Practice Areas

The following is a brief list of various California business structures available to meet your needs. We will discuss the following options available for your business:

• C Corporation gets its “C” from the Internal Revenue Code: 26 USC Subtitle A, CHAPTER 1, Subchapter. A. C corp, as they are commonly called, grants its shareholders limited liability in an entity that is its own taxpayer, has its own TIN, and is a legal person. It has a noteworthy flaw, it suffers from double taxation. Five of the biggest advantages of a c corporation are 1. An unlimited number of shareholders, 2. No restrictions on ownership 3. No restrictions on classes, 4. Lower maximum tax rate, and 5. More options for raising capital.
  
  
• S Corporation This type of entity is a legal person, with its own taxpayer identification number (TIN) issued by the Internal Revenue Service. In California it pays an annual fee of $800.00. The s corporation does not pay income tax at the entity level, but it must file an annual information only tax return on Form 1120S. The S-corporation is a “pass-through entity,” which means the shareholders are the ones who pay tax on the corporation’s profits or take their share of any losses, thus a single level of taxation. S-corporations may also be entitled to a 20% qualified Income tax deduction, under the TAX CUTS and JOBS ACT of 2017. (Speak with your tax professional to see if your S Corporation before taking this 20% deduction before taking it.) S-corporation challenges include a limitation on the number of shareholders and on who may be a shareholder. Discuss these features with us to see if the s-corporation is the right choice for you.
  
  
• Professional Corporation This is a type of corporation that may only be owned by a licensed individual in a Profession such as Law, Medicine and Architecture, all shareholders must be licensed in the same profession. Unlike a c-corporation the professional corporation does not limit liability of the professional to clients for professional malpractice. In California, professional corporations are governed by the Professional Corporation Act (Ca. Corp. Code Sections 13400-13410). Officers and directors of professional corporations generally must be licensed to perform the professional activity that the corporation is engaged in. Professional corporations must be limited to one profession. The corporate name must be distinguishable from the name of any other business entity on file with the California Secretary of State. (See Cal. Corp. Code § 13409.)
  
  
• Non-Profit and Public Benefit Corporations The attorney general’s office tells us that a large portion of the nonprofit corporations in California are organized as public benefit corporations. They are organized for public or charitable purposes, and may not be organized for the private gain of any person. A public benefit corporation cannot distribute profits, gains, or dividends to any person. To make certain that these prohibited acts do not occur these corporations are regulated by the attorney general.
  
  
• Limited Liability Companies (“LLC”) A limited liability company is the United States specific form of the LTD. It is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. LLC’s can be either member-managed and manager-managed. The managers are usually also members, but an LLC can hire a non-member as a manager.
  
  
• Limited Partnership is a business entity that consists of one or more general partners, whose responsibilities include daily management of the company, and one or more limited partners, who do not participate in management. The general partner does not have limited liability. A general partner may be an individual or an entity, such as a corporation.
  
  
• General Partnership, A general partnership is a business arrangement by which two or more individuals agree to share in all assets, profits, and financial and legal liabilities of a jointly owned business. In a general partnership, partners agree to unlimited liability, meaning liabilities are not capped and can be paid through the seizure of any partner's assets. Furthermore, any partner may be sued for the business's debts.
  
  
• Registered Limited Liability Partnerships (RLLPs) are like Limited Liability Companies (LLCs) but are formed for licensed professionals. In fact, in California, only attorneys, accountants, and architects may form an RLLP. California allows professionals to form registered limited liability partnerships (RLLPs) or professional corporations (PCs), professionals are not permitted to form LLCs or PLLCs.