Corporations Explained: What is a Corporation and Why Hire a Business Lawyer
The Legal Implications of Forming a Corporation3 min read
Many business owners, entrepreneurs, and CEOs choose to form a corporation for their business, but they may not be aware of the legal ramifications. Understanding the differences between corporations and other business entities, as well as the various possible business structures and their consequences, is essential for avoiding legal issues. Forming and running a business can be complicated, so it is important to hire a business lawyer with in-depth knowledge of corporation laws to ensure your company’s success and your peace of mind.
What is a Corporation?
A corporation is a business entity that exists on a separate legal plane from its owners and managers. There are two types of corporations: C corporations (those registered with the state) and S corporations (those registered with the IRS).
C corporations are owned by shareholders who play no role in the management of the business but are legally entitled to the profits generated by the business. S corporations, on the other hand, have the same ownership structure as C corporations, but the profits are passed directly to the shareholders, who then pay taxes on those profits.
In both C and S corporations, the owners are not personally liable for any debts the company incurs. This is one of the main benefits of forming a corporation: with an LLC, all members are personally liable for debts; with a corporation, the shareholders are not. This legal protection is critical for businesses with significant debt.
Benefits of Forming a Corporation
In addition to the liability protection offered by a corporation, there are a number of other benefits as well. A corporation can help make a business more attractive to investors since a corporate structure indicates a strong commitment to investing in the continued growth of the business. Corporations can also be eligible for certain tax benefits, and a corporate structure can help the business operate more efficiently.
Developing a Corporate Structure
Forming a corporation requires setting up a corporate structure that includes corporate officers, directors, and sometimes shareholders. The corporate structure will dictate how the business is run and who is in charge of various aspects of the business. It is important to have a thorough understanding of corporate laws and regulations to ensure that the corporate structure is legally compliant.
Hiring a Business Lawyer
Hiring a business lawyer who specializes in corporate law and who is familiar with local laws is essential for any business that is considering forming a corporation. A business lawyer can help develop an effective corporate structure, draft the necessary documents, and ensure that the corporation complies with all applicable laws and regulations.
It is also important to have a business lawyer review contracts and other legal documents to ensure that the business has maximum protection. Additionally, a business lawyer can provide advice on navigating the legal system and can be a valuable resource for any business looking to capitalize on opportunities and avoid potential risks.
Finding a Business Lawyer in Los Angeles
Business owners in Los Angeles have access to many experienced attorneys who specialize in corporate law. From small local firms to large, global law firms, Los Angeles has an abundance of lawyers who are familiar with the local regulations and who can provide expert counsel. For the most comprehensive legal services in the Los Angeles area, business owners can turn to UpCounsel’s network of experienced lawyers. With its highly rated attorneys and extensive knowledge of corporate law, UpCounsel is the go-to resource for professional legal advice.