Bay Area Business Lawyers | Primum Law

The Benefits of a Formal Business Entity

You do not have to take any formal steps with the state to begin conducting business. Many people simply begin offering a service, and start receiving money in exchange for that service. You could continue operations as a sole proprietor (one owner) or general partnership (more than one owner) indefinitely. There is no requirement to ever create a formal business entity with the State of California.

However, should you consider a formal business entity? There are benefits to doing so for many company owners, and the process can be simplified by seeking the help of a small business lawyer in San Francisco.

Limited Liability

This is the most common reason for changing from a sole proprietorship/partnership to a formal business entity is to shield owners from personal liability whenever possible. Without entity formation, there is no legal distinction between a business and its owner. This means that owners are fully and personally liable for all debts of the business. If the company cannot pay a debt, the owner’s own assets and property can be at stake. Forming a limited liability company (LLC) or limited partnership (LP) can work to separate your debts and property from that of the company.


Consumers have many options when choosing a service or product provider. Many potential clients might see an “LLC” or “Inc.” in your business name as a sign that your business is established and less risky than a sole proprietorship. Often, entity formation can boost your reputation without making any major changes to your operations.

Contact a Small Business Lawyer in San Francisco for Assistance

At Primum Law Group, we can review your options for business formation and help you complete the process accurately and effectively. Call 415.293.8042 or contact us online to schedule a consultation with a San Francisco business attorney.

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