Fisher Law Corporation’s Frequently Asked Questions

The following are select subjects which are representative of the type of law we practice. Peruse the articles: If you don't find a subject that interests you, call us or e-mail us with your request.

Notice: The information contained in these articles is designed to provide accurate information in regard to the subject matters covered and is made available with the understanding that the information provided does not constitute the rendering of legal or professional services. All information is of a general nature, is specific to California law only, and is not intended to to replace professional or legal advice. Each person’s situation is unique and the information contained herein cannot be applied to any individual’s situation. If legal advise is required, the services of a professional should be sought.


What is an all-inclusive deed of trust? »

What is CERCLA? »

How does a condominium differ from a house? »

What are Covenants that run with the land? »

What is a deed in lieu of foreclosure? »

What are easements? »

What are Encroachments? »

How does escrow work? »

What is fire and flood insurance? »

How do foreclosures work? »

What are the different forms of doing business? »

What do trade terms mean? »

What are liquidated damages in real property contracts? »

What is a Lis Pendens? »

How do loan modifications work? »

What is a Mechanic’s Lien? »

How does a Multiple Listing Service work? »

What is an off-shore trust? »

How do real property taxes work? »

What is Procuring Cause? »

What is a Quitclaim Deed? »

What is RESPA? »

Who bears the risk of loss during escrow? »

What are second deeds of trust? »

What is the Statute of Frauds? »

What is Statute of Limitations on Debts Secured By a Mortgage? »

Does a buyer’s broker have a duty to inspect? »

What is The Parol Evidence Rule? »

What is Adverse Possession? »

 


Q. What are the different forms of doing business?

A. Although there are many ways to organize a business, the most common forms and their characteristics are explained in this article. These include the sole proprietorship, the general partnership, the limited partnership, the limited liability company, and the corporation.

Ownership of a sole proprietorship rests in one person, no matter how many people are involved in the day to day operations. A sole proprietor has unlimited personal liability for losses of the business, the owner has sole management responsibilities, there are no formalities to follow, the owner’s interests are freely transferable, and the business can last the lifetime of the sole proprietor. A fictitious business name statement is usually required.

A general partnership is comprised of two or more persons. Each partner has unlimited personal liability for the losses of the partnership. There is equal management and control between the partners, no formalities are required, although often the partners will execute a written partnership agreement that spells out their rights and obligations, and there are generally restrictions on transferring a partner’s interests to a third party. A general partnership expires on the death of a partner unless there is a written agreement to the contrary. A general partnership can be treated as an entity separate and apart from its partners for certain purposes.

A limited partnership is comprised of one or more general partners who manage the business and who have unlimited liability, plus one or more limited partners whose liability is generally limited to their capital contributions. The limited partners have no control over the management of the business. Formalities are required, included filing a Certificate of Limited Partnership with the Secretary of State and payment of annual filing fees. Ownership of a limited partnership is restricted and transferring rights is also restricted. A limited partnership is treated by the IRS as a separate entity from its partners.

A limited liability company is a relatively new business form in California. If properly set up, a LLC can avoid the double taxation that a corporation faces and, at the same time, shields its members from personal liability that a partnership would experience. A LLC is treated as a separate tax paying entity and can be advantageous for loss write offs. A LLC requires two or more members. Formalities must be observed, including drafting and adopting Articles of Organization and an Operating Agreement.

A corporation is a traditional business form which is comprised on one or more shareholders. The shareholders are generally not liable for the debts of the corporation. Management of the corporation is vested in a Board of Directors which is elected by the shareholders. Formalities must be observed, including holding annual meetings and maintaining meetings, or the shareholders may be held personally liable for the corporate debts. A corporation may exist in perpetuity.

Back to FAQ Questions »

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