Starting a business or establishing a partnership has the potential to bring both financial and legal risks to all parties involved. This is why it is critical for parties to do their due diligence to limit their risks and proceed thoughtfully. It is prudent for all parties to understand what to expect from the formation process.
There is a perception that the process of forming a California business will be both complicated and confusing. However, that does not have to be the case. Whether your LLC will be a small business venture, real estate investment partnership or other type of operation, you can strive from the beginning to lay the foundation for a strong future and lower your chance of facing complications in the future. The time to work to minimize your risks starts now.
The reasons for forming an LLC vary from situation to situation. Regardless of the specific goals you have for your LLC, you may have to walk through the following steps:
- Choosing a name for the LLC -- No matter what function your LLC will have, you must have a unique name for it. You have to be certain it is not the same or substantially similar name used by another LLC or contains restricted words.
- Filing the Articles of Organization -- This paperwork offers important information about your LLC, and you will also have to pay a fee for filing.
- Drafting the operating agreement -- You will need to draft this document that explains how you will run your company and the expectations for each founding partner of the LLC.
- Getting the right licenses -- Before you begin operations, you will have to be certain that you apply for and obtain the appropriate licenses necessary for your company's operations.
This is just a basic overview of what you can expect to experience as you create your LLC. Preparing the appropriate paperwork and drafting certain documents is a large part of that process, and it can be enormously beneficial to work with a legal processional who can assist you by reviewing and drafting the documents you need to move forward.
An LLC is a popular choice for investment partnerships and other types of businesses because it limits the personal liability of the individual owners. However, mistakes during the formation process can expose you to the possibility for various types of complications. It is a significant investment of time, money and energy to start a business and form an LLC, and it is worthwhile to have the help necessary to protect your investment.