Legal Question in Business Law in California

Re: Starting a business with a friend

You want a Limited Liability Company or LLC. It protects you like a corporation and you can run it like a partnership.

Ken Koury

Kenneth P. Koury, Esq.

5807 Topanga Cyn Blvd., Suite G-201

Re: Starting a business with a friend

You want to keep it simple, cheap and safe. This reminds me of the old story about the contractor who is being hired to remodel the kitchen. He says, "Out of cheap, quick and good, you can have any two."

Mr. Koury suggests the Limited Liability Corporation. While safe, and perhaps cheaper in the long run if your business is very successful, I hardly think it is simple or will keep your costs down in the short turn.

If you want to keep it simple and cheap, then general partnership will keep your taxes simpler and lower. You really should have a written partnership agreement, but you *can* just have an oral partnership agreement.

If you want it simple and safe, then you can go with a corporation of some kind. There are several different types of corporations and I will not go into all the different flavors. I could put you into an "S" corporation (which will keep your taxes lower) for about $1,000.

I am not sure that you can choose both cheap and safe. Protecting your assets will require that you hire someone to do it right.

I think you are wise to consider the type of business you want your project to be. Asking an expert is also a good idea, but this is hardly the forum to get the answer you need. Too many individual factors need to be considered. Business planning is too important for glib answers.

Feel free to give me a call or send email if you want to discuss your business idea in more depth.

Timothy J. Walton

Internet Attorney

1896 San Ramon Avenue

Re: Starting a business with a friend

Both Mr. Koury and Mr. Walton have valid comments, however

a LLC is taxed just as a C corporation or any other corporation.

That means in California a monimum of $750.00 tax per year. The primary

difference between a C corp. and a LLC is that the LLC allows for

money to flow directly to the partners without an additional tax. The C corp.

is taxed on any income and then you are taxed as an individual when you

withdraw any money from the corp. In other words, Legally speeking

the C corp and the LLC both protect your assets. Tax wise, the C corp

is taxed as a corporation, the LLC is look at more like a partnership.

If you have any further questions, please feel free

to e-mail me or contact me at (805) 260-1149.

Robert E. Drescher

Robert E. Drescher

Law Offices of Robert E. Drescher

23958 Avenida Crescenta