Business Formation

Selecting the right legal entity is critical for your business. We explain the difference between the various types of legal entities and help you decide what is best for you.

Sole Proprietorship: This is a business entity that is owned and operated by an individual. A sole proprietor receives all profits and has complete control over the business. The owner is not protected from liability; therefore, the proprietor’s personal assets can be taken by creditors or the assets may be used to settle a lawsuit brought against the business.

Limited Liability Company (LLC): A California LLC offers several advantages to its members. First, it helps to protect its owners from personal liability if the company is ever sued. This means that only the LLC’s property could be compromised to respond for LLC’s liabilities. Secondly, the entity is automatically taxed as a pass-through entity (partnership), but the entity may elect to be taxed as if it were a regular C-Corporation. Thirdly, the structure of LLC’s is often less complicated and subject to less regulation than other corporations, which generally makes them easier to manage.

California: LLC’s are required to pay an annual minimum California tax of $800 a year, regardless of if the company is in business or even if the business did not bring in any income for that year. Also, LLC’s must file a Statement of Information with the CA Secretary of State on an annual basis. Therefore, the company must be disclosed to the state (including the address of the principal office, name and address of the manager, if applicable, and, if member-managed, the name and address of each member), and this information then becomes available to the public.

C-Corporation (C-Corp): This is a default business entity model. This business entity extends personal liability protection to its shareholders who collectively make up the ownership of the corporation. The C-Corp is overseen by a board of directors with day-to-day decision-making left to corporate officers. This type of business entity exists forever, unless steps are taken to dissolve the corporation.

C-Corps are taxed as separate entities from their owners. Therefore, they do not undergo pass-through taxation. Instead, the income of the California corporation is taxed before being divided amongst shareholders when the corporation files its own tax return. The income is taxed again when shareholders file individual tax returns after receiving dividends. This is called double taxation. Also, this type of entity is relatively complex, as numerous regulations must be followed, including making annual filings.

The primary tax advantage regarding California C-Corps, however, is the ability to control the distribution of your profits, and therefore largely control your taxation.

This business model is usually more beneficial to foreign investors, who can lower their personal tax liability depending on the investors financial goals.

S-Corporation (S-Corp): A S-Corp is a C-Corp that elected to be taxed under Subchapter-S of the Internal Revenue Code. Thus, the S-Corp is functionally similar to a C-Corp. However, it is considered a pass-through entity in regard to federal income taxes, which means that profits and losses are passed through to the shareholders of the corporation. This taxation pass-through allows the corporation to avoid double-taxation. One of its major differences from C-Corp is that S-Corp is restricted to one class of stock and may have no more than one hundred (100) shareholders. This type of entity is not available for foreigners.

Limited Liability Partnership (LLP): This structure is similar to an LLC. Partners cannot be held personally liable for negligent acts committed by other partners or employees who are not under their direct control. There is also no personal liability for partnership debt and other business-related obligations. The LLP is governed by the partnership agreement, a contract that covers one of the most important aspects of the operation. However, if one day the partners chose to part ways, the Partnership Agreement should cover all potential issues. A partnership agreement alone does often provide the protection you need. This is a complex document often used by people in Real Estate and other professional settings (attorneys, architects, doctors). It allows some partner(s) to manage, and others to simply invest with participation that is limited or allowed by the contract.

Corporate Governance & Shareholder Relations

Corporations are subject to strict legal formalities that must be observed to avoid undesirable legal consequences. Boards of Directors are responsible for the governance of their companies. The shareholders’ role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place. Corporate governance therefore refers to what the board of a company does, how it sets the values of the company, and how it is to be distinguished from the day-to-day operational management of the company by full-time executives. Tondini Law can assist Boards of Directors to comply with legalities and maintain the company on good standing and compliance with documentation and filings. We also represent shareholders to protect their interest in the company.

Business Contracts

A contract is an agreement between two or more people or entities and is the foundation of all business dealings. Hiring an experienced attorney can save you time, money, and prevent future disputes. Tondini Law will advise and draft the agreement for you based on your needs and goals, but with the necessary legal expertise to accomplish your goals. Our expertise allows us to write sound business agreements that prevent future disputes and allow you to move forward with your business transaction confidently.

Tondini Law can assist clients with contract drafting, modifications and negotiations. When negotiating contracts, you are our priority. Our goal is to develop an agreement that meets your needs while ensuring that the other party deems the agreement beneficial.

We can assist you from start to finish with the following contracts:

• Buy-sell agreements
• Business acquisitions and merge
• Distribution agreements
• Importation agreements
• Brokerage agreements

International Business 

In today’s global economy, doing business internationally can be fraught with unfamiliar laws, regulations, and complexities. Cross-border matters must be handled by an experienced international lawyer in close collaboration with an established network of firms located in jurisdictions around the world. Effective tax planning and corporate structuring includes dynamic international, federal, state, and local tax planning that proactively manages income, excise, and property taxation enhancing business profitability and a competitive advantage.

Tondini Law has the experience necessary and an established network of firms in several jurisdictions to help guide you through the intricacies that come with expanding your business, no matter where you are. We work with you to create strategies and methods that minimize your risk, maximize your revenue, and ensure that you maintain full compliance with global regulations.

Tondini Law merges a personalized approach with a global network of partners and resources to provide a customized, comprehensive team of professionals who will ensure your business goals are met and exceeded.

Whether you are looking to expand your already existing business to the United States or open a new venture, we have the background and experience to create and implement a legal strategy focused on one thing – your success.