When forming a new business, you will have quite a few crucial decisions to make. One of the most important choices relates to your business structure. The entity you select takes you down a particular path that is different from other entities. For example, you might want to form a corporation. First, you need to understand whether incorporation is the right path for you and your company.
Florida Business Structures
The general types of business entities are:
- Sole proprietorships
- Partnerships
- Limited liability companies
- Corporations
While considering whether incorporation is right for you, ask yourself the following questions:
Do I need liability protection?
Through incorporation, entrepreneurs can protect their personal assets from legal actions taken against the company. This protection occurs because a corporation is a separate legal entity from its owners, often known as shareholders.
Will I need to raise capital for my company?
While it’s not set in stone, it is typically easier to raise capital for a corporation than some other business entities. Corporations can raise cash by selling shares of stock, finding investors, or applying for bank loans.
Do I need to keep my involvement in the corporation somewhat private?
Incorporation often allows owners to stay out of the limelight. The focus is on the corporation and its management, not the individual owners. While this is not always the case, it may be more attainable through incorporation than through other business entities.
Would you like your business to operate for many years to come?
Some companies cease to exist if their founders retire or pass away. However, corporations generally are run by executives and a board of directors. This type of structure makes it more likely, although not guaranteed, that a corporation can survive the loss of managers and directors.
Your Company’s Future May Depend on How You Avoid Unnecessary Risks
One final note concern of incorporation regards taxation. Corporations are ‘double taxed.’ Unlike pass-through entities, the shareholders and the corporation both pay taxes on their earnings. However, incorporation might be a benefit because corporations may be entitled to access more tax deductions.
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 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.