Starting your own business is often a mixture of exhilaration and anxiety. The “to do” list includes everything from advertising, and logistics, to the most basic issues such as making sure that there is enough toilet paper in the businesses bathroom. During this shuffle to get everything together it is legal matters that often get put on the back-burner. Many decide that they don’t have time to figure out what “LLC” means until the lights are on and working. This, however, can be a huge mistake and can quickly lead a small business off course and into dangerous waters.
Business structures like an LLC are designed to safeguard you from many of the inherent dangers involved in starting a small business. For example, if you do not form any sort of business structure in the state of California you will probably, by default, form either a sole proprietorship or a general partnership. A business owner with either of these business structures will be personally liable for any debts of the business. That is, if you are a sole proprietorship and your company owes $10,000.00 on a contract, you will likely personally owe $10,000.00 on the contract if your business cannot pay. With a business structure like an LLC, however, generally only one’s business will be liable for the business debts. Thus, if one’s LLC is properly formed, and the LLC owes $10,000.00 on a contract, you, the business owner, can avoid being personally liable for $10,000.00 if your company can’t pay the debt.
There are however, many different business structures each with their own advantages and disadvantages. Picking the business structure that is best for your business, and making sure that it is done correctly, can be a difficult. Having some legal advice at your side can act as a compass for your business and save it from steering into troubled waters. If you are thinking about starting your own business the San Francisco Bay Area attorney’s of Jones & Devoy LLP can provide you with a free consultation on the common pitfalls that business owners face and the steps one needs to take to help you and your new business go in the right direction and succeed.