San Diego Corporate Formation: What factors should be considered in choosing the type of business form for my business?

san diego corporate formationWhen selecting the appropriate business form for your company, there are a lot of different factors to consider.  Different business forms include sole proprietorship, partnership, Limited Liability Partnership, Limited Liability Company, and an S or C corporation.  Each has its own advantages and disadvantages and it is advisable to speak with a qualified and experienced legal professional to determine the best option for your new business.

Sepahi Law Group APC can advise you on the best business structure and help you to complete all necessary requirements to begin operations. Call today to speak with a member of our legal team to learn more.

Factors to Consider in Choosing a Business Form

When selecting the right form for your business, the factors to consider include:

  • Start-up requirements. Starting a sole proprietorship is the simplest way to begin doing business because you only need to obtain required business licenses before you can start operating. You do not need to take any steps to actually form a sole proprietorship. Partnerships, LLPs and LLCs are more complicated than sole proprietorships to start, but require less paperwork and initial expense than S or C corporations.
  • Ongoing paperwork requirements. Again, sole proprietorships are the simplest option and there are no ongoing operating requirements. Corporations are the most complicated, with annual filings required.
  • Taxes. The form your business takes has a significant impact on how taxes are paid and how much is paid. When you form a C-corporation, for example, there is the risk of double taxation as the money is taxed when the company makes a profit and when dividends and distributions are paid out to owners.  When you have an S-corporation or a partnership, on the other hand, money passes through to the individual owners who declare profits and losses on their personal tax returns.
  • Liability. Liability issues are the biggest downside to sole proprietorships. You and your business are the same legal entity and if your business is sued or goes bankrupt, you are personally sued or go bankrupt. Corporations provide the broadest protection as long as all corporate formalities are followed, since the corporation is a separate legal “person.”

San Diego Corporate Formation Legal Advice and Guidance

These are a few of the key things to think about when choosing a business form.  Sepahi Law Group APC can assist you in understanding your options and the pros and cons of each choice so you can make an informed decision on what is best for your company both in the short-term and over the life of the business.


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