How to Choose the Right Ownership Structure for Your California Business

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california state flag e1306784573146 How to Choose the Right Ownership Structure for Your California BusinessDeciding on the proper structure for a new business in California – sole proprietor, partnership, limited liability company (LLC) or corporation – will depend on the type of products or services your business will provide, the ownership structure and the financial situation.  Consider these factors when deciding on a business ownership structure:

Complexity – if you are starting your business without a lot of capital, you may wish to choose a simple structure, like a sole proprietorship or partnership.  More complex corporate structures like corporations and LLCs are more expensive to maintain, and require certain operational formalities that may not be needed if you have a simple business.

Risk – if your business is inherently risky – for example, stock trading or construction – you will probably want a business structure that protects your personal assets from business claims, like a limited liability company (LLC) or corporation.

Taxes – taxes on business profits for partnerships, LLCs and sole proprietorships are all reported on the personal income tax returns of their owners, who must pay income taxes on all net profits.  Corporations pay corporate taxes at special rates on any profit at year-end.

Investment Capital – with a corporate structure, you can sell shares in your business to raise investment capital.

Contact our Orange County business planning law firm for the experience and legal acumen you need to protect your California business.

Help is available to you by contacting your Southern California financial planning experts today.

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