California

LLC Formation in California

Advantages to register in California

The main advantages of incorporating in California are: lawsuit protection, credibility, tax savings, deductible employee benefits, anonymity, and the simplicity of raising capital. By creating a separate legal entity for personal protection purposes, a California corporation has a broad range of powers beyond that of the standard sole proprietorship such as small claims court benefits, separate liability for corporate debts, and best of all perpetual duration. When you incorporate in California you create a separate legal individual.

If you register a California LLC you will receive protection from personal liability for things like lawsuits and other financial claims against the company. In an LLC, you do not issue stocks to raise funds, or revenue for capital investment. Instead, members are issued interest certificates that reflect the amount or share of their investment in the company. An LLC is run by the members, and the power vested in these members is determined by percentage of ownership. You can register an LLC by filing with the office of the Secretary of State. In most cases this process is simple, and takes as little as a couple of days to complete. It’s a good idea to consult with an attorney or other financial adviser before filing for this status. You may want to weigh the alternatives to determine which business structure meets the needs of your business, your customers and your partners.

LLC Advantages

No requirement of an annual general meeting for shareholders;
No loss of power to a board of directors;
Much less administrative paperwork and recordkeeping than a corporation;
Pass-through taxation (i.e., no double taxation), unless the LLC elects to be taxed as a corporation;
Limited liability, meaning that the owners of the LLC, called “members,” are protected from some liability for acts and debts of the LLC, but are still responsible for any debts beyond the fiscal capacity of the entity;
Using default tax classification, profits are taxed personally at the member level, not at the LLC level;

An LLC can elect to be taxed as a sole proprietor, partnership, S corporation or C corporation, providing much flexibility.

LLCs in California can be set up with just one natural person involved.

Unless the LLC has chosen to be taxed as a corporation, income of the LLC generally retains its character, for instance as capital gains or as foreign sourced income, in the hands of the members.

Advantages of the SLP

The main advantages of the Scottish Partnership (Scottish Limited Partnership, Scottish LP)

  • There are no taxes in the UK, providing that the partnership does not trade in the UK and partners are not residents of the UK. Partners are taxed in the jurisdiction of their location.
  • No requirements to submit financial statements in the Register of Enterprises.
  • No requirements to submit tax declaration in the Register of Enterprises.
  • Internationally recognized jurisdiction with an excellent reputation
  • High confidentiality

The legal requirement that the limited partners are not entitled to participate in the management of the company, makes Scottish LP an ideal mean for investment structures with a large number of partners, where management and control are assigned to the general partner or manager appointed by the general partner.

Uses of an SLP

  • A Scottish L.P. is an ideal solution for those who prefer to operate a company incorporated in the EU and to have a totally tax-free facility at the same time.
  • Funds structures
  • SLPs can be used flexibly in funds structures.
  • SLP as main fund vehicle
  • The SLP can be a main funds vehicle because
  • It can hold assets in its own name;
  • There can be multiple but passive investors (the limited partners);
  • Only one person manages the investments and business of the partnership (the general partner);
  • Tax transparency means that each partner is taxed on the profits it receives, the amount of which will be determined by the limited partnership agreement.

Uses of an SLP

  • A Scottish L.P. is an ideal solution for those who prefer to operate a company incorporated in the EU and to have a totally tax-free facility at the same time.
  • Funds structures
  • SLPs can be used flexibly in funds structures.
  • SLP as main fund vehicle
  • The SLP can be a main funds vehicle because:
  • It can hold assets in its own name;
  • There can be multiple but passive investors (the limited partners);
  • Only one person manages the investments and business of the partnership (the general partner);
  • Tax transparency means that each partner is taxed on the profits it receives, the amount of which will be determined by the limited partnership agreement.

SLP as a participant

Because it has separate legal personality, the SLP can also be used in funds or other structures which require ‘persons’ to be members. A common example of this is the use of the SLP as a carried interest partner. A ‘carried interest partner’ facilitates the filtering of a percentage of the profits of the main fund to the fund manager. An example of a structure is in this diagram.

The above structure comprises a main funds vehicle which is a limited partnership (and could be a SLP). The SLP is itself made one of the limited partners in the main funds vehicle. This is only possible because the SLP has separate legal personality: limited partnerships registered in other jurisdictions could not fulfil this function. The fund manager is one of the limited partners of the SLP. The profits from the main funds vehicle filter through to the SLP and from there to the fund manager (how and when this happens is determined by the limited partnership agreements). As the SLP is tax transparent, the fund manager is taxed directly on the profits it receives.

Why Global Premier?

What separates us from our competitors is that our services don’t end with the registration of your company. We offer a wide range of additional services others can’t or just won’t offer, such as lifetime free support.

Whilst most providers either specialise on personalized consultation at relatively high rates or run bulk registration factories without any support, we want to offer the positive aspects of both types.

Therefore Global Premier combines professional advice, worldwide registration services, reasonable fees, customized order processing, lifetime support and fast processing. Where others see company formation services as a bulk registration with no support and no individual assistance, we do care about your business needs.

Should you have any question or matter
You would like to discuss or clarify with us
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Our multi-lingual team of business advisors is happy to assist you with all upcoming questions and issues in relation to your company.

You may call or email us, and we will be happy to assist you in a fast and efficient manner.

You can also come and visit us at our Limassol offices to discuss issues face to face if you prefer. Just arrange an appointment and we will be happy to meet with you.

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