When you decide to open a Florida business, you will be making several decisions. Where will you be located? What will be the business name? How many employees do you need? What inventory will be required to support your operations? What advertising platform will you choose? Another equally important matter will be choosing the correct business entity for your Florida business.
Florida Business Formation
When a business is opened in Florida, the proprietor may be required to register information about the enterprise with the state, including the business’s name, entity type, and location. There are numerous issues to consider when you legally establish your business.
Generally, Florida business owners will be choosing between the following structures:
- a sole proprietorship,
- a corporation,
- a limited liability company (LLC), or
- a partnership
The type of structure you choose will depend on your business type, ownership, and goals.
Florida Business Entities
Sole Proprietorship
When you register your business as a sole proprietorship, you will be the only owner. Because there is a single owner, sole proprietorships tend to be easier to establish and have fewer requirements than other Florida business formations.
A sole proprietor can form this type of business by choosing a name and beginning operations. If you operate under your own name, you can open for business without registering with the state. However, if you have a business name, you will file a DBA (doing business as) registration with the Florida Department of State. You should also ensure that you register your sole proprietorship name in other states where you anticipate conducting business.
Sole proprietorships can be an excellent option for a Florida business owner who prefers a less expensive and straightforward structure. However, it’s important to know that having a sole proprietorship means, as the owner, you can be held personally liable for claims against your business.
Limited Liability Company (LLC)
When a Florida business forms a limited liability company (LLC), it is owned by multiple people or members. LLC members have limited liability for the company and for the acts of other members. LLC governance can be under members or a designated manager. Unlike a corporation, LLCs are not required to hold regular stockholder or management meetings or comply with other corporate requirements. Additionally, LLC profits and losses are taxed on the members’ personal returns rather than to the business.
Corporations
When a Florida business incorporates, a certain number of shareholders will own the business. Under this business structure, the shareholders are mutually liable for the business. However, one of the primary benefits of a corporate structure is that liability only extends to shareholders’ corporate holdings. In other words, owners cannot be held personally liable for the business or the conduct of other owners. A corporate structure may also offer some tax benefits to its owners.
Depending on your business needs, a Florida corporation may be the best entity. However, as with any business structure, there can be some potential downsides. The main disadvantage to forming a corporation is the expense. There can also be numerous formalities that are not required when forming a partnership or sole proprietorship.
General Partnerships
General partnerships tend to be less complicated than LLCs and corporations. In some ways, they are comparable to sole proprietorships. These entities are formed when two or more partners decide to open operations and engage in for-profit business activity. General partnership rights and responsibilities are divided equally among the partners. Further, each partner can act on behalf of all partners, and each partner is mutually responsible for the partnership’s debts and obligations.
Limited Partnerships
A limited partnership can be comprised of limited and general partners. These partners can determine the extent of their personal liability. Limited partners are not responsible for the partnership’s actions, debts, or obligations. General partners can manage the business. However, limited partners cannot.
There are variations on some of these Florida business formations, and which one you choose will depend on your business requirements.
The business structure you choose can significantly impact you and the future success of your operations. Therefore, you want to choose wisely and with the advice of an experienced Florida business attorney. If you have questions about choosing a Florida business entity, please contact us today to schedule an appointment.
Contact an Experienced Florida Business Attorney
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent small business clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.