Legal Question in Business Law in California

Re: The Umbrella Corporation

You may not need corporations. You are assuming something before getting the proper sophisticated and knowledgeable legal information that will structure your businesses to conform to the types of entities that may be the ones you would use. Having dealt in business matters for over 30 years people come in thinking they need corporations when in fact that might be the worst thing they could do. What you really need is the advice of a business attorney who is school in corporate/business matters who understands businesses, their differences, and within what kind of entities those businesses should be operated. Open up your mind, higher of good attorney and hopefully you'll be more than successful. Don't run the businesses without proper advice and in the same manner you've asked the question or you will preclude a great deal of growth in growth potential by limiting your knowledge.i have been practicing law in this speciality for over 30 years in the san francisco bay area and if you wish to consult with me you can contact me at 925-945-6000.

Re: The Umbrella Corporation

Without more information about the businesses and their owners it is impossible to recommend whether or not to recommend that an S election be made. However, if the subsidiary makes the S election, then the parent must be an S corporation.

You must also decide whether to elect to be a close corporation if it is appropriate for your businesses. Your best bet is to meet with both an attorney and your CPA to discuss the options and choose what fits best.

Re: The Umbrella Corporation

Before you form a multiplicity of corporations, you need to ask yourself why this is necessary or useful for you.

It may well be that insulating various business activities from losses and liabilities of others is a valid objective that can be achieved by separate corporate entities. Separate entities will also allow you to have differing minority participation in ownership, if you wish. Still, it is doubtful that you need a parent-subsidiary type setup. Think of the extra franchise taxes, reporting, record-keeping, etc.

In short, the best setup depends upon your needs, and evaluating them accurately would almost certainly require an in-depth discussion with you about the businesses' state of maturity, risks, relatedness to one another, profitability (for tax reasons), diversity of ownership, and your long-range plans and expectations for them.

I think you are in North Berkeley from your Zip code -- I used to live on Spruce St. -- I now live in Marin and practice all around the Bay Area and northern California.

If you would like a free in-depth analysis of your needs, please contact me directly.

Re: The Umbrella Corporation

Protect you and your employees from what?

There is a lot to consider in establishing the form of ownership for a business. In addition to corporations, there is the LLC (Limited Liability Company). This could offer you all of the protection you need, and give you tax advantages over a "C" Corporation.

I would highly advisy you to sit down with an attorney to detemine what your goals are, and the best way to acheive them.

Re: The Umbrella Corporation

You've got a good question and the answer will depend on getting a lot more information about you and your business(es).

For starters you have to decide what type of entity or entities you want to have, corporation, LLC (limited liability company) or partnership. Check out my article: http://www.legalwarriors.com/llc,_corp,_partner.htm for some basics.

You really need to have a talk with an attorney to discuss your business, how you will be doing business, the areas of potential liability, how the owner(s) will be participating in the business(es), etc.

I would be happy to discuss this matter with you.

J. Caleb Donner

DONNER & DONNER

LEGAL WARRIORS �

325 E. Hillcrest Drive, Suite 242

Thousand Oaks, CA 91360

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