Legal Question in Business Law in California

Re: Benefits of forming an LLC

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Re: Benefits of forming an LLC

An LLC will provide you with some protection of your personal assets if anyone sues the LLC, while a partnership does not do. They are, however, taxed like a partnership. They are also simpler to run than a corporation.

Re: Benefits of forming an LLC

Although I am in San Diego, I should be able to offer some assistance. In most cases, my fees are nearly identical for forming and LLC or a corporation.

LLCs and corporations are equally good at personal asset protection, but it usually comes down to a tax treatment issue. LLCs in California pay taxes based on gross revenue that corporations do not pay. There are some ways to reduce self employment taxes with a corporation that I understand are not available to LLCs, but I prefer to work with the client's CPA to help advise on choosing a corporation or LLC.

By the way, some businesses cannot legally do business as a corporation. For example, licensed professionals suchs as brokers, contractors, doctors and lawyers cannot operate as an LLC.

Finally, some practioners believe it is simpler to operate as an LLC because there are less formalites. Corporations have annual shareholder meetigns, etc.. I happen to disagree and believe that a small corporation can run almost as easily as an LLC and have more tax benefits than an LLC.

Re: Benefits of forming an LLC

WEll, generally LLC's are better for raising money amongst a small group in the beginning, slightly higher taxes though, and you would need a good CPA. On the other hand, if it is just the two of you, you might prefer a S corp or perhaps a C corp. Depends on the facts.