At-Will Employment

AT-WILL EMPLOYMENT

While every state in the U.S. recognizes at-will employment, the rules and requirements for employers are not uniform from one jurisdiction to the next.  Therefore, California employers must familiarize themselves with employees’ protected legal rights under at-will employment laws specific to California.  Failure to carefully comply with these laws can lead to months or years of costly litigation at the expense of the employer when an employee alleges wrongful termination.

Employee Termination and At-Will Employment

Workplace Discrimination and At-Will Employment

At-will employment seems like a simple concept, but looks can be deceiving.  This area of employment law is rife with misconceptions and misunderstandings, which, needless to say, can be financially harmful to the employer.  In order to minimize your risk of inviting a wrongful termination lawsuit, it is critical to understand the basic mechanics of at-will employment in California.

In theory, employers may terminate at-will employees for any reason.  In practice, as noted by the Governor’s Office of Business and Economic Development, “There are exceptions to the at-will rule created by statute, the courts or public policy.”  For example, an employer’s rights under at-will employment do not supersede Title VII of the Civil Rights Act of 1964, which famously protects against workplace discrimination – including wrongful termination or demotion – on the basis of sex, race, color, national origin, or religion.  Other examples of protected employee classes include:

  • Employees with disabilities, under the Americans with Disabilities Act (ADA).
  • Employees aged 40 or older, under the Age Discrimination in Employment Act (ADEA).
  • Employees who are pregnant, under the Pregnancy Discrimination Act (PDA).

However, it isn’t just the class to which an employee belongs that matters.  Employers can also find themselves targeted by wrongful termination lawsuits for taking retaliatory actions (such as termination, demotion, sexual harassment, or verbal harassment) against an employee who:

  • “Refus[es] to carry out an activity that violates the law.”
  • “Participat[es] in union activity.”
  • Becomes a whistleblower or reports a safety violation to OSHA (Occupational Safety and Health Administration).

California Employment Law and Labor Code Violations

In addition to federal acts like the ADA, PDA, and ADEA, California employees are further protected by state laws.  For example, FEHA (the Fair Employment and Housing Act) bolsters Title VII of the Civil Rights Act by providing protection against discrimination, harassment, and retaliation (such as termination) based on “race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, mental and physical disability, medical condition, age, pregnancy, denial of medical and family care leave, or pregnancy disability leave.”  To provide another example, the CFRA (California Family Rights Act), which applies to companies with 50 employees or more, protects employees from being terminated for taking leave to attend to an illness or care for a child or family member.

In addition to refraining from workplace discrimination or the other violations described above, employers must also take care to appropriately compensate at-will employees upon termination.  In accordance with Cal. Lab. Code § 2922, “An employment, having no specified term, may be terminated at the will of either party on notice to the other.”  This is important in the context of Cal. Lab. Code § 2926, which provides that “an employee who is not employed for a specified term [i.e. an at-will employee] and who is dismissed by his employer is entitled to compensation for services rendered up to the time of such dismissal.”  Cal. Lab. Code § 2927 further extends this right to compensation to employees who quit.

The employment attorneys of Bellatrix PC are well-versed in the nuances of California’s labor laws and are prepared to represent limited liability companies, partnerships, and corporations.  Our knowledgeable legal team brings years of experience to every matter we handle, no matter how minor or complex.  We focus our practice on balancing aggressive client advocacy with strict legal compliance so that you can feel confident your financial interests are protected at every stage of the mediation, arbitration, or litigation process.  We have represented employers and business owners in numerous cases involving at-will employment disputes, and have a track record of obtaining favorable outcomes for our clients.

If you’re worried about your company’s current employment policies, we can perform a Business Risk Review to strengthen vulnerable areas in your contracts.  If an employee has already threatened you with a lawsuit, the time to seek legal representation is now.  To set up a confidential case evaluation, call the experienced employment law attorneys of Bellatrix PC right away at (800) 889-8376.

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Insurance Policyholder Coverage

INSURANCE POLICY HOLDER COVERAGE

An insurance policy may come into existence as a contract, but insurance coverage issues fall under their own body of law. In many instances, lawyers that practice general business law assume that they can handle the problems and questions presented by insurance coverage issues, but what they may not realize is that insurance issues are far from intuitive in nature. Whether the issue is a disputed claim, a coverage issue, or a “duty to defend”, coverage issues are typically grounded in state law.

insurance contract

If you are wondering if your insurer should be held liable for a specific claim or if you hold certain rights or benefits under your policy, the experienced insurance coverage attorneys of Bellatrix PC can assist you or your business. To schedule a confidential consultation, call us at 800-449-8992 or contact us online.

How Can An Insurance Coverage Attorney Help?

Our insurance coverage practice handles insurance issues ranging from relatively straightforward matters to extremely complex and multifaceted disputes. We handle first-party claims where the insured, himself or herself, files a lawsuit against the insurer for refusing to assume liability for a covered event. Our practice also handles third-party claims that typically arise due to a failure to defend or a failure to pay a claim submitted on the behalf of a covered policyholder. Our insurance coverage practice can also handle an array of other insurance related claims including:

  • The interpretation and assessment of existing or proposed insurance policies
  • Provide guidance in selecting a policy and level of coverage that is appropriate for anticipated risks.
  • Provide clear advice regarding the potential consequences of an insurance decision.
  • Understand the business, industry and the common risks faced by similarly situated businesses.
  • Anticipate actions by the insurer.

In short, attorneys who regularly handle insurance coverage issues for policyholders are aware of all the laws and regulations governing insurance carriers, policies, and what the policyholder is entitled to.

Who can Use an Insurance Liability Lawyer?

A lawyer who handles insurance coverage provides value to a broad array of individuals and businesses. Any policyholder who contacts a lawyer will receive a contract review and guidance on coverage issues, indemnity issues, and failure to defend issues, among other things. Others who would be well-served by establishing a relationship with an experienced insurance coverage attorney include:

  • Corporate lawyers – Lawyers working in a corporate firm are often the first place a potential client will go. Corporate lawyers who simply refer matters out to a general practitioner without first checking for insurance policy coverage may be doing their clients a disservice. Remember, failure to raise a timely coverage claim can be a grounds to oppose coverage. At Bellatrix PC, one of the first steps we take in any litigation is to analyze and seek insurance coverage.
  • Homeowners and renters – If you own a home, you almost assuredly have a home owner’s insurance policy. Likewise, many renters insure their goods and possessions. There is nothing worse than finding out after the fact that your coverage was insufficient or did not cover the things you thought it did.
  • Business owners and employers – Owners of a company know that their business faces certain common risks and certain risks that are unique to the industry. We can review insurance policies already in effect or suggest other types of policies to consider for your business.

Because insurance liability issues are determined by a particularized body of law, any individual or business whose interests are affected by a policy can find value in meeting with an insurance coverage attorney. While people most commonly seek an attorney after the fact, it is prudent to review your policy, the duties it creates, and its levels of coverage with an experienced professional before disaster strikes

Rely on our Experience handling Insurance Coverage Issues for Policyholders

The insurance coverages attorneys of Bellatrix PC are dedicated to assisting individuals and businesses with coverage issues. We can provide on-point advice to guide your purchase of an appropriate policy. Moreover, if your insurer has declined to defend or declined to provide coverage following a covered event, our attorneys can negotiate with the insurance company and advocate on your behalf. To schedule a confidential insurance coverage consultation, contact Bellatrix PC by calling (800) 449-8992 or contact us online.

Partnership Agreements

PARTNERSHIP AGREEMENTS

While written partnership agreements are not mandated by law, you are strongly urged to create one prior to opening your doors for business.  While you may have a positive relationship with your fellow partners and clients now, you never know what sorts of legal issues you may be confronted with in the future.  If a conflict or uncertainty ever arises, you will want to be able to refer to back to the provisions of your written agreement.  If you base your partnership on a verbal agreement and a handshake, your legal recourse will be limited should a partnership dispute or breach of contract ever take place.

Contract Form

The knowledgeable legal team at Bellatrix PC has extensive experience helping all types of partnerships select their legal structures, register with the state of California, prepare clear and detailed partnership agreements and client contracts, and negotiate effectively through conflicts.  Whether you need an aggressive litigator to represent you in a dispute over liability, or you simply need advice on getting your partnership started, our business attorneys are here to assist you.

To discuss your business’ needs in a confidential legal consultation, call the law offices of Bellatrix PC at (800) 449-8992 today.

Should You Structure Your Business Entity as a GP, LP, or LLP?

Prior to beginning the registration process, you must determine whether your partnership will be structured as a general partnership (GP), a limited partnership (LP), or a limited liability partnership (LLP).  The business formation lawyers of Bellatrix PC can help you make an informed decision.

General partners share equal liability and participate equally in the management of daily business operations.  In an LP, the general partner assumes greater managerial control and a greater share of liability than the limited partner.  In an LLP, multiple partners enjoy limited liability.  However, only certain types of businesses may be structured as LLPs, including accounting firms, law firms, and architecture firms.

Your partnership entity selection will impact not only the business registration process, but even more importantly, all matters of liability, profit distribution, and management responsibility going forward as set forth in your partnership agreement.  It is critically important to consult with an experienced business law attorney when making this decision, as your entity selection will serve as the foundation upon which every aspect of your company rests.

Steps to Registering a Partnership in California

The steps to the process of registering your partnership depend on the type of partnership you select, as described below:

  • General Partnership
    • Filing a Statement of Partnership Authority (GP-1) with the Secretary of State is optional, but recommended.  The GP-1 “specifies the authority, or limitations on the authority, of some or all of the partners to enter into transactions on behalf of the partnership and any other matter.”  The GP-1 is a short, simple form that will ask you for information like your address and the partners’ contact information.
    • Once your GP-1 is received, it will be reviewed by the Secretary of State’s Office to make sure there are no compliance issues.
    • If there are no compliance problems, your GP-1 will be filed.
    • You will receive a copy of your GP-1 for your records, as well as a Certificate of Registration.
  • Limited Partnership
    • Domestic LP – You must file a Certificate of Limited Partnership (Secretary of State Form LP-1).  This is not optional.
    • Foreign LP – You must file a Foreign Limited Partnership Application for Registration (Secretary of State Form LP-5).  The subsequent review process is similar to the process for general partnerships described above.
  • Limited Liability Partnership
    • You must file a Registered Limited Liability Partnership Registration (Secretary of State Form LLP-1).
    • If you are seeking malpractice liability coverage, you must prove your net worth by filing a Limited Liability Partnership Alternative Security Provision transmittal form (Secretary of State Form LLP-3).  This form must be accompanied by a $30 filing fee and a $15 service fee for a total of $45.
    • Your registration forms will be reviewed for compliance.  Assuming there are no issues, your forms will be filed, and you will receive a copy of your LLP-1 as well as a Certificate of Registration.

Note that all registration forms must be accompanied by a filing fee.  The filing fee is the same for GPs, LPs, and LLPs.

mergers and acquisitions business contract

What Should a Partnership Agreement Contain?

Countless web sources supply pre-made partnership agreements which use generic boilerplate language.  While these templates may seem like the simplest and most convenient option for getting started, they generally cause more harm than they prevent as they inevitably fail to make provisions for the nuances of any given business transaction or relationship.  When crafting your partnership agreement, you should always consult with an experienced business lawyer, such as those of Bellatrix PC.  Only your attorney will be able to prepare a detailed, personalized, and comprehensive contract which is structured to protect your best interests.

That being said, there are some key components which are common to most partnership agreements, regardless of the type of business the partnership is engaged in.  Generally speaking, your agreement should include provisions outlining the following elements:

  • Decision-making authority, profit division, and the distribution of partner liability.
  • How much capital each partner is expected to contribute to the business.
  • What sorts of equipment and resources will be included in the partnership’s property.
  • How financial matters will be handled, such as tax liability and bank accounts for the business.
  • How the business should be sold or dissolved if the partners wish to part ways or end the partnership.
  • What will happen if a partner dies or becomes disabled.

If you’re thinking about starting a partnership in California, or if you need assistance preparing a partnership agreement, the business law lawyers of Bellatrix PC can help.  We have years of experience providing general counsel and business risk reviews for GPs, LPs, and LLPs, and are well-versed in the nuances of state and federal law governing partner liability, tax obligations, management duties, insurance coverage, property and asset division, and other aspects of partnerships.  We are also prepared to assist with business dissolution or sale of business.

To learn more about how Bellatrix PC can help your partnership get started or resolve a dispute, call our law offices at (800) 449-8992 to arrange for a private consultation.

 

Business Transaction Attorney

Business Transactions

A mismanaged business transaction can have devastating effects on every aspect of your company.  From tarnishing your public image to damaging your professional relationships to hurting your bottom line, issues like breach of contract, disagreements over profit distribution, or partnership disputes can quickly escalate into costly, disruptive, and time-consuming litigation.  Employers and business owners must take careful steps at the outset of any business transaction in order to minimize the risk of exposure to these legal and financial problems.

man with money mouse trap for greedy

The knowledgeable business attorneys of Bellatrix PC have years of experience assisting limited liability companies, corporations, and partnerships with a wide range of business transactions.  We pride ourselves on balancing aggressive and tenacious client advocacy with nuanced and strategic planning, and have obtained favorable outcomes for numerous clients during our many years practicing business and employment law.  Matters our business transaction attorneys handle include but are not limited to the following:

    • Breach of Contract and Breach of Fiduciary Duty
    • Commercial Debt Collection
    • Commercial Leasing (Real Estate and Equipment Leasing)
    • Construction and Real Estate Transactions
    • Contract Negotiation
    • Corporate Bylaws (S-Corporations and C-Corporations)
    • Due Diligence
    • Distributor and Supply Agreements
  • Mergers and Acquisitions
    • Non-Disclosure Agreements
    • Operating Agreements (LLCs)
  • Partnership Agreements (GPs, LPs, LLPs)
  • Partnership Disputes
  • Purchase Agreements
  • Sale of Business
  • Trademarks and Intellectual Property

Whether you’re still thinking about starting a business, are looking for cost-effective ways to grow your company, or are preparing the company for a sale of business or business dissolution, the attorneys of Bellatrix PC are here to help guide you through the process.  To learn more about how we can help your company reach its goals, call our law offices at (800) 449-8992 today.

Breach of Contract and Commercial Litigation

A significant portion of business disputes occur because one party alleges a breach of contract.  While breach of contract is occasionally intentional (known as anticipatory breach of contract), in most cases disputes are caused by one of the following issues:

  • Attempts to include clauses and terms which are unfair or even unenforceable.  In some cases, the contract itself is inherently unenforceable.  For example, non-compete agreements are typically unenforceable in California, with several exceptions.
  • Confusion caused by use of contradictory language.  In cases where transactions involve multiple cities, counties, or states whose laws contradict one another, questions of jurisdiction must be settled as early in the process as possible.
  • Failure of the contract to account for new or updated laws, such as RULLCA as it pertains to LLC operating agreements.
  • Use of unclear, ambiguous, or jargonistic wording.
  • Use of a generic template contract which does not account for one or more factors of the transaction.

By utilizing contracts which are clear, enforceable, and tailored to the circumstances of the transaction, you dramatically reduce your risk of being sued for breach of contract or inviting other problems.  The business lawyers of Bellatrix PC are prepared to draft contracts and file legal documents ranging from partnership agreements to stock options to mechanic’s liens.  We are aggressive negotiators focused on identifying and avoiding contractual issues before they arise.

Sale of Business, Formation, and Entity Selection

The steps you take during the entity selection and business formation process will set the stage for success or failure for the rest of the entity’s life cycle.  Our attorneys will assess every aspect of your business plan to help you make an informed decision about which legal structure will give you the right tools for making your vision a reality.  We will handle all of the paperwork and filing requirements necessary for incorporation and registration, so that you can feel confident you are starting your new business out on the right foot.

At the other end of the spectrum, it is equally important that your sale of business or business dissolution is handled with care and attention to detail.  Our legal team will advise you of the benefits and disadvantages associated with asset sales versus entity sales, help you assess the potential outcomes of selling versus dissolving the business, and keep you informed with regard to your rights and responsibilities before, during and after the change in ownership.

Operating Agreements, Partnership Agreements, and Corporate Bylaws

Even in situations where written contracts are optional, as is the case with partnership agreements, all entrepreneurs are strongly advised to prepare written documents explicitly addressing the goals, needs, rights, and responsibilities of the entity and its individual owners, members, partners, managers, and so forth.  The ability to refer to written documentation will serve as your best defense against future claims ranging from wrongful termination to workplace discrimination to acts of corporate fraud.

Operating agreements, partnership agreements, and corporate bylaws provide the legal and financial framework for limited liability companies (LLCs), partnerships (GPs, LPs, LLPs), and corporations (S-Corporations and C-Corporations), respectively.  These documents will serve as your entity’s blueprint, and should, where applicable, set forth guidelines with respect to matters such as:

  • Capital contributions
  • Conflicts of interest
  • Death and disability
  • Distribution of profits and losses
  • Employment and workplace policies
  • Insurance coverage
  • Personal liability for debts and restitution
  • Procedures for amendment or modification of agreements and contracts
  • Structure of ownership, membership, management, the Board of Directors, etc.
  • Tax liability and IRS profit and loss reporting requirements
  • Voting rights and powers

No matter which stage of its life cycle your business has reached, the employment attorneys of Bellatrix PC are ready to help you bring your company to the next stage of its development.  To arrange for a private consultation, call our law offices today at (800) 449-8992.  Our law offices are located in St. Louis, San Diego, and Riverside, California.

 

Sale of Business

SALE OF BUSINESS

In certain circumstances, selling a business can prove to be a lucrative and beneficial exit strategy. It can also be a lengthy and complicated procedure. Before you embark on this challenging process, it is critical to consult with an experienced business attorney, like the attorneys of Bellatrix PC.

handshake detail

Our legal team routinely works with partnerships, corporations, and limited liability companies across a broad spectrum of industries. We are prepared to advise and represent you on every aspect of selling your business, including preparing your entity for sale, performing due diligence, negotiating with potential buyers, and drafting and reviewing covenants not to compete, non-disclosure agreements, business sale agreements, security agreements, and other documents necessary to complete the process smoothly.

Even if you aren’t entirely sure whether it’s the right time in your entity’s life cycle to consider selling the company, our business attorneys can offer counsel on your legal options and their potential financial outcomes and ramifications. We pride ourselves on our in-depth understanding of the intricacies of the state and federal laws, and will work closely with you to identify a strategic approach toward achieving your desired outcome.

To discuss whether a sale of business is right for you, or other ways we can help you succeed, call the law offices of Bellatrix PC at (800) 449-8992.

Asset Sale vs. Stock Sale: Which is Right for Your Business?

Business sales are not one-size-fits-all. For instance, the distinction between selling stocks and selling assets should not be understated. The type of sale you enter will have a significant impact upon your tax liabilities, and in turn, your ability to benefit financially. Our attorneys will evaluate you specific situation and counsel you on the decision that is the most advantageous to you.

When you sell a company’s assets, it means that the buyer purchases your assets while you retain possession of limited liability company membership interests or corporate stocks, depending on how your entity is structured. Examples of company assets include industrial equipment, furniture and appliances, trade names, trade secrets such as software or algorithms, items included in inventory, accounts receivable, real estate, and other items. While you continue to own the company from a technical standpoint, the entity’s assets are no longer in your possession or control.

Business buyers tend to favor this type of sale. In addition to benefiting from a tax standpoint, by purchasing only the entity’s assets and not the entity itself, the buyer avoids the danger of assuming the company’s outstanding liabilities, including the company’s debts and civil liabilities like like breach of contract or sex discrimination lawsuits.

While sellers have the power to exclude from the sale any assets which they decide they would like to keep, the so-called “tax bite” generally make asset sales unfavorable to sellers. This is particularly true of C-Corporations due to their susceptibility to double-taxation. As a business seller, it is typically more favorable to make a stock sale.

Stock sales are effectively the inverse of asset sales. In other words, instead of selling the assets and keeping the corporate stock or LLC membership interests, the company continues to own the entity’s assets and you sell your stocks or LLC membership. Likewise, the pros and cons for buyers and sellers are also inverse: prospective buyers may resist accepting stock sale proposals because they are hesitant to assume the entity’s liabilities, while sellers benefit from a taxation and liability standpoint.

For all of these reasons, it is crucial to enter buyer-seller negotiations with an experienced and aggressive business sale lawyer on your side. Your attorney will protect you from inadvertently accepting unfavorable terms, and will keep you informed of the potential advantages and drawbacks throughout the negotiations process.

Due Diligence Checklist for Selling Your Company: Preparing for Buyers

Due diligence is generally associated with business buyers who must carefully appraise and evaluate a potential purchase before committing to the transaction. However, it is equally important for business sellers to prepare for the inevitable due diligence phase of the purchase and sales process. Advance preparation can make the business appear more attractive to potential buyers, and in turn, can allow you to complete the sale more rapidly and with an enhanced financial benefit. Needless to say, a seller’s failure to disclose information to a potential buyer can make even the most promising transactions turn sour. That’s why preparation is for a sale is as critical to a seller as it is to a buyer.

In order to keep the transaction as smooth and efficient as possible, sellers should gather and prepare the following documents and records:

  • LLC records or corporate books, including but not limited to, where applicable:
    • Business Ownership Certificates
    • Certificates of Good Standing
    • Corporate Meeting Minutes
    • Corporate Resolutions
  • Contracts with vendors, distributors, suppliers, customers/clients, and other businesses.
  • Trade secrets and intellectual property.  Trade secrets can potentially include any of the following:
    • Algorithms
    • Blueprints/Inventions
    • Databases
    • Marketing Strategies
    • Recipes
    • Software/Computer Programs
    • Supplier Lists
  • Tax and other financial documents, including but not limited to:
    • Balance Sheets
    • Profit and Loss Statements (“P&Ls”)
    • Tax Returns
  • Any special permits and/or licenses your business may hold, such as a liquor license or an outdoor entertainment license.
  • A breakdown of your business’ inventory.
  • Documents pertaining to real estate and property, including but not limited to:
    • Commercial Leases
    • Deeds of Trust
    • Mortgages
    • Property Liens
    • Zoning Permits

The forgoing is not a complete list, and should be evaluated on a case by case basis. If you’re ready to sell your entity, or are still thinking about whether the sale of the business could be right for you and your company, the business lawyers of Bellatrix PC can help. To start discussing your goals in a private consultation, call our law offices at (800) 449-8992 today. If a sale is not desired or appropriate for your entity, we may be able to assist with business dissolution or other alternatives.

Incorporation and Entity Conversion

INCORPORATION AND ENTITY CONVERSION

There are numerous practical advantages to incorporating a business, including, but not limited to, tax benefits, protection against personal liability, increased credibility, greater ability to raise capital, and facilitation of ownership transfers. While each business has its own unique set of financial and legal circumstances to consider, incorporation or strategic entity conversion have proven to be valuable tools to innumerable companies and business owners.

Russian nesting dolls

The business attorneys of Bellatrix PC have extensive experience aiding entrepreneurs and business owners through each and every stage of their business venture, including the incorporation or conversion processes. We are prepared to help new entities draft and file articles of incorporation, or to guide existing entities through all steps required to successfully convert to another legal structure. Bellatrix PC is a results-oriented firm dedicated to providing efficient and customized business solutions for companies and entrepreneurs across all industries and levels of experience.

To learn more about how Bellatrix PC can help your company meet its goals, call our business lawyers at (800) 449-8992 to arrange for a confidential legal consultation.

Why Incorporate a Business Entity?

There are no laws mandating that an entrepreneur must incorporate his or her new businesses. As a business owner, you are free to structure your new entity as a sole proprietorship or partnership in lieu of opting for formal incorporation as a limited liability company (LLC), C Corporation, or S Corporation.

That being said, the advantages to incorporation are innumerable, and should be carefully considered by business owners when selecting and setting up a legal structure as part of the business formation process. Moreover, new business owners should bear in mind that entity selection is not necessarily permanent, and an entity which begins its life as a partnership or sole proprietorship may choose to incorporate later should the company’s objectives or circumstances change.

By incorporating your business as an LLC or corporation, you stand to reap a variety of significant practical benefits. Importantly, you will dramatically increase your protection against personal liability for the entity’s financial obligations should a debt or lawsuit arise in the future. LLCs and corporations offer members and shareholders robust legal protection against creditors, with a few exceptions for situations involving personal injury, personal guarantees, alter-ego, liability by statute, or acts of fraud. By comparison, general partners and sole proprietors remain completely vulnerable to personal liability for satisfying debts owed by the business.

In addition to providing a shield against creditors and debt collection, incorporation can also be favorable from a tax liability standpoint. For example, limited liability companies enjoy excellent tax flexibility, as the Internal Revenue Service (IRS) permits LLCs to elect to be classified as a corporation, a partnership, or a disregarded entity.

Moreover, both LLCs and S Corporations are considered flow-through or pass-through tax entities, meaning members report profits and losses on their individual income tax returns. C Corporations are subject to double-taxation, but allow full deductions for expenses pertaining to health insurance and fringe benefits, such as employer vehicles or public transportation costs.

Other notable benefits of incorporation include, but are not limited to:

  • Increased authority and credibility from a business perspective.
  • Ability to raise capital by selling stock.
  • Lengthened entity life (with some limits for LLCs). Sole proprietorships and partnerships dissolve upon the death of a partner or owner, with some exceptions where partners make special arrangements in advance.

Our attorneys are well versed in California’s business incorporation requirements, and will insure that you are compliant with state and federal law. Among other things, we will help you file your Statement of Information, assess your ability to satisfy California’s directorial and shareholder requirements, and prepare and review your corporate bylaws, articles of incorporation, and/or articles of organization where applicable.

Can You Convert a Corporation to an LLC or Vice Versa?

As mentioned above, entity selection does not always have to be permanent. In many cases, entity conversion is not only possible, but also favorable to the business from a legal and financial standpoint. It is not uncommon for business owners to convert limited liability companies to corporations, or conversely, for corporations to be converted to LLCs. Alternately, depending on the needs of your limited liability company, it may be desirable to convert a multi-member LLC to a single-member LLC, or to add members to a single-member LLC.

Moreover, there are several different methods of conversion, some of which are less complicated than others. For example, the streamlined statutory conversion process allows limited liability companies to convert to corporations (or vice versa) with minimal paperwork and automatic transfers of debts and assets. As an added benefit, the converted corporation does not need to go through the process of business dissolution.

Nonetheless, even simplified conversion procedures can be rife with opportunities for errors and mistakes. In order to convert smoothly and successfully, you must file a Certificate of Conversion with the California Secretary of State, create a formal plan of conversion, and, in the case of corporations, obtain approval for conversion from the stockholders and board of directors — to name just a few components of the legal process.

The steps you take during the incorporation or conversion process will create the framework for your business’ future. A misstep or omission during this crucial period could undermine your company’s ability to meet its full potential, depriving your entity of the financial flexibility and legal protection it needs to grow and thrive as the business matures.

Therefore, it is absolutely critical that your articles of incorporation, conversion plan, operating agreements, and other pertinent documents are drafted and reviewed by a knowledgeable business attorney with experience representing companies and employers in these matters. When you work with Bellatrix PC, you can feel confident you will be guided by trusted and dependable legal advice in all your business decisions.

Let’s start discussing how our team can help yours. Let us act as your corporate general counsel. To schedule a confidential personal evaluation, call Bellatrix PC at (800) 449-8992 today.