Limited Liability Company Formation in California
The limited liability company in California is a very popular business entity. Limited liability company formation is a quick and relatively inexpensive process.
California LLC
As with most states, a limited liability company in California is an incredibly flexible business entity. Originated in the 1970s in Wyoming of all places, this business offers the best of a corporation and a partnership without the accompanying downsides.
Similar to a corporation, it provides you with a shield from personal liability should the business fail or be sued for hundreds of thousands or millions of dollars. Unlike a corporation, it does not require the formal documentation that often makes corporate shareholders grumble. While you need to keep some documentation, the paperwork is about the tenth of a corporation.
A key advantage of a partnership is the tax situation. The financials of a partnership are passed through to the individual partners in the form of a K-1 partnership tax form. The partnership does not actually pay taxes itself. If you choose to do so, and most do, you can have the IRS tax your limited liability in California just like a partnership. This gives you significant flexibility and is much easier than a corporation, which must file and pay taxes on its own finances.
The downside with a partnership is it offers no protection from liability. Unlike a corporation, no shield is created between the business activities and your personal assets such as your home and investments. This problem is avoided with the limited liability company because it provides the shield of a corporation, but you get to retain the tax advantage of a partnership.
If you are interested in forming a California LLC, please contact me today at 619-637-6043 to get started.
