As indicated, in an attempt to reduce the vulnerability of personal liability from lawsuits or higher taxes, a business owner may decide to operate under one of the formal legal structures, as the following: a common corporation (also termed a C-corp), a Sub-Chapter S Corporation (or S-corp), a Limited Liability Company (LLC), a Limited Partnership.
These formal structures have to be filed with the SOS, as outlined under the agency’s specific procedures and forms. After submission by the business owner of the necessary documents and payment of the related fees, the SOS will issue a certificate (or acknowledgement) that the filing for the particular structure has been accepted. However, as indicated, in starting or changing to one of the formal legal structures, the owner may need to seek the assistance and advice of specific professionals, such as attorneys or CPAs that work with small businesses in this area. For example, if an LLC is not organized or operated properly, the owner could face the possibility of the business being taxed like a regular C-corporation.