There are various types of business entities that can be formed under California law including corporations, limited liability companies, and partnerships. Each has its own set of advantages and disadvantages as it relates to business administration, legal liability, and tax implications, so it is important to consult with an attorney before you set one up.

Corporations are business entities that have shareholders as the owners evidenced by stock certificates, with executive officers, a board of directors, and income taxes that are filed on its own tax return (either C-corp or S-corp). In California, many professional services require a corporation, pursuant to California Corporations Code 13401.

Limited liability companies are business entities that have members as the owners, that may or may not have executive officers and directors, and income taxes that may be filed on a personal return, a separate partnership return, or on an S-corp return.

It is important to note that in California, business entities usually have an annual filing requirement with the secretary of state and usually owe a minimum tax to the Franchise Tax Board.

If you have questions about business liability or business tax, contact us to schedule a consultation.