California Business Formation & Start-Ups

Choosing the right entity is very important. It is imperative that an attorney discuss the client's and objectives before time and money is wasted on entities that do not suite the client's needs. The main factors to consider are:

  1. personal liability;
  2. type of management;
  3. continuity of the entity;
  4. transferability of ownership;
  5. complexity and expense of forming and operating the entity; and
  6. federal and state tax considerations.

Each state's laws can change the way that any of these factors can impact your new business. This is why it is important to find an attorney that is familiar with the laws of the state in which you plan to conduct business. A lot of people believe that by creating their corporation or LLC in a business friendly state like Delaware will shield them from California State taxation. This isn't the case. California, along with several other states, tax all income derived from within its borders. If your business does most or all of its business within California, it does not make a lot of sense to form the company in a foreign state. This can create additional administration costs and even additional taxes.

The most common business entities in California

Each entity offers different pros and cons that can make the difference between the success and failure of your startup company.