What is the best legal structure for my business?

The best legal structure for your business will depend on a variety of factors specific to your company. In California, the most common business structure is a general partnership, limited liability company (LLC), or corporation. A general partnership is a simple business structure that requires two or more individuals to form the business. General partnerships do not require paperwork to be filed with the state and each partner is both personally and financially responsible for the company’s obligations. This type of business is best for businesses with a small number of owners, who can trust each other and are comfortable with shared responsibility. A limited liability company (LLC) is a type of business that shields the personal assets of its members from debts and lawsuits of the business. LLCs are relatively easy to form, but they usually require paperwork such as Articles of Organization to be filed with the California Secretary of State. The members of an LLC have limited personal liability and they can select the status of their LLC to be taxed as a sole proprietorship, partnership or corporation. A corporation is a business structure where the owners, or shareholders, have limited personal liability for the company’s obligations. A corporation can be formed by filing Articles of Incorporation with the California Secretary of State and it is generally the most complex and expensive structure of all. The corporation can be taxed separately from its owners, but it is often the best option for businesses that want to protect the personal assets of its owners, or businesses that intend to raise much capital. When choosing the best legal structure for your business, consider the size of the business, the number of owners, the level of personal liability you desire, the taxation of the business and the amount of capital you plan on raising. You should consult a business attorney to ensure you make an informed decision about the best legal structure for your company.

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What is the best legal structure for my business?

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