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Richard T. Williamson,
Attorney at Law
1945 Palo Verde Ave., #101
Long Beach, CA 90815

Phone: 562-431-1956
Fax: 562-431-4433

Office Hours:

Mon-Thurs: 9:00am-5:00pm
Friday:       9:00am-1:00pm

Corporation and LLC Formation

Why Should You Form a Corporation or an LLC?

There are two main reasons why a person should form a Corporation or an LLC: Asset Protection and Tax Planning.

Asset Protection-

Forming an entity to hold your investments or your business forms a barrier or a bubble of sorts around that investment or business. This means that if a liability generating event happens inside of that entity then the liability stays within the entity and your personal assets outside the entity are shielded from the liability. For example: You own an apartment building which is held in an LLC. If someone falls down the stairs and decides to sue you, the only assets that person can go after are the assets within the LLC in which the apartment building is held. He or she will not be able to attack your personal residence or other investments held outside that LLC.

"Bubbling Off" your investments or business can protect your personal assets in case of a lawsuit.

Tax Planning-

In many cases, forming an entity to hold your investments or business can be beneficial for you tax wise. For example, by forming an S corporation, an independent contractor could take some income as distributions from the corporation and only a small portion as self-employment income thereby significantly reducing one's amount of self-employment income and alleviating a large tax burden. Each person's unique situation requires careful consideration, and the best solution for you can be achieved by discussing your plans not only with your attorney, but also with your accountant.



*Note: The information provided is not intended to be a complete explanation of all the aspects of entity formation. The author is not engaged in rendering legal, tax, accounting, or other professional advice by creating this website. The reader should seek competent professional advice and make an independent evaluation of one's needs for entity formation and the legal requirements under applicable State and federal laws.