Business Formation Attorneys Santa Cruz County
At the law firm of Dawson, Passafuime, Bowden & Martinez, our Business Law attorneys can help individuals and businesses in Santa Cruz County with forming a new business or changing from one business form to another.
Businesses can exist in many forms. They can exist in a minimal form such as a Sole Proprietorship or in a more complex form such as a Corporation or S Corporation. Another entity form is a Partnership such as a General Partnerships or Limited Partnerships (LPs) and in an estate planning context, a family partnership. A popular hybrid of or Corporations and Partnerships is the Limited Liability Company or LLC. Many homeowners’ associations, charities, or activist groups form as Nonprofits. Each entity has different advantages and disadvantages and the appropriate entity form can vary based on the type of business and how the business is run. Often an important consideration in choosing a particular entity for a business is tax treatment of that entity.
A Sole Proprietorship is a form of business in which an individual, who is the sole owner and decision-maker, carries on a business for-profit. The Sole Proprietorship is the simplest and least expensive form of business organization to form.
A General Partnership is an association of two or more persons, as co-owners, carrying on a business for profit. Although not as simple a form of business organization as the Sole Proprietorship, a General Partnership is easier to organize than a Limited Partnership (LP) or a corporation and can provide a relatively simple arrangement regarding management and control, capital contributions, and the sharing of profits and losses.
A Limited Partnership (LP) is a partnership formed by two or more persons that has one or more general partners and one or more limited partners. A California Limited Partnership is a hybrid form of business organization having some attributes of a General Partnership and some attributes of a corporation. A Limited Partners may avoid subjecting personal assets outside of their investment in the partnership to the claims of the partnership’s creditors.
Family Limited Partnership
A Family Limited Partnership or Family Partnership is a type of Limited Partnership that can be used in the Estate Planning for its transfer tax and asset protection benefits. It is often used in combination with other methods of Estate Planning such as a will or trust.
Limited Liability Company
A Limited Liability Company (LLC) is a business entity that is essentially a hybrid of a corporation and partnership. An LLC is an entity having one or more members that is organized under the California’ Limited Liability Company law. In 2014 the California Revised Uniform Limited Liability Company Act (RULLCA) displaced the earlier Beverly-Killea Limited Liability Company Act. A California LLC can have the tax advantages of a partnership while avoiding the double taxation inherent in the use of a general corporation, without the restrictions imposed on S Corporations, close corporations, and limited partnerships. The formation and operation of an LLC is relatively simple. However, like a corporation or limited partnership, more formality in formation and operation is required than in either a general partnership or sole proprietorship.
The Corporation is the dominant form of business ownership today. California general business Corporations are governed by the General Corporation law. A Corporation is a distinct legal entity, existing apart and recognized separately from its owners or shareholders, and has all the powers of a natural person, including the rights to own property, sue in its corporate name, and make contracts. The rights and obligations of the corporation, its directors, and its shareholders are clearly delineated by law but may be altered, within statutory limits, by agreement.
An S Corporation is a regular business corporation that has made an election to be taxed under Subchapter S of the Internal Revenue Code and, therefore, is treated as a partnership for most tax purposes. The Internal Revenue Code distinguishes between corporations that have made this election from those that have not, by referring to the former as “S” Corporations and the latter as “C” Corporations. An S Corporation is in essences a tax vehicle rather than a distinct business entity.
A Nonprofit Corporation is a business form subject to the general restriction that no profits may be distributed to members. Businesses that are formed for specified Nonprofit purposes may avoid state and federal taxation. In addition, these businesses may qualify as exempt organizations. If a business is exempt, contributions to that entity may be deductible as charitable donations. This corporate form is typically used by Nonprofit companies to protect principals from personal liability.
The Business lawyers at Dawson, Passafuime, Bowden & Martinez have experience drafting articles of incorporation, bylaws, operating agreements, partnership agreements, or any amendments to those agreements as well as electing Subchapter S status or filing for tax-exempt status. Our Business attorneys can help you start a new business entity, change from one business entity to another, or sell or dissolve an existing business.