Entity Choice Generally

Will putting my personal residence into an LLC protect it from my creditors?

Sorry, but . . . LOL – no. People do try this, though. The purpose of an LLC, and therefore what it ultimately protects, by law, is the business that’s operating inside it. Unless you have turned your personal residence into a business (not really a personal residence anymore), then it’s not protectable this way. However, one of the main reasons people put their business into an LLC is to protect their personal assets, like their home. Nice try, though.

By | June 15th, 2015|0 Comments

Can any corporation be an S Corporation?

Any corporation can be an S Corporation, unless it doesn’t meet certain criteria. For example, an S Corporation cannot be owned by another corporation, with certain very narrow exceptions. And sometimes you don’t want your corporation to be an S Corporation, for example, when you are seeking VC investments.

By | July 12th, 2015|0 Comments

Why is an S Corporation called an S Corporation?

S = “Small”, and, yes, that’s per the Internal Revenue Code.

By | July 12th, 2015|0 Comments

Is my business big enough to justify the additional overhead of a corporation or LLC?

“Big” is a relative term. Size isn’t always the only, or even a significant, element to determining whether you should entity-ize your business. If you run a small business, but it’s a high-risk business, like, for example, a liquor store, then an LLC or corporation is probably a good idea, regardless of your revenue.

By | July 12th, 2015|0 Comments

What are the advantages of a C Corporation versus a sole proprietorship?

Short question . . . long answer. For the most part, the classic answer, which is also correct, is a C Corporation (or an S Corporation) provides limited liability for its owners and management. An S Corporation could provide additional tax benefits. On a less obvious level, having your business in a corporation may provide it with more “respect” in the business community, and may fend off nuisance suits.

By | July 12th, 2015|0 Comments

I’ve heard that California has limitations on what type of business can be operated through an LLC. Is that true?

True! California has placed a limit on what businesses can be operated out of an LLC. The general rule is no professionals, and though typically the rules point to any professional named in California’s Business and Professions Code, there are some exceptions. One exception is contractors; additionally, some “professions” that don’t require testing, experience, or certain skills may also be exempt.

By | July 12th, 2015|0 Comments

How long does it take to form a corporation or LLC, in California? What about other states?

California varies – sometimes it’s a matter of days, but sometimes, especially at the beginning of the year, it can take a couple weeks. You can always submit your documents on a rush (24 hours or even same day) basis. Other states? It really depends. Delaware’s quick.

By | July 12th, 2015|0 Comments

Will putting my business into a corporation or LLC help me save taxes?

It can, but not always. It’s not often the case that a business will put their business into an entity solely to save on taxes, although S Corporations for small businesses are frequently and legitimately used for that purpose.

By | July 12th, 2015|0 Comments

Is there a lot of paperwork? Do I have to do it all?

There’s some paperwork . . . corporations tend to have more paperwork, which is why some people might immediately gravitate to LLCs, or nothing at all. And, yes, if you want to maintain your status as a corporation, and maintain your limited liability, don’t cut corners on the paperwork. It’s important.

By | July 12th, 2015|0 Comments

I just put my business into a corporation/LLC. Do I have to file paperwork for that?

If you have an existing business, then its assets and contracts should get transferred to your corporation. This can look like an assignment, or a bill of sale. There are tax considerations regarding contribution of the assets of your existing business. You may also need to notify third parties, such as vendors and landlords. A stitch in time, as they say. Paperwork is king.

By | June 15th, 2015|0 Comments