Business Law Attorney

Nicole B. Reimer Chico Business Law Attorney
Business Law Attorney Nicole Reimer

Call Today 530-898-1111

Business Law Attorney Services

The formation of the correct type of business entity can have several benefits to any business owner. Such benefits may include tax benefits, as well as legal and debt liability protection. Nicole B. Reimer is a knowledgeable business law attorney in the North State who is ready to assist with the formation of your business entity. Call (530) 898-1111 for a free consultation today! Chico Business Law Attorney Nicole B. Reimer will discuss the benefits and downfalls of each type of business entity and will help make the decision for what business entity you should form for your individual business needs. The available business entities include C corporations, S corporations, professional corporations, limited liability companies (LLCs), limited partnerships (LPs), limited liability partnerships (LLPs), general partnerships (GPs), and sole proprietorships.

C Corporations

A C corporation is a business entity considered separate and distinct from its owners. A corporation’s assets cannot be comingled with the business owners’ assets and specific formalities must be recognized in order to retain the corporation’s protections. A corporation’s owners are not typically liable for the corporation’s debts and legal liabilities. C corporations receive “double taxation” tax treatment. Double taxation means that the net income of the corporation is taxed at the corporate level, and the corporate profits distributed to the shareholders as dividends are taxed to the shareholders as income, even though taxes on the income was already paid at the corporate level.

S Corporations

A S corporation is a corporation that has made a subchapter S election with the IRS, allowing for “pass-through” tax treatment, meaning that the corporate profits or losses are taxed to the shareholders and not taxed at the corporate level. There are specific qualifications for making a subchapter S election, such as that there can only be 100 or fewer shareholders, the corporation must be a domestic (California) corporation, and there can only be one class of stock.

Professional Corporations

A professional corporation is a corporation that is formed with the same general requirements of a C corporation, but is formed for the purpose of rendering professional services in corporate form. A professional corporation can make a subchapter S election with the IRS. Businesses that may incorporate as a professional corporation include businesses practicing accounting, medicine, dental work, architecture, engineering, and the law among others. The shareholders of a professional corporation must be licensed to practice the profession being practiced by the professional corporation. Shareholders of a professional corporation are protected with limited personal liability for the nonprofessional service obligations of the professional corporation, for example, rent, loans, contracts, etc.

Limited Liability Companies (LLCs)

A limited liability company (LLC) is a business entity that combines the limited liability of a corporation with the “pass-through” tax treatment of a partnership. This flexibility allows an LLC’s owners (members) to agree on the how to organize the company’s management, rights of the members, allocation and distribution of profits and losses, and transferability of membership through the adoption of an operating agreement. Not all businesses qualify to become a limited liability company, including most businesses that qualify as a professional corporation.

Limited Partnerships (LPs)

A limited partnership (LP) is a partnership with at least one general partner and one limited partner. A general partner makes business decisions, controls the partnership, and has unlimited liability for business decisions and obligations. A limited partner does not control the partnership or make business decisions, and therefore is not personally bound or liable for the business decisions and obligations. A limited partnership cannot be formed for the purpose of practicing the banking, issuing policies and assuming risks of insurance, or trust company. A limited partnership is not subject to state or federal income taxes and is treated the same as a general partnership for taxation purposes.

Limited Liability Partnerships (LLPs)

A limited liability partnership (LLP) is a partnership where all members have limited personal liability for business decisions and obligations. A limited liability partnership can only be formed for the purpose of practicing the profession of public accountancy, architecture, law, engineering, or land surveying. The IRS will likely consider a California LLP as a general partnership for state and federal income tax purposes.

General Partnerships (GPs)

A general partnership is two of more persons carrying on as co-owners a business for profit. A general partnership can often be formed by individuals without intending to form a general partnership. When forming a general partnership, a partnership agreement is often desirable and can control the division of profits and losses, the ability of partners to engage in other business activities, and the terms and conditions of the termination of the partnership or withdrawal of a partner. A California general partnership is generally not subject to federal or state income or franchise taxes.

Sole Proprietorships

A sole proprietorship is one individual engaging in business. The owner of a sole proprietorship makes all the business decisions for the entity. A sole proprietor is personally liable for all of the business’s debt and legal liability. This is the most basic business entity to form, but offers the least protections to the business owner. Some of the requirements for forming a sole proprietorship may include obtaining a fictitious business name and a business license.

In addition to the initial formation requirements, many of the business entities listed above have additional requirements to maintain their entity status. These requirements can include annual meetings and annual filings with the California Secretary Of State. Nicole B. Reimer will ensure your business is formed and operating correctly! Call Chico Business Law Attorney Nicole Reimer (530) 898-1111 for a free consultation today. Appointments are available after hours by appointment only, and can be held in person at her office, over the phone, or she can come to you if necessary.

*Disclaimer: Nicole B. Reimer is a Business Law Attorney and not a certified public accountant (CPA) or tax professional. Prior to making any taxation decisions, it is always recommended and advised to consult with your personal CPA or tax professional.

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