As a Californian business owner just starting your venture, you have to ask yourself what sort of business formation suits you best. Consider your purpose, size, and intention in order to make your decision. Today, we will take a look at Limited Liability Corporations.
FindLaw takes a look at two of the most common reasons to organize your business as a corporation or an LLC. The first reason is if you have a large amount of personal assets. When you run a business, your own personal assets could potentially be put at risk due to liabilities associated with the business itself. By organizing your business as an LLC, you can separate and protect those assets.
The second most common reason is if you work in a high-risk field or otherwise do business in a dangerous area. For example, a field can be dangerous if there is a large potential for you to build up debt, or if you are likely to be sued. This can be a possible risk for businesses involving cosmetics, skin care, or other products used for topical use or oral consumption. Companies with high-risk components like construction or anything using strong chemicals can also qualify.
However, some companies may not have the option to form LLCs. In some situations, this can include businesses involving insurance, banking or trusts. Some states also disallow professionals from forming LLCs together, including doctors, accountants, architects, lawyers, and more.
If you are curious about whether or not your business could qualify to be organized as an LLC, you can contact an experienced attorney who understands the ins and outs of business formation.