With the current competitive economic climate, it is pertinent that all businesses are operating under the best legal structure for their purposes. Forming a limited liability company may be the best idea for your business. After all, a limited liability company, or LLC, is a specific business entity that blends the best parts of both partnership and corporate structures.
There are actually several reasons to select an LLC as your business’s structure. However, it should be noted that the option is not always the best in every situation. As your trusted business lawyer in Los Angeles, we will discuss when it is best to form an LLC:
Benefits
There are several benefits and advantages to operating as a limited liability company in California.For one thing, with the help of a professional, they are relatively easy to set up and get the ball rolling.
When you structure your business as a California LLC, you must first choose a name and be sure that no other business in the state is using it. Then, you will fill out a form “LLC-1,” and you can submit it online with the California Secretary of State. Then, each year you will need to pay compliance costs and LLC taxes.
LLCs are also very flexible when it comes to structuring, so you are able to split voting rights, profits, and financial obligations in any way the members prefer.And, of course, LLCs are best known for their protection against the personal liability of their members, similar to corporations. Subject to certain exceptions, members will not have to worry about personal liability for the company’s liabilities or debts.
Downsides
It is not always best for all businesses to be formed as LLCs, however. There certainly are advantages, but the limitations and other restrictions may outweigh them for some companies.
For example, active members of an LLC may not be deemed employees are receive W-2’s; instead, they will need to receive “guaranteed payments” through from the LLC, which may be subject to self-employment taxes.
In California, not all businesses can operate as LLCs. Most businesses requiring licensure, for example, cannot structure themselves as an LLC.For professionals such as physicians, attorneys, and accountants, a limited liability partnership is a better alternative business option.
Have Questions About Forming a Legal Business Structure?Contact an Experienced Business Lawyer in Los Angeles Today
Hakim Law Group stands ready to help small business owners and entrepreneurs. Our team of skilled and highly reputable business attorneys have worked in top tier international law firms and served as general counsel to major companies. This high level of diverse legal and business experience is paramount to our boutique approach – which produces more efficient, responsive and, ultimately, more effective results. For further information or to schedule an appointment with a leading business attorney in Los Angeles please contact HLG at 310.993.2203 or visit www.HakimLawGroup.com to learn more.
