As exciting as starting your own business can be, it can also be daunting. At Fox, Shjeflo & Babu LLP, we provide clients with sound advice on all aspects of business law and entity formation.
We are here to help you navigate the various legal pitfalls so you can create a business that thrives. Since 1978, our team of small business attorneys has diligently supported entrepreneurs in San Francisco and throughout Northern California. Let us do the same for you.
Types of business entities
Prior to starting any business, you should consult a lawyer who is experienced in business law. An experienced San Francisco lawyer can fully evaluate your needs and determine which business model is most appropriate for you:
- Corporation. Most larger companies choose the corporation model. While shareholders in a corporation may lose their investment, they enjoy limited liability and their personal assets are safe.
- Limited liability company (LLC). In California, limited liability companies combine aspects of partnerships and corporations. The main benefit of an LLC is that the liability of the owners is limited to their financial investment. Similar to a general partnership, LLC owners have a right to participate in the management of the business.
- General partnership. General partnerships are ideal for small- or medium-sized companies that involve at least two individuals. In a general partnership, each partner is liable for the debts and responsibilities of the other partner.
- Limited partnership. Limited partnerships have two different types of partners: general partners and limited partners. In this arrangement, limited partners are not responsible for the management of the partnership and are only liable for their own investment.
- Limited liability partnership. A limited liability partnership gives limited liability to all partners. Also, in an LLP, every partner is responsible for handling the management of the company. Unlike other states, California limits the LLP form of ownership to individuals who are licensed to practice in public accountancy, law, or architecture.
- Sole proprietorship. Many small business owners choose the sole proprietorship business model, but it is important to note that with this entity there is no distinction between your business and you as an owner. Consequently, you are personally responsible for the debts and responsibilities of the company.
- Flexible purpose corporation (FPC). This model combines the for-profit philosophy of a traditional corporation with the mission of a charitable organization. An FPC chooses a “special purpose,” which allows the company to pursue both economic and social objectives. Owners and officers are not responsible if stockholders claim that the company’s social and environmental policies reduce the value of their stock.
- Benefit corporation. The law requires a benefit corporation to include non-financial interests, such as social and environmental issues, as part of their legal charter. Similar to an FPC, owners and officers are not responsible if stockholders claim that the company’s social and environmental policies reduce the value of their stock.
If you need reliable advice on starting a business, contact Fox, Shjeflo & Babu LLP. The experienced lawyers at our firm are equipped to assist clients with all aspects of business law, from formation to business transactions to contracts.