Phone : (916) 395-2172

There are a number of ways a business can be organized. These are:

Sole Proprietor – One owner. No formal organization. You personally own your business and everything in it (other than what you rent or lease). You may do business under your own name, or you may have a “fictitious business name”. You may have employees or hire contractors.

Partnership – Multiple owners. No formal organization, although you would normally have a “partnership agreement” where you would specify what share of the business each owner would have, specific responsibilities of each partner, and how the profits will be distributed. Partnerships are not normally registered with the state. But there are special forms of partnerships, such as the “limited partnership”, where the owners are divided into two categories: “general partners”, who run the firm, and “limited partners” who are investors only. Limited partnerships must be registered with the state.

Corporations – One or multiple owners. Corporations are formally organized, and must be registered with the state. The main purpose of a corporation is to protect the personal assets of the owners from claims against the business. Any claim against the business must satisfied from the assets of the business only. The claim cannot reach the owner’s personal property or assets. Another benefit of the corporate form is that you are definitely considered to be contractor of the organization that hired you, rather than an employee. The main players in a corporation are the shareholders (owners), who then elect the directors, who in turn appoint the officers (president, secretary, and treasurer) who run the business on a day-to-day basis.. In a one person corporation, one person fills all of these roles.

Limited Liability Company (LLC) – One or multiple owners. Like corporations, LLCs are formally organized, and must be registered with the state. The advantages and reasons for having an LLC are much the same as for a corporation. In general, LLCs are more flexible regarding who manages them and how profits are distributed. But under California law, there are certain lines of business that are not allowed to organize as a LLC, and must organize as a corporation.

These are the main forms of business organizations. There are other specialized forms that may be required or appropriate depending on the type of business and who the owners are.

No matter how your business is organized, there are other requirements such as a business license from the local city or county, licensing by certain state boards depending on the nature of the business. Permits may be needed depending on what activities are carried out by the firm.

Tax returns also are different for each type of organization.

If you have more than one owner, you may wish to have a “buy-sell” agreement that spells out what happens if a person leaves the business for any number of different reasons. This ties in with including your business in your estate plan. After all, your business is something you own, and there may be certain restrictions on who you can leave it to. For example, if you own a law practice, you cannot leave it to someone who is not a licensed attorney, and you may wish to provide instructions on shutting it down or selling it to an attorney in your Trust or Will.

Another major area of business law is Contracts. We can review contracts others are asking you to sign, and can assist you in forming contracts you want to present to others. Remember that you should not sign a contract until you understand every part of it, and agree to all the terms. Once you sign, you are committed to the terms of the contract.

Businesses, no matter how they are organized, can be bought or sold. We can assist you in creating and executing the purchase / sale contract.