Consider a close corporation for your business
As a practice serving the legacies of families and their businesses, numerous tools need to be at-the-ready to fit the situation. When it comes to an intimate family business owned by two individuals, there is a particular corporate structure that may be considered: the Close Corporation.
Many think of them as a partnership dressed as a corporation. A close corporation refers to a corporation under Corporations Codes Section 158 and 300(b). In general, this type of corporation involves situations with few shareholders. It is ideal for situations where the owners prefer flexibility, preferring to streamline the usual formalities of governance. They are relatively easy to form and regulate. To do so, they need to be organized in the usual course.
One recent example was a service-based company owned by a husband and a wife who owned their home. Without a corporate form, if they were ever sued their personal assets would be at risk. Thus, they preferred to have a corporation to insulate their assets from this risk. With just two owners, they desired a flexible and simple corporate structure and opted for the close corporation.
Like any corporation, it is important to follow the required conventions to maintain the corporate shield against exposure. Hence, having a team of advisors to guide you through the process is critical to ensuring your objectives.