Whether you’re considering a tech startup in San Francisco or a niche e-commerce company in Los Angeles, there are special considerations that must be made for people who are thinking about starting a business or Business Ownership in California.
One of the most important considerations is what type of business entity your company will operate as, and
in today’s blog, we’ll review a few of the most common business entities recognized by the state of California.
Before a new business can get off the ground, developing a well-written business plan to secure funding. Drafting a business plan for your California venture may seem overwhelming at first, but it doesn’t have to be with professional assistance from Business Plan City. Browse our packages today!
Types of Business Entities
An essential part of any entrepreneurial endeavor is determining what type of business you will own. What kind of products will you sell? Who is your target demographic? In addition to these important considerations, it is necessary to determine what type of business entity your company will operate as. The state of California recognizes several types of entities, including:
If you choose to operate as a sole proprietor, you will have total control of your business. This means that all profits will come your way, but it also means that you are solely responsible for tax and liability matters that the business faces. This means that you and your business name appear as one and the same, which means that you may be held personally liable for debts and obligations of the business. This type of entity can be reasonably affordable to start, but not many investors will invest in sole proprietorships.
Corporation and Limited Liability Corporation
In the state of California, corporations are usually considered to be separate from the owners of the business. This type of entity can be useful for limiting the liability exposure that is common in sole proprietorships. In the instance that your new company is registered with the state of California as a corporation, the company and its shareholders will be responsible for any taxes that are levied against the business. Limited liability corporations (LLC) provide similar liability protection for owners, but get taxed in a slightly different manner.
Do you need assistance drafting a business plan for your corporation or LLC? Business Plan City can help. Contact us at 949-229-2578 today to learn how!
Limited and General Partnerships
If you and another person are considering starting a business together, it will be worthwhile to see what types of partnership entities the state of California offers for entrepreneurs.
Limited Partnerships (LPs) composed of at least one general partner and one limited partner,
whereas General Partnerships (GPs) must have two or more partners engaged in a business for profit. Depending on which type of partnership you choose, the personal liability and tax implications may vary greatly.
Need Help Drafting a Business Plan?
No matter what type of business you are thinking about starting in California,
it is wise to consult with a private attorney or tax advisor before taking the leap. Proper planning and a well-crafted business plan will take you far in your pursuits, and while Business Plan City cannot advise you on tax or liability matters, we can help you by drafting a business plan that is customized and professional to your specific venture. Shop our packages today or call 949-229-2578 to get started!