Choosing a right business legal form is one of the most important decisions to make as a business owner. In California, there are five common business forms available: sole proprietorships, partnerships, corporations, S corporations and Limited Liability Company (LLC). Partnerships can be either general partnerships or limited partnerships. Limited Liability Company is relatively new and draws advantages from corporations and partnerships. Single business owner may form a Limited Liability Company since January 2000 in California.
People who want to start a new business should consider these important factors to decide which business form is the right one for them.
Legal protection (Legal liability) – Am I willing to take a risk of my personal assets with a new business?
Tax implications – How can I minimize income tax?
Start-up costs and maintenance – How much do I want to pay? How much administration will it need? How much will it cost every year to keep the business?