection from shareholders to pursue the triple bottom line
- Transparency and accountability enforcement
To summarize these features: The California Benefit Corporation’s Articles of Incorporation must state they are a Benefit Corporation with one purpose to create a general public benefit. The shareholders’ interests are not given priority above the other parts of the triple bottom line of profit, people, and planet. This allows the board of directors to make decisions that may advance the public benefit purpose but not the shareholders profits. To ensure transparency and accountability enforcement the company must fulfill three checks: a third-party assessment standard, annual benefit report, and a benefit enforcement proceeding. Choosing to establish your business as a California Benefit Corporation is a great social commitment. However, there are many specific legal requirements that must be understood and followed for this business type. Hiring an experienced business formation lawyer to complete and file all of the necessary legal documents allows you to focus your time and energy on what you do best, run the company and better society.
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Choosing the Right Business Formation for Your For-Profit Company
Each type of business formation provides your company with various benefits and limitations. Understanding how each option could impact your business and choosing the best business structure is the first step in laying a solid foundation to build your company on. Here is a quick reference chart with some of the most common differences.
Business Formation Review
“After meeting with Mike Abrate about forming my business, he was able to explain the benefits of setting my company up as an LLC over a Sole Proprietorship. The benefits of the LLC will not only save me money, but protect my family and I.”
– Ben M. Sacramento, CA
Business Entities for Nonprofit Organizations
An organization that works for the betterment of society, the environment, or a select group of people may be eligible to be considered a not-for-profit or nonprofit organization. While the organization is generally structured as a corporation, the organization is not owned by individuals or shareholders. Our law firm is experienced with the many types of business entities that are available for your nonprofit business. The most common types of not-for-profit business structures are outlined below.
Public Benefit Nonprofit Corporation
Mutual Benefit Nonprofit Corporation
- The Foundation’s Mission
- The Foundation’s Board
- The Investment of Funds
- The Disbursement of Funds
Like a corporation, a foundation can be set up with the intent to exist in perpetuity, continuing to benefit your cause into the future.
501(c) and 501(c)(3) Tax Exemption
- Establishing a specific purpose clause
- More than one initial director
- Special language regulating how corporate matters are handled*
- Prohibition of self-dealing*
- Prohibition of engaging in propaganda or attempting to influence legislation or elections*
*For charitable organizations If the IRS approves the application for tax-exempt status for a charitable organization, donors to the organization may deduct their contributions from their personal or corporate taxes. Understanding which type of business structure to use for your nonprofit organization can depend on many factors, including mission, target beneficiary, federal rules and state laws just to name a few. Hiring a legal team that is experienced with nonprofit business formation can offer you the legal advice and guidance to ensure that your nonprofit follows all the federal and state regulations.
Business Formation Legal Counsel Tailored for Your Business Needs and Goals
There are many business entity options available to consider when forming your business structure. Our experienced business formation attorneys will guide you through the process of deciding what business entity type will best achieve the business goals and needs of your new company.
You can rest assured that we will thoroughly explain the benefits of all business entities available to you. We will detail how each business formation will affect your liability, you and your business will be taxed, ability to grow your business, bring on additional partners and raise capital.
Schedule a legal consultation with our business formation attorneys toady to review the unique business needs and goals of your new company today.