Setting up a business can be an exciting endeavor, but an important part of the process is ensuring that you make the right choice of business entity. LLC vs Inc both have different features and liabilities, and can vary depending on where your business is located. Knowing whether to create an LLC or Inc in Los Angeles is essential for understanding your legal obligations and getting the most out of your business. In this article, we will discuss the differences between LLC and Inc, what business owners should take into consideration when choosing either entity, and where to seek legal counsel to help you with the process.

Why Choose An LLC vs Inc?

Deciding whether to set up your business as a Limited Liability Company (LLC) or Incorporation (Inc) is a decision that has significant legal implications and can affect the financial wellbeing of your business. LLCs are typically more flexible than Incs, and offer greater protection for owners against personal liability for the debt and losses of the business. An LLC can be formed much more quickly and more easily than an Inc., as essentially all that is required is to fill out and file some paperwork with the Secretary of State's office.

In contrast, Incs involve much more rigorous setup requirements such as the filing of a corporate charter, organizational meetings and resolution adoption, and potentially the development of bylaws. With an Inc, owners are responsible for their share of the corporation's debts, and their risk of personal liability is limited but not eliminated. Unlike LLC owners, corporate owners must adhere to the corporate formality to maintain the liability protection that a corporation or Inc. provides.

What to Consider for Los Angeles businesses?

For businesses in Los Angeles, it important to understand the nuances of LLC vs. Inc when making the decision which type of business entity to form. For example, LLC's in Los Angeles must file additional documents with the Secretary of State's office, such as operating agreements and members' certificates. Moreover, LLC owners in California should be aware that the California Franchise Tax Board requires all LLC's to file an annual fee with the Secretary of State's office. This fee is calculated as a percentage of the LLC's gross receipts.

Where to Seek Legal Counsel?

When choosing your business entity in Los Angeles, it is important to seek the right legal counsel so that you can make the best decision for you and your business. Legal counsel can help you ensure that you properly set up your LLC or Inc, given the unique legal context in California. One great resource for Los Angeles business owners looking for legal counsel is UpCounsel. Whether you need a one-time consulting service or an entire freelance legal department, UpCounsel’s network of experienced lawyers has you covered. From small businesses to the Fortune 1000, groundbreaking companies of all sizes trust UpCounsel and its attorney community.

UpCounsel’s profiles of their online attorneys display client ratings and reviews of recent work, so you can trust that you are getting the best legal advice for your business. With UpCounsel, businesses can get instant, high quality access to legal advice without the high fees that come with traditional law firms.

Setting up an LLC or Inc in Los Angeles can be a daunting process, but by understanding the differences between the two business entities, considering the Los Angeles-specific legal requirements, and finding the right legal counsel for your business, you can make the most of your business.


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