There are numerous decisions you must make when starting a business, beginning with a few basics. You must pick a name and what your company does. You must also choose a structure that will determine your taxes, how much reporting you will do to the Florida Department of State Corporations Division, and how prospective owners can buy into the business.
A Florida business formation lawyer could help you choose the structure that will serve your needs in the future, depending on the size and number of owners you envision. Let a skilled attorney at Sparks Law guide you through this important decision and secure your company’s success.
Businesses in Florida are generally formed as sole proprietorships, general partnerships, limited liability companies (LLCs), or corporations. However, some unique structures address targeted entities, such as the professional LLC, which provides services from licensed professionals. Another option, the limited liability partnership, offers some protection for partners’ assets.
Businesses have varying duties to file information, but the more sophisticated structures such as corporations and LLCs require owners to:
Owners choose business entities for different reasons. If an owner is working alone, a sole proprietorship may suffice because the business and owner are treated as one, with intermingled taxes and owner liability for the business debts. An experienced Florida attorney can discuss the types of entities and help an entrepreneur in the early steps of forming their company.
General partnerships feature two or more persons who work together in a for-profit business. A limited partnership includes general partners who manage the business and limited partners who do not. A limited liability partnership offers some protection from personal liability for the company’s debts or the acts of other partners.
Florida law includes several provisions governing partnerships. If no partnership agreement is in place, or if it is not comprehensive enough to include some matters, the law will prevail when disagreements arise, according to Florida Statute 620.8103. Owners should consult a local business formation attorney at Sparks Law to discuss the merits of adopting a partnership agreement.
Owners of limited liability companies (LLCs), known as members, are not personally responsible for debts incurred by the company. At the onset, members make capital contributions in cash, property, or services that determine their ownership share.
Florida does not require a written operating agreement for LLCs, although any company with multiple members should adopt one. Without it, the law could construe all members as equal owners should a dispute arise, which is a problem if the members’ contributions are not equal.
The operating agreement describes, among other covenants:
The LLC structure is the most popular choice in Florida, outranking corporations by two-to-one since 2015.
Companies that intend to trade on a stock exchange and want the ease of raising capital by selling stock from the outset should choose to form a corporation. With greater structure and more reporting duties than an LLC, corporations are run by a Board of Directors and managed by officers who report to the Board. Generally, all are personally exempt from the liability for the corporation’s actions, providing they act in good faith. Our knowledgeable attorneys can further advise entrepreneurs in Florida looking to form a corporation.
Entrepreneurs must make many decisions when founding their companies. One of the most important choices is deciding which structure to operate under. Different legal entities have unique benefits and drawbacks, so it is important to get legal counsel from a Florida business formation lawyer to ensure that your choice meets your needs and goals for the future.
If you are starting a business, you can get off on the right foot by consulting the team at Sparks Law. We have the expertise to get your new company ready for success, so give us a call today.
