Legal Question in Business Law in California

Generally, I would always advise clients to establish some form of limited liability protection when they open a business. Since "partnerships" do not provide for limited liability protection I would not recommend this type of business form unless there is very specific reasons requiring it.

However, limited liability protection exist in not only LLC but also Corporation. The decision whether to form the business as an LLC or as a Corp. depends on the type of business (web startup? restaurant? retail? person services? etc.) and your goals (family owned, to sell the business, go public, etc.).

Feel free to contact me or an attorney in your area to further discuss your business plans and to assist you in forming the business.

Kind regards,

Jim

I disagree with Mr. Betinol. Although I often advise clients to form a corporation or LLC, neither is universally desirable. Both have record keeping, accounting and tax requirements that can be burdensome for a small business. Each also has its own rules about how investments, ownership, and control interrelate that can be desirable or undesirable in any given business model. For a small, low-liability-risk business with limited administrative time, resources or skills, a partnership with good insurance may well be all that is needed and may provide needed flexibility in management investment and control for a new business. There is no reason a partnership cannot incorporate or become an LLC at a later date if it grows to a point and becomes complex enough that a more formal form is required. The bottom line is that you need to consult with an attorney who can familiarize themselves with your business model, and preferably with a good tax accountant as well, go over your business plan and get their advice on the best way to form your business entity.

It depends on your situation. If one form was inherently better than the other, that's the form everyone would use.

Ask four attorneys, get four different answers. I personally steer clients away from business partnerships because of the personal liability and other internal management issues, and the fact that many legally-recognizable general partnerships are formed by accident or, at least, with insufficient preparation and documentation. LLCs and corporations that obtain IRS "S" status are rather similar, and the differences that matter the most generally point to using a corporation for businesses with high revenues and an LLC for businesses where there will be heavy up-front investment, but you'd be wise to have an attorney and an accountant counsel you based on your business plan before choosing.