Things to Consider Before Deciding on a Legal Structure for a Small Business
When starting a new business in San Diego, one of the first, and most important, things you will need to do is decide on the legal structure that your company should take on. After all, this decision can potentially have significant legal and financial implications for the company and its owners. When making your choice, you would be wise to consider the following factors:
Taxes
Just as with most things in life, money will play a huge role in choosing your company’s legal structure. If, for instance, you wish to make every possible effort to minimize your tax obligations at the end of the year, you may wish to consider forming a pass-through organization – such as an S Corporation. If, however, you would prefer to keep things relatively simple at tax time and don’t mind the possibility of paying a little extra tax, an LLC or partnership structure may work better. Of course, it is always wise to consult with your accountant or business attorney before making any major decisions in this regard.
Liability
For most new business owners, potential liability plays a huge role in determining their preferred legal structure. If your new company is planning to operate in an industry or business environment that is known to be pretty litigious, you may wish to opt for a legal structure that gives your personal assets some cover – such as an LLC. On the other hand, if you are not concerned with liability issues, a simpler structure such as a partnership or sole proprietorship may be more up your alley. An experienced business lawyer will be able to give you a full breakdown of your potential liabilities and how best to protect yourself against them.
Ongoing Administrative Work
When deciding which legal structure is best for your business, you will also need to pay attention to the amount of administrative work that is necessary to stay in good standing with the necessary regulatory bodies (including the secretary of state and the IRS). If you choose a non-corporate structure, such as a sole proprietorship or partnership, you shouldn’t need to worry about completing too much paperwork to stay compliant. However, if you opt for a more intricate legal structure (like an S Corporation), your paperwork load is likely to be much heavier. In either case, a skilled business attorney will be able to help you make sure that all of your documentation is completed correctly and filed on time.
Semanchik Law Group
Semanchik Law Group is proud to help the people of San Diego with all of their company’s legal needs. Whether you would like to discuss your structural options or learn more about your potential liabilities, you can count on us. Once you have decided on the right structure for you, we can even prepare and file all of the paperwork on your behalf. To set up an initial consultation, simply give us a call at (619) 535-1811. We can’t wait to help you get started on your business journey.
