Law Offices of
Thomas Gross

SILICON VALLEY BUSINESS LAW

  San Jose  Silicon Valley
Corporate, Business, Contracts, M&A, Securities (408) 377-4178      info@svbizlaw.com

 

Incorporation & Formation of your California Business: 

 

Corporations, Limited Liability Companies (LLCs) & Partnerships

What legal structure is best for your new business?  It depends.  There are many factors that must be considered before choosing the right type of entity.  That is why seeking the advice of an experienced business attorney is important.  Some of the important factors include the following:  Is it a single person or family business?  Does the company need to attract outside investors?  Are there employees who require equity participation in the form of stock or options?    Does the business desire to reinvest its profits or does it want to distribute them?   Will there be passive investors?  Will there be any foreign investors?  Are special profit or loss allocations desired? Does the business involve managing real estate?

The majority of new businesses seeking liability protection organize as corporations, but limited liability companies (LLCs) are gaining favor.  Real estate companies and investment funds are more likely to form as LLCs or limited partnerships, than as corporations.  Some other companies elect to become LLCs because the corporate governance is easier.   The downside to LLCs are that they are a rather new concept (sort of a hybrid between partnerships and corporations). Because of their relative newness sometimes the legal uncertainties involving them can be a serious disadvantage.  We can help you decide the most appropriate legal structure for your business.

Do I need an attorney to form and set up my new business?  No.  However, hiring an attorney to set up your business is money well spent and a prudent choice for several reasons.  

Cost Effective: Attorney fees for organizing a business are usually not that expensive and are tax deductible.  In fact, the advice of an experienced attorney may actually end up saving the company much more money in the long run.  Many companies get suspended for failing to observe all the necessary requirements to keep the company in good standing.  This could jeopardize any liability protection that the entity afforded to its owners.  Also, a suspended company cannot properly authorize business transactions and contracts. The other parties may be able to void the contract and walk away at their option.  An experienced business attorney can help you get set up properly and advise you on how to maintain your company in good standing.

Time and Effort Savings: Having an experienced attorney prepare the formation documents and initial steps can save you lots of valuable time and effort..   Forming and setting up a company is much more than filing a single document with the Secretary of State.  Some of the steps that are required or should be taken to set up a corporation include  the following: drafting and filing articles of incorporation, drafting bylaws, drafting minutes and resolutions relating to initial corporate activities (for the incorporator, the shareholders and the directors), issuing shares, preparing and filing securities notices, obtaining a federal tax ID and submission of tax elections, preparing and filing an  officers and directors statement with the Department of Corporations.  

Invaluable Advice:  Many critical decisions are made at the time of formation and an attorney's advice is invaluable.  An attorney can  help advise you on many issues relating to formation--the type of entity, whether to file in California or out of state, whether to make an "S" election for a corporation, initial contributions and capitalization, valuation of shares, size of board, how to choose and elect directors, the role of officers, employee compliance and compensation issues, compensation plans, stock and option plans, IP protection, company contracts etc.  These are very important decisions and ones that should be made in consultation with an experienced business attorney.  

An Attorney Relationship also provides: 

(a) an important resource: Business Attorneys are used to dealing with presidents and CEOs of a company.  They also routinely deal with other attorneys, accountants, bankers, appraisers, business brokers and consultants.  Because of this, they can often provide a useful source of referrals and contacts with other professionals and businesses.

(b) a source for ongoing legal advice:    Another important reason for seeking the advice of an attorney when initially forming your business entity is to establish an attorney relationship.  An attorney who has worked to form your company likely will become very familiar with your business.  When the company needs immediate legal advice, an established relationship with an attorney can be invaluable.  Without an established relationship, a business would  have to spend considerable time identifying a suitable attorney, trying to get an appointment with such attorney, and educating the attorney on the relevant background of the company.  Establishing a relationship with an attorney takes time, therefore it is prudent to plan ahead so that you can have someone available to consult with during emergency situations.

(c) a source of confidentiality: In general, your conversations with an attorney are legally protected from disclosure.  Therefore, if organizing your business involves discussing issues where confidentiality  is important, you should seek the counsel of an attorney.

We can help..   Our attorneys can help you form, organize and set up the right legal structure for your business.  Our attorney have formed California corporations, Delaware corporations, LLCs, general partnerships, limited partnerships, corporate subsidiaries, international offices and non-profit organizations. Our attorneys can help you with all aspects of the formation process including articles of incorporation, bylaws, partnership agreements, operating agreements, incorporator's certificate, initial shareholder meeting, initial director's meeting, managing partner or manager's meeting, stock certificates, share registration, EIN application, tax exemption filing, reseller's permits, state business authorizations, business licenses, option plans, employment compliance, invention assignments, non-disclosure agreements (NDAs) and employment agreements.  We offer fixed pricing plans for the formation of a new business.

We are experienced in forming all types of businesses and therefore we can provide a valuable resource in helping you to make important decisions surrounding the formation of your business.   We can also provide advice on operating your business in a manner that preserves your company's liability protection.  We take an active interest in getting to know your business.  We try to be as accessible as possible for our clients as we know that emergency situations occur and  require quick decision-making.  

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