Formation and Operation of Companies
In today’s business environment, there are a number of options when thinking of starting and operating a business, and one must decide on the type of organization to form. Available types of business entities include corporations, limited liability companies, general partnerships and limited partnerships. Corporations, limited liability companies and limited partnerships have the advantage of providing limited liability protection for the owners of the business (for limited partnerships, only the limited partners have such protection). A business may also be operated as a sole proprietorship, but that does not provide any limited liability protection for the owner of the business. Limited liability protection can shield the owners from a company’s debts and obligations. In other words, it can prevent people with claims against a company from forcing payment out of the personal assets of the company’s owners. When forming and operating a business, one must also consider the desired tax treatment for the entity. S corporations, limited liability companies and partnerships can provide pass through tax treatment and avoid the double taxation of income associated with C corporations. Tax ramifications should also be considered in connection with purchasing or selling either an ownership interest in a company or the assets of a company.
The operation of a business typically involves a wide variety of legal issues and a business will often face matters related to general corporate laws (such as establishing or changing the ownership and management of the business), securities laws (such as requirements for offering and selling ownership interests in the business), real estate laws (such as leasing or buying real property), tax laws (such as any taxes to be paid on the profits of the business or upon the sale of the business), intellectual property laws (including determining how best to develop and obtain protection for any intellectual property belonging to the business) and employment laws (including a company’s ability to terminate an employee and the rights of an employee before and after termination). Matt Sumrow has over fifteen years of experience advising numerous business owners on a broad range of issues affecting their businesses. Contact Orange County business attorney Matt Sumrow for further information.