Los Angeles Business Formation Lawyer

Business Formation Services In California

At EJP Law, P.C., we provide legal services for small and mid-sized businesses in the greater Los Angeles area. Because each company is unique, we offer tailored solutions to meet your specific needs. However, we also offer a range of services that are commonly required by start-up businesses.

• Business Name Assessment
• Business Entity Formation
• Corporate Document Drafting
• Obtain Agent for Process & EIN
• Shareholder Agreements
• Partnership Agreements
• Private Stock Issuance
• Licensing Agreements
• Website Terms of Use & Privacy Policies

If you’re starting a business in California, hiring a skilled Los Angeles business formation lawyer can help protect your company and free up your time to focus on its growth and operation instead of legal issues. Properly structuring your business entity, safeguarding your intellectual property, and utilizing clear transaction documents can all contribute to a more successful start for your venture.

Major Types Of Business Formations In California

If you’re starting a new business in California, you’re probably wondering about the best type of company structure. Choosing the right entity form will make it easier to operate and grow your business, and can make it more attractive to clients, suppliers, investors, lenders, and potential partners. California offers several entity options for start-up businesses, including the following:

Sole Proprietorship

A sole proprietorship is a type of company that is owned and operated by one person. The owner receives all the profits and has full control over the business. However, there are some drawbacks to being a sole proprietor. Since the owner and the business are considered the same legal entity, the owner is responsible for all the debts, duties, and liabilities of the company.

General Partnership

A general partnership (GP) is a type of business entity created by two or more individuals who plan to run a commercial venture together. Although it is recommended to have a written partnership agreement, GPs can be formed without one. Similar to sole proprietorships, profits and losses in GPs are allocated to the partners based on their percentage of ownership.

In a partnership, the profits and losses are divided among the members. Each member must report this on their own tax return. All members of a GP are personally liable for the business. If creditors come to seize assets, they can go after any partner, who may be held responsible for the actions or performance of any other partner.

Limited Partnership

An LP in California is a type of business structure that involves both general and limited partners. The general partners are responsible for managing the business, sharing all profits and losses proportionally, and bearing individual responsibility for all partnership debts and obligations.

In this business structure, limited partners have minimal or no authority to manage the LP. Therefore, their liability is restricted to the extent of their investment in the partnership. To prevent blending personal and partnership assets, limited partners should be careful.

Limited Liability Partnership

In California, only licensed professionals such as accountants, lawyers, and engineers can form a limited liability partnership (LLP). An LLP shields individual partners from being personally liable for corporate debts, partnership obligations, and the negligence of other partners. Unlike other partnerships, there are no general partners in an LLP.

LLPs distribute profits and losses to partners based on their ownership share, and partners are responsible for paying taxes on their individual tax returns. The state’s minimum yearly franchise tax applies to LLCs, but LLPs are exempt from federal business income tax if they meet certain criteria. LLP members have the power to manage the company, unlike limited partners in an LP. LLPs must register with the state and meet certain requirements to operate.

Limited Liability Company

An LLC is a business structure where the owners are generally not responsible for the company’s debts. This type of company gives its members protection from any corporate liabilities and allows them to receive profits and losses directly. Typically, the personal belongings of LLC members cannot be seized due to a lawsuit against the company.

In California, members of corporations have two options: they can manage the business themselves or they can assign management responsibilities to designated managers. Likewise, LLCs in California can be taxed as a single proprietorship, partnership, C corporation, or S corporation. However, all California LLCs are required to pay the state’s minimum annual franchise tax.