On behalf of Thaler Law posted in business formation on Sunday, April 2, 2019.

Starting a business is an exciting venture for a California entrepreneur, but there is much more involved with this process than just finding a storefront or launching a website. The business formation process involves many complex and important choices, including deciding on the type of structure a company will have. Before a founder makes any important decision that can affect the finances of his or her business, it is smart to know all of the options available.

There are two main types of business structures available, including limited liability companies and corporations. The choice a business owner makes will affect taxes, personal liability for business debts and more. Limited liabilities companies, or LLCs, are popular choices because this type of entity can protect an owner’s personal assets if the company ever gets into financial trouble and owes a significant amount of debt.

The majority of small businesses are LLCs because owners enjoy a certain amount of flexibility regarding how the company will operate. However, a corporation is a smart choice for some specific types of companies. Stockholders technically own corporations, and directors are in charge of how the company operates on a daily basis. Proper formation is a significant step toward ensuring a strong future for a California business.

When making decisions regarding business formation, it is smart to consider the long-term implications of any choice made. This can help an owner or founder avoid complex legal and financial issues down the road. There are benefits in speaking with a lawyer about the legal issues at hand and the specific advantages or drawbacks of the business structure types.