Legal Question in Business Law in California

As to question #1, there are sufficient differences between LLCs and corporations which elect to be taxed as "S" rather than "C" corporations that there are situations where each is clearly a better choice (or perhaps the only choice). For example, an LLC must pay a small but often significant additional tax based on its gross revenues. On the other hand, an LLC may have a member who is a nonresident alien, but an S corporation cannot. LLCs also can deduct losses in excess of their "at risk" investment. And on and on.

I think that often, but not always, an LLC is better for real estate investment and development projects, while an S corp. is preferable for businesses with large and immediate gross receipts but thin profit margins on those receipts, like grocery stores. Might also be true for a bar and restaurant, but please consult with both an attorney and an accountant before making a selection.

Now, as to your potential problems in getting licensed by the California Alcoholic Beverage Control Board. I have some experience there, having started a California bonded winery of my own back in the 1970s as well as representing a restaurant that was trying to get licensed at a new location near a university. I don't remember all the regulations, but my guess is that the ABC Board will look at all the owners of any entity seeking a license, down to around 10% (or maybe 20%) ownership. Therefore, your ineligibility to be a licensee may prevent any entity in which you have a significant portion of ownership from getting licensed. I strongly suggest that you contact the local office of the ABC for advice. They are easy to do business with, at least as far as explaining the rules. They won't, however, bend them.