If you are starting a business in California, you are likely eager to gain the legal protections of a corporation or limited liability company (LLC). Before you can obtain these protections, there are a few decisions that must be made. A trained corporate attorney will help startups make some of these decisions, and ultimately, this will enable a business to grow more easily and efficiently. The skilled Los Angeles corporate attorneys at Startup Company Counsel know what details are required to establish and run a business smoothly and will plan ahead for the future.
Here are a few examples of details you will need to form a business entity:
Entity election: You will be required to choose an entity type (corporation, limited liability company, limited partnership, etc.). Each entity has different tax and legal implications. Depending on which entity is chosen, there are documents to file to create the entity (i.e., corporations require articles of incorporation; LLC’s require articles of organization) and there are documents to draft to establish management of the business’s day-to-day operations. For example, corporations have bylaws and LLC’s have operating agreements to grow day-to-day operations. Consult with an experienced corporate attorney to explore the pros and cons of each entity type to determine which business entity best meets your specific needs.
Management structure (LLC only): The articles of organization for a limited liability company must specify whether the LLC will be member-managed or manager-managed. Specifically, member-managed is when each of the members has an equal say in the management of the business; manager-managed is when members appoint or hire managers who are responsible for the key decisions and daily operations of the business. It is important to determine which management structure allows for the most efficient operation of the business. It is also important to clearly communicate with other members to define each person’s role and expectations for the management of the business. The Los Angeles corporate attorneys at Startup Company Counsel can help LLCs determine the best option and establish an operating agreement that will outline the management structure in detail.
Agent for service of process (registered agent): The agent for service of process is authorized to accept legal documents on behalf of the business whether a corporation or LLC. These documents can include renewal notices, franchise tax notices, annual report forms, and any lawsuits. The registered agent is usually an individual, although, businesses can register with the Secretary of State to be corporate agents. The registered agent must reside in California with a physical California street address. It is important to note that the physical address provided in the articles of incorporation becomes public record, so using a home address is not advised.
Purpose statement: A short description, or mission statement, of the business in which you are engaged is required in the articles of incorporation and articles of organization. A Los Angeles business attorney can draft this for you, or you can use the pre-printed statement provided in the sample documents provided by the Secretary of State.
Authorized number of shares to be issued (corporation only): No matter the size of the company, if a business is incorporated, stock will need to be issued and authorized. The number of shares issued can have significant ramifications for the financial health of a business, including its tax liability. Consult with an experienced corporate attorney to see if your state bases the annual corporation fee on the number of shares and to determine the share structure that will best suit the business’ needs.
Call Today to Speak with a Los Angeles Corporate Attorney
Let the Los Angeles corporate attorneys at Startup Company Counsel ensure the success of your corporation by helping you build a successful entity from the ground up. When formed with the assistance of an experienced corporate lawyer, you can be sure to choose the right business entity for your business and ensure that it is properly established. Call (855) 353-5377, or use our online contact form to schedule your consultation with a corporate lawyer today.