Starting a consulting business in California is becoming a more popular, and more lucrative choice for many East Bay residents. When deciding to start a consulting business, there are several legal considerations that should be considered and decided on from the start. The most important of these decisions involves which business form or entity is best suited for your consulting business and future goals.
First, anyone considering starting a consulting business – or any business, for that matter – should take precautions to protect their personal assets in the event of a lawsuit or bankruptcy. Under California law, the business entities that hold the owners or operators of a consulting business liable for all business debts include a sole proprietorship, a general partnership and, in a limited partnership, the general partner.
In a general partnership, where two or more individuals are engaged in a profit-making venture together – all partners are jointly and severally liable for all business debts of the partnership. In a limited partnership, there is a general partner who has unlimited personal liability for all business debts. In short, all of these business forms leave at least one person in a new consulting business exposed to personal liability.
Because California business law offers several business forms that allow a consultant to avoid personal liability on the debts of their new business – one real issue for consultants looking to start a new business is which tax structure best suits their business goals. In the simplest terms, California consultants will have several options including “disregarded status”, “partnership taxation”, “S” corporation taxation or “C” corporation taxation.
The lowering of the federal tax rates on businesses throughout the country may provide new incentives for aspiring consultants in Pleasanton, Oakland, Tracy and the greater East Bay area. Depending on the nature of the consulting business and its owner’s aspirations for their business, there is no “best” business entity choice for all consultants. To learn more about how to ensure your business operations are legally protected, contact the East Bay experts in business formation at JGPC Law.
Originally posted at https://www.jgpc.com/best-business-entity-consultants/
Kevin Dean, President of WSI Net Advantage...
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