Archive for the ‘ Business Law ’ Category

Top 5 Mistakes Small Business Owners Need To Avoid

Posted on: December 15, 2018 by in Business Law
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If you own a small business in the state of Florida, you already know that you’ll sometimes need a lawyer’s advice and services to grow your business and to keep it compliant with the law.

Business lawyers in Daytona Beach help business owners resolve both simple and complicated legal matters. They can also help business owners avoid the mistakes that can hurt your business.

HOW CAN A GOOD BUSINESS LAWYER HELP YOU?

A qualified business lawyer can help you put solutions in place before disputes arise. When a dispute does arise, your attorney can help you keep a minor conflict from becoming a major courtroom battle.

avoiding courtroom battles

What are some of the most common and easy-to-avoid mistakes that small business owners make?

1. the failure to have everything put in writing
2. the failure to plan for the future of the business
3. the failure to use effective employment agreements
4. the failure to properly classify workers as contractors or as employees
5. the failure to use effective restrictive covenants

MISTAKE #1: THE FAILURE TO HAVE EVERYTHING PUT IN WRITING

It’s a serious mistake when a small business owner fails to have everything put in writing. Whether it’s a lease, a purchase order, a storage agreement, or an employment contract, get it in writing.

Yes, it’s inconvenient to get everything in writing every time, but successful, long-time business owners know how important it can be to have every understanding, agreement, and transaction on paper and in black and white. Over time, a casual approach to details hurts a business.

When you have everything in writing, if a dispute arises, you may already have the evidence that you need to prevail. If you don’t have everything in writing, and a dispute arises, you could be stuck with no evidence to prove your side of the dispute.

It’s also never a bad idea to let your business attorney review any contract or any other document that might affect your best interests.

MISTAKE #2: THE FAILURE TO PLAN FOR THE FUTURE OF THE BUSINESS

Businesses inevitably change. People come and go. So do business trends. You can’t wait for a difficult situation to become a legal problem. You need to get “in front of” a difficult situation before it becomes a problem.

What can happen if a co-owner of your business gets married, gets divorced, dies, disappears, declares bankruptcy, is convicted of a crime, or is declared incompetent by a court? What if your business partner simply can’t get along with you any longer?

drafting business plans

Unless your business is a sole proprietorship, one or more of these situations – or something very similar – is almost certain to happen at some point in the future. You need to have a carefully drafted business plan, by-laws, or operating agreement that adequately addresses these scenarios.

If you’re a sole owner, you need written provisions that spell out what happens if you sell your business or retire. Let a Daytona Beach business attorney help you plan for the future, draft the documents you need, and review your current business plan and other pertinent documents.

MISTAKE #3: THE FAILURE TO USE EFFECTIVE EMPLOYMENT AGREEMENTS

Hiring and dealing with employees is one of a business owner’s biggest legal challenges. To protect yourself, offer your new employees an agreement that precisely spells out the duties of the job, the compensation, and any other benefits.

Business owners who are hiring employees on an at-will basis cannot imply in any way that the employment is open-ended. A good Florida business lawyer can create employment agreements that provide you with full legal protection while meeting your specific needs.

Some business owners may also need confidentiality or non-disclosure agreements, especially if you have exclusive trade secrets or customer lists that might be valuable to others.

A business attorney can draft confidentiality agreements and restrictive covenants that will, if necessary, be enforceable by a court. Below, you’ll read and learn more about restrictive covenants.

MISTAKE #4: THE FAILURE TO PROPERLY CLASSIFY WORKERS

Who are your employees and who are independent contractors? Properly classifying anyone who works for you is imperative.

For business owners, classifying a worker as a contractor can mean tax savings, partial exemptions from some labor laws, less liability, and relief from providing employee benefits.

classifying employees

These are substantial advantages, but you don’t want someone that you classified as an independent contractor to claim employee status and sue you for any additional compensation or benefits that come with that status.

So who is a contractor and who is an employee? The more control an employer has, the more likely it is that a court will find that a worker is legally an employee. If you have a concern about a specific situation or worker, have an experienced business lawyer review the situation for you.

MISTAKE #5: THE FAILURE TO USE EFFECTIVE RESTRICTIVE COVENANTS

A restrictive covenant may be part of an employment contract, a consulting contract, a purchase order, or a non-disclosure agreement. You may already require your contractors and employees to sign restrictive covenants, but if it’s not enforceable, a restrictive covenant can’t help you.

Florida law spells out a “legitimate business interest” test that the courts must use to evaluate restrictive covenants. Florida courts generally presume that for a former employee, contractor, or agent, a restraint of six months or less is reasonable but a restraint longer than two years is not.

Trade secrets receive additional protection. Where trade secrets are concerned, Florida courts generally presume that a restraint of five years or less is reasonable, but a restraint longer than ten years is not.

Restrictive covenants should clearly specify the legal action that a business owner will take if a breach occurs.

You must establish a restrictive covenant before you share any intellectual property owned by your business. A good business attorney will help you with the precise language necessary for enforceable restrictive covenants that meet your needs.

WHAT MIGHT BE THE BIGGEST MISTAKE BUSINESS OWNERS MAKE?

Probably the biggest and costliest mistake that a small business owner can make is having no legal advice or representation at all. A good business lawyer can help you in numerous ways to avoid most of the other mistakes that business owners sometimes make.

getting a business attorney

If you own a small business in Florida, you must have a reliable business attorney on your team and ready to work on your behalf. That is your right. The future of your business could depend on it.

Things To Legally Consider For Mergers And Acquisitions In The U.S.

Posted on: November 17, 2018 by in Business Law
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Buying or selling a business can be a complicated process in Florida. If you are buying or selling a business in this state, keep reading. The right legal help is imperative for negotiating an appropriate price and for preventing and managing risks on both sides of a major transaction.

Large, important transactions must be structured on the clearest, most favorable terms and provide full legal protection to all parties involved. The failure to be advised by an experienced business lawyer often results in subsequent legal disputes that could easily have been avoided.

HOW ARE MERGERS AND ACQUISITIONS DEFINED?

This is a brief look at the legal side of mergers and acquisitions, the problems that you may encounter with a merger or with an acquisition, and the solutions to those problems.

A merger happens when two or more distinct businesses combine to create one company. A merger of equals happens when neither business is designated as acquiring the other business. The stockholders of both companies trade in their shares for shares from the new company.

WHAT ARE THE WAYS A BUSINESS MAY BE ACQUIRED?

When one company directly purchases another company, it’s an acquisition. Acquisitions can happen in two ways – through purchases of stock or through asset purchases:

  1. Stock purchases: The acquiring company buys the shares of the target company from its shareholders and gains all of the target company’s assets and liabilities. The complexity of a stock acquisition often depends on the target company’s number of shareholders.
  2. Asset purchases: The acquiring company buys the assets of the target company including equipment, stock, inventory, and facilities. The purchaser chooses which assets to acquire, so asset purchases are often considered more advantageous than stock purchases.

HOW WILL A GOOD BUSINESS ATTORNEY HELP YOU?

A qualified Florida business lawyer can help you understand what the advantages and disadvantages are of an asset purchase vs. a stock purchase in any particular potential business acquisition.

If you are a selling a business in this state, you must see to it that you are not making any false or exaggerated representations that will come back to haunt you. If you are a purchaser, you must make sure that the selling party will stand by its representations about the business.

A business lawyer can ensure that the documents involved in a Florida business merger or acquisition are complete, accurate, and reflect your expectations as a buyer or seller. A good business attorney can also help you with and advise you regarding:

  1. debt and equity financing agreements
  2. corporate reorganization or consolidation
  3. partnership and shareholder agreements

It is essential to conduct due diligence before you initiate any transaction such as the merger of two or more companies, the purchase of a business, or any related activity. You will need a skilled, diligent attorney who has substantial contract, acquisition, and merger experience.

WHAT IS REQUIRED TO BUY OR SELL A BUSINESS IN FLORIDA?

Listed here are the steps you will need to take prior to selling a business in Florida. Go through these items with your business attorney to ensure that you have met all of your obligations and that you have adequately protected your long-term interests:

  1. If you are leasing business space, determine how the lease can be reassigned to the buyer. Landlords need to know that your buyer will continue the operation – and the rent payments.
  2. Determine if your licenses can be reassigned or if your buyer must obtain new licenses.
  3. Have your business lawyer review your contracts with clients, service providers, and vendors to ascertain what your responsibilities are to those parties when you sell the business.
  4. Conduct a lien search. If liens are outstanding, satisfy them or arrange for the payment. If you do not disclose outstanding liens against the business, you will probably be violating the sales agreement.
  5. Have all of the appropriate financial papers, statements, and disclosures ready in advance for the buyer.

WHAT IF THERE ARE COMPLICATIONS WITH A BUSINESS ACQUISITION?

If you are the buyer, realize that purchasing someone else’s business might obligate you to take on a variety of responsibilities and to handle a number of unresolved matters.

Have your business attorney ensure that everything about the purchase is legal and legitimate. If there are complications, your attorney can explain them to you and possibly even clear up those complications for you.

WHAT MUST BE CONSIDERED IN ANY MAJOR TRANSACTION?

The top consideration in either a merger or an acquisition is how the transaction is structured. A number of conditions typically must be met before a merger or acquisition can proceed. Those conditions could involve loans, liens, stock, employee contracts, or almost any related matter.

A company’s financial issues, sales, debts, services and/or products, intellectual property, and customer relations all must be considered. Have your attorney help you review the documents, performance, and finances of a company before you merge with or acquire that company.

The key to successfully completing a business acquisition, merger, or sale is to avoid unexpected complications by closely scrutinizing the details. A skilled Florida business lawyer will help you attend to those details and will help you avoid unexpected obstacles or complications.

WHAT SHOULD YOU AVOID IN A TRANSACTION?

Speaking frankly, one of the most common problems with mergers and acquisitions is the use of improper forms downloaded from online legal document companies.

Standard contracts cannot take unique situations into account. Signing the wrong contract could leave you at risk, so avoid using any standardized forms – especially in a major transaction.

A reliable business attorney can draft – or review – all of your merger or acquisition contracts and documents to guarantee that your goals are accomplished and that your interests are protected.

WHAT ABOUT THE FUTURE?

When the transaction is complete, your lawyer can help you plan for the future of your company, help you avoid legal disputes, and keep your business running smoothly by ensuring that you have policies and documents in place to deal with any unexpected complication or circumstance.

No business owner likes taking time off to handle legal matters. If you are a business owner in Florida, this is the right time to arrange a consultation with an experienced central Florida business attorney. It may be the best business investment you make.

What To Consider When Drafting Employee Contracts

Posted on: October 13, 2018 by in Business Law
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In 2018, the economy is booming, and employers everywhere are hiring. Here in Florida, most workers are “at will” employees, which means that they work without an employment contract, and they may be legally fired without cause.

But if you own a business in the state of Florida and you need to have one or more – or all – of your employees sign an employment contract, what will need to be considered? Can a business law firm in Daytona Beach help?

WHAT SHOULD BE INCLUDED IN AN EMPLOYMENT CONTRACT?

Legally speaking, it is a good idea for employers to offer their employees a written agreement which sets forth the terms and conditions of their employment. The document should include specific details about the nature of the work, the compensation, and any additional benefits.

An employment contract spells out precisely what is expected of an employee, and in return, it also specifies what the employee may expect from the employer.

If you own a business in this state, an experienced business attorney can draft the employment contracts that meet your precise needs and give you full legal protection. And as you might imagine, anyone doing business these days needs full legal protection.

A reliable business lawyer can also provide the legal advice and additional legal services that your business needs.

WHAT DO EMPLOYERS WANT EMPLOYMENT CONTRACTS TO ACCOMPLISH?

For employers in Florida, generally speaking, here is what needs to be addressed in an employment contract – and what needs to be kept in mind as the contract is drafted:

1. Retaining the employee: Employment contracts should stipulate the minimum amount of time an employee must remain with an employer. A contract may also stipulate that the employee must give the employer sufficient notice to find an appropriate replacement.

2. Setting goals and standards. An employment contract should include the employer’s expected standards, performance goals, and other productivity measures for the employee.

3. Protecting intellectual property: If the employee has access to confidential information, you must set some guidelines regarding what may and may not be disclosed.

4. Providing security for both employee and employer: With a properly drafted contract, both sides understand the other side’s expectations, and both enjoy certain legal protections.

WHAT SPECIFICS MUST BE ADDRESSED IN AN EMPLOYMENT CONTRACT?

The specifics that must be addressed in almost any employment contract include:

1. the employee’s responsibilities
2. the pay and pay schedule, benefits, and commissions or bonuses
3. leave and how to request it
4. profit-sharing and stock options
5. mileage and travel expenses
6. rules for the use of company property
7. rules and processes for employee discipline and termination

The last point above needs elaboration. An employment contract should spell out exactly what steps an employer must take in order to terminate the employee legally. This provision will help to protect an employer from a possible lawsuit for wrongful termination.

An employer may also want to include clauses in an employment contract that clarify employer policies regarding matters such as harassment and discrimination. It’s a good idea.

WHAT ABOUT NON-COMPETE AND CONFIDENTIALITY AGREEMENTS?

Some employers in Florida should also have their employees sign non-compete agreements. Employers in our state have only a limited legal ability to keep ex-employees from competing against them – and for only a specific length of time and in a certain geographical location.

Still, a good business lawyer can help you draft the best possible non-compete agreements. The right business attorney can also help you draft confidentiality agreements that Florida courts, if necessary, will enforce.

Employment contracts are legally binding and enforceable. If one party to a contract fails to meet its contractual obligations, the other party has the right to take legal action.

Contract dispute resolution is handled through the state courts, so Florida employers need to work with a business attorney who has substantial experience handling contract dispute cases in this state.

WHY SHOULD YOU AVOID PRE-PRINTED CONTRACT FORMS?

Every word that is printed in an employment contract counts. Every line is important. Employers absolutely must avoid using the pre-printed, blank contract forms that you can buy at an office supply store or download from the internet.

Instead, as an employer, you need precisely-written contracts drafted exclusively for your own company’s needs. A business attorney can protect an employer by drafting easily-understood employment contracts that cannot be misconstrued or misinterpreted.

Employers who wish to hire employees on an at-will basis, for instance, must avoid any language in an employment contract that leads an employee to believe that the period of employment will be indefinite.

Additionally, employers who wish to bind employees to particular terms and conditions must ensure that the language in an employment contract will hold up and will protect their interests if challenged in court.

WHAT’S THE BEST WAY FOR EMPLOYERS TO AVOID LEGAL PROBLEMS?

Deciding to retain a business attorney is the smart step that every Florida employer should take to avoid most legal problems and to deal constructively with any legal problems that may become unavoidable.

A good business attorney will help you draft, interpret, and enforce employment contracts, and if necessary, will guide you through the legal process if you are sued over an employment contract – or if you need to have an employment contract enforced.

Employers routinely sign a variety of contracts. It’s an almost daily part of doing business. However, there’s no such thing as a “simple” business contract, and if you own a business, you should never sign a contract without the advice of a good business attorney.

WHEN SHOULD YOU CONTACT A FLORIDA BUSINESS ATTORNEY?

Employers should have a business attorney review every line and every word of every contract they sign or use in their business on a regular basis.

A good business attorney should also sign off on any modifications, deletions, or additions to any business contract. The advice of a good business lawyer is invaluable, and the slight cost can save a business owner immeasurably in the long run.

Choose to protect yourself and your Florida business starting today. If you do not already have the services of an experienced business attorney, make the call immediately. Protecting yourself and your business is always the right thing to do.

The Importance Of Choosing The Right Business Structure

Posted on: September 16, 2018 by in Business Law
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When starting up a new business, choosing the business structure that is most compatible with the goals of your company is imperative. If you are forming a new business here in Florida, or even if you are already a business owner in this state, a Central Florida business attorney can help.

What follows is a brief description of the various business structures and some tips on how to choose the structure that is right for you and your company. Generally speaking, businesses in Florida conform to one of these four basic business structures:

1. sole proprietorships
2. general or limited partnerships
3. S or C corporations
4. limited liability companies (LLCs)

WHAT DO SOLE PROPRIETORSHIPS OFFER?

The sole proprietorship is the most popular and most traditional business structure. More than 17 million sole proprietorships currently operate in the United States.

To start up a sole proprietorship, what you’ll need is a basic business license, any special permits (such as a liquor license or a contractor’s license) that your particular business may require, and a Social Security number.

A sole proprietorship is the simplest business structure to start up. If you are the only owner and your business is not incorporated, you are a sole proprietor. However, sole proprietorship provides a business owner with very little legal protection.

WHAT IS THE BIGGEST RISK WITH SOLE PROPRIETORSHIPS?

Your income as a sole proprietor is taxed only once, because you and your company are considered the same “legal entity.”

Thus, one of the negatives to a sole proprietorship is that when the business is at risk, the owner’s personal assets may also be at risk.

If your sole proprietorship cannot pay its debts, creditors may pursue – and in some cases seize – your personal assets as well as your business assets.

A sole proprietorship, therefore, requires discipline – it is not for everybody – because the complete responsibility for the business falls on one person.

WHAT DO PARTNERSHIPS OFFER?

Partnerships are another quite popular business structure. Partnerships are established when at least two persons do business together. Much like a sole proprietorship, a partnership is relatively easy to start up.

The state of Florida allows both “general” partnerships and “limited” partnerships. A general partnership, like a sole proprietorship, provides the owners with only the minimal legal protection.

HOW ARE “LIMITED” PARTNERSHIPS DIFFERENT?

A limited partnership in Florida must have at least one general partner managing the business and assuming liability for its debts, but a limited partnership must also have a “limited” partner – at least one investor who brings capital to the business but is not involved in management.

If they do not participate in the company’s management, a partnership’s limited partners are not liable for the debts of the company.

WHAT DO CORPORATIONS OFFER?

A corporation is a business structure that is a separate legal entity with multiple owners. As a legal entity, a corporation has legal “rights.” When a corporation is sued, the owners in most cases are legally insulated from personal liability (with several exceptions explained below).

Corporations appoint directors, routinely conduct corporate meetings, and record the minutes of those meetings. A corporation’s ownership can change through the transfer or sale of the corporation’s stock.

Corporations are stringently regulated. The IRS closely scrutinizes a corporation’s financial conduct.

IN WHAT SITUATIONS ARE A CORPORATION’S STOCKHOLDERS LIABLE?

Although shareholders are generally protected from personal liability, if a corporation’s creditors can demonstrate that business and personal funds were “commingled,” a corporation’s shareholders may become personally liable for its debts.

A corporation’s creditors may also pursue a shareholder’s personal assets if they can prove that the corporation was created simply and only to protect its shareholders. Proving such an allegation is called “piercing the corporate veil.”

WHAT ARE “S” CORPORATIONS AND “C” CORPORATIONS?

The two main types of corporations in the U.S. are “S” corporations and “C” corporations.

C corporations are taxable entities taxed at the standard corporate tax rate, but an S corporation’s losses and income are divided among the shareholders and transfer or “pass through” to the shareholder’s personal taxes.

A limited liability company has the limited liability that a corporation offers. An LLC’s owner may be a sole owner, a trust, a corporation, or another LLC. Depending on how they are established, LLCs may be taxed like partnerships or like corporations.

With some rather extensive paperwork and a good business attorney’s help, an LLC can be taxed like a partnership, but otherwise, an LLC will be taxed like a corporation.

WHAT’S BEST FOR YOUR BUSINESS?

You will have to choose one of these four basic business structures when you start up a business in Florida. The choice you make will determine how much paperwork you must submit, the way you will be taxed (and the tax rate), and your personal liability.

Your choice of a business structure has long-term implications. When you decide to start up a new business in Florida, the smartest move you can make is consulting with a Daytona Beach business attorney regarding the structure of your business.

Every business will require the help of an accountant and a business lawyer. The right business attorney can provide assistance with concerns including taxes, zoning, copyrights, trademarks, and compliance with employment and hiring laws.

HOW CAN A FLORIDA BUSINESS LAWYER HELP YOU?

All businesses are governed by federal, state, and local laws and regulations. A business lawyer can help you establish the business policies and practices that will protect you from lawsuits and other legal problems.

Business owners – almost daily – face a number of legal issues that directly affect their businesses: personal injury claims, discrimination claims, intellectual property protection, environmental concerns, advertising regulations, and of course, taxes.

If you’re starting up a new business in Florida, a business lawyer will also assist you with drafting the legal documents you will need, including but not limited to:

1. by-laws
2. articles of incorporation
3. shareholder agreements
4. operations agreements
5. any other contracts, agreements, and policies

WHY IS LEGAL HELP SO VITAL FOR BUSINESS OWNERS TODAY?

Even routine, everyday business decisions – like hiring decisions – can open the door to potential legal difficulties. Business owners in the 21st century need legal help now more than ever before.

Do not let a legal dispute bring your business to a standstill. If you are a business owner in Florida, develop a long-term relationship with an experienced Central Florida business attorney.

Make the call to a business lawyer today. It’s the best business investment you can make.

The 3 Major Pitfalls That Small Businesses Encounter

Posted on: August 16, 2018 by in Business Law
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Independent, small and mid-sized businesses are the foundation of Florida’s economy. Whether you’ve been a business owner for years or if you are just now starting up your first business venture, you need sound legal advice and reliable legal services.

When you work with an experienced Daytona Beach business attorney, your attorney will focus on the many legal issues and concerns that business owners face every day, including but not limited to:

1. hiring and discrimination matters
2. liability concerns
3. taxes
4. compliance with zoning, advertising, and environmental regulations

WHAT ARE THE TOUGHEST LEGAL PROBLEMS BUSINESS OWNERS FACE?

A business attorney can handle a number of business and legal matters on a business owner’s behalf, including three of the trickiest legal problems that business owners encounter:

1. contracts
2. hiring and employment discrimination laws
3. personnel policies

A business owner must have everything in writing, without exception. This includes contracts for services, leases, other real estate documents, storage agreements, and employment contracts.

HOW CAN A LAWYER HELP YOU WITH CONTRACTS?

Have a business lawyer review all of your business contracts and other important documents, and never sign a business contract or agreement unless and until you know precisely what you are agreeing to.

Business owners routinely sign contracts. Contracts, in fact, are so common in business that you can download blank contract forms from a number of websites or you can buy pre-printed blank business forms at office supply stores.

WHY SHOULD YOU AVOID PRE-PRINTED CONTRACTS?

Every line counts in business contracts. Avoid using blank and pre-printed contract forms.

Pre-printed contract forms with vague language and broad generalizations may not be enforceable. If you are a business owner, you need precisely-written contracts drafted strictly and specifically for your business needs.

That is just one of the many reasons why the services of a trustworthy business lawyer are so imperative. Your lawyer will protect your interests by drafting easily understood, legally valid and enforceable contracts that meet your business needs and can’t be misunderstood.

WHAT LAWS GOVERN HIRING AND LEAVE RIGHTS?

For thousands of workers in Florida, the protections offered under federal law by the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990 (ADA), the Pregnancy Discrimination Act of 1978 (PDA), and the Family and Medical Leave Act of 1993 (FMLA) are essential.

Under the ADA, disabled persons are a legally protected class. If someone can perform the job, it is illegal for an employer to fire, refuse to hire or promote, or discriminate in any other way against someone because that person is physically or mentally handicapped or disabled.

The Family and Medical Leave Act requires businesses with fifty or more employees to provide unpaid, job-protected family and medical leave, without interruption of group health insurance coverage, for twelve weeks for qualified medical and family reasons.

The Pregnancy Discrimination Act requires any business with fifteen or more employees to treat pregnant employees exactly like other employees are treated based on their capacity or incapacity to perform the job.

WHEN CAN A LEGAL PROBLEM ARISE?

Whenever a business hires – or does not hire – a job applicant, a legal challenge could arise.

Any misunderstanding or misstep regarding hiring and employment laws could put a small business owner on the wrong end of a hiring or employment discrimination suit.

If you are a business owner in Florida and you have any questions or concerns about any aspect of the federal employment laws, or if you’re being sued for hiring or employment discrimination, speak at once to a skilled business lawyer – and get the legal help you need.

A qualified business lawyer will help you stay compliant with hiring and employment laws and with the multitude of other confusing and overlapping state, federal, and local laws and regulations that govern businesses.

WHAT IS A PROPER PERSONNEL POLICY?

Beyond hiring and employment discrimination claims, as your company grows, it will need appropriate personnel and human resource policies. The right personnel policies put solutions in place before personnel problems can become legal problems.

A good business attorney will help a Florida business owner create, establish, and enforce the personnel policies that fit your business requirements.

A good business lawyer will also recommend – and will help a business owner draft – an employee handbook that precisely explains your company’s personnel procedures and policies.

If you need to conduct an internal investigation of your business, or if you need legal advice or representation regarding any employer-employee dispute, a good business lawyer can help.

A business lawyer will also provide training and legal advice to your supervisors and managers regarding personnel policies. You will receive the sound legal advice, representation, and services that every business owner in the state of Florida needs.

HOW ARE MOST BUSINESS CONFLICTS RESOLVED?

As you probably know, the majority of business disputes are resolved privately and outside of the courtroom. The right personnel policies provide quick solutions and deter costly, unnecessary lawsuits.

And that is what you need when you own a business; quick, out-of-court solutions that let you focus on business rather than problems.

As your operation grows over time, you must have consistent, trustworthy, reliable legal counsel. The right business lawyer will help you make the changes that need to be made and will help you to remain compliant with the scores of laws that regulate and govern your business.

WHAT DOES EVERY BUSINESS OWNER NEED?

In the 21st century, every business owner needs guidance through the maze of employment and hiring laws and the endless list of zoning, tax, environmental, and advertising regulations.

You need an advocate who can fight aggressively on your behalf if your business is cited by the government or sued by an individual or another business. You also need a lawyer who will safeguard your intellectual property and act as your corporate registered agent.

In today’s litigious business environment, you simply cannot do business effectively without the advice of a reputable business lawyer.

Put a reliable business attorney on your team – now, or from the very beginning. That way, you’ll be working with someone who already understands you and your business when legal needs arise or when legal matters need serious attention.

If you do not already have the services and advice of a Florida business attorney, now is the time to reach out for the legal help that you and your business need.

What Are The Four Major Business Formation Types?

Posted on: July 20, 2018 by in Business Law
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The economy is booming. There has perhaps never been a better time to start up a new business in the state of Florida.

Starting up a new business usually requires making some tough decisions. You will encounter a variety of unanticipated obstacles and dilemmas. For example, you’ll have to choose exactly what kind of business entity is best for you and is most compatible with your goals. This is where a Daytona Beach business formation attorney can help.

WHAT ARE THE FOUR TYPES OF BUSINESS ENTITIES?

The four types of business entities – that is, the four ways to form and structure a new business – are:

1. Sole Proprietorships
2. Partnerships
3. Corporations
4. Limited Liability Companies (LLCs)

But however you choose to set up your business, you will need to have the advice, insights, and services of a business attorney.

Your attorney can make certain that you’ve covered all the bases, filed all of the required forms, met all of the deadlines, and paid all of the fees. Your business attorney can also help you avoid legal problems in the future by helping you put solutions in place now – before problems arise.

HOW DOES A SOLE PROPRIETORSHIP WORK?

Sole proprietorships are the simplest business entities. A sole proprietorship has one owner. All you need to start a sole proprietorship is a Social Security number and the basic business licenses and permits.

Simplicity is one of the benefits of a sole proprietorship. Taxes are another. The income of the owner and business is taxed once – rather than twice, first as a company and then as an individual.

What are a sole proprietorship’s other advantages? You won’t have any conflicts with partners when you are a sole proprietor, and if you need to dissolve the business, it can be easily done.

Prospective sole proprietors should understand that the law actually does not distinguish between the owner and the business. Hence, one disadvantage of a sole proprietorship is that the owner’s assets can be imperiled if the business suffers difficulties.

Sole proprietorships are not for everyone. It takes talent and discipline to operate a sole proprietorship successfully and to take full responsibility for every decision.

HOW DOES A PARTNERSHIP WORK?

When two or more owners agree to operate the same business together, that business is a partnership.

Partnerships are similar to sole proprietorships in that they are relatively inexpensive and easy to form. Partnerships, however, have unique liability and tax issues.

One advantage of a partnership is the shared responsibility for decision making and management. A disadvantage is that unresolved conflicts can put the business at risk. Another disadvantage is that one partner’s legal or financial mistakes can put the entire operation in danger.

HOW DOES A CORPORATION WORK?

The advantage of a corporation is that it’s the most adaptable and flexible business form. Corporations are chartered by the state and have legal rights like a person.

A big advantage of corporations is the limited liability enjoyed by the owners because corporations are considered separate legal entities. If the business is sued, owners are protected from personal liability.

Corporations are subject to scores of regulations, and their financial activity is carefully scrutinized by tax authorities.

A corporation must appoint directors, conduct regular meetings, and record the minutes of those meetings. Ownership of a corporation can be easily changed through the sale or transfer of stock.

HOW DOES A “C” CORPORATION DIFFER FROM AN “S” CORPORATION?

A C corporation is considered a separate taxable entity by the IRS, is taxed at the standard corporate tax level, and is then in effect taxed again at the personal income tax level when dividends (or payments) are made to the shareholders.

An S corporation is not taxed at the corporate level. Instead, the income and losses are divided among shareholders and “pass through” to their personal income taxes.

An S corporation cannot have over one hundred shareholders, and they must be U.S. citizens or lawful permanent residents. C corporations face no similar restrictions.

C corporations may issue different classes of stock. S corporations may issue only one class of stock, so all shareholders have the same voting rights.

Finally, banks, insurance companies, and several other types of businesses do not qualify to become S corporations.

HOW DOES A LIMITED LIABILITY COMPANY (LLC) WORK?

An LLC has many of the advantages of a corporation, and along with the limited liability it provides, an LLC may be owned by an individual, a trust, another LLC, or a corporation.

With some paperwork and a business attorney’s help, an LLC can be taxed like a partnership, but otherwise, an LLC will be taxed like a corporation.

An LLC’s members and managers are not required to conduct regular meetings, so an LLC’s paperwork and legal restrictions are less burdensome than a corporation’s.

WHY IS A BUSINESS LAWYER’S HELP SO IMPORTANT?

Although these are the four basic types of business entities, the rules that govern the formation and management of these business types differ slightly from one state to another.

That’s why it is imperative if you are starting up a business here in the Sunshine State, to work with a skilled business attorney from the very beginning.

The right business attorney will help you determine which business entity is the best fit for your own goals and circumstances. A business lawyer will also help you draft whatever legal documents your new business requires, including:

1. by-laws
2. articles of incorporation
3. shareholder agreements
4. operating agreements
5. all other agreements, contracts, and policies

WHAT ELSE WILL A BUSINESS ATTORNEY DO ON YOUR BEHALF?

Florida law also requires business owners to name a registered agent to act on behalf of your business. Your business attorney should serve as your registered agent.

If you are served with a lawsuit, a summons, or any other official documents, a registered agent must be available and authorized to receive and sign for such documents.

When you are starting up a business in this state, having the services of an experienced business attorney is imperative. As your business grows, your attorney will be able to advise you on a variety of matters – from zoning to employment law to taxes.

Get the legal help you need – from the start – to make your new Florida business a success. It’s the very first investment your company should make.

Equity And Startups – How Does It Work?

Posted on: June 20, 2018 by in Business Law
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The economy is booming in 2018, and scores of entrepreneurs in Florida are starting up new business enterprises this year. Many of these startup businesses will recognize their first employees for taking a chance with a new company by rewarding them with some equity.

However, a company may choose to do it, issuing equity to employees is a complicated procedure. It can raise a number of complicated tax and legal issues. This is where a business formation attorney comes in.

WHY WILL A NEW BUSINESS NEED AN ATTORNEY’S HELP?

Startups are not easy. If you are an entrepreneur who is starting up a business in Florida, you will face a number of questions, issues, and expenses that must be handled the right way.

Any time that someone starts up a new company, the number of details to remember and decisions to make can feel almost overwhelming.

There is no easy way to manage everything that a new business owner will be responsible for, but in this state, it will be imperative for that new business owner to have the guidance of an experienced Central Florida business attorney.

Every business is unique. If you are starting up a business anywhere in Florida in 2018 or beyond, you are going to need the personalized services, insights, and sound legal advice that a reputable and trustworthy business lawyer will provide.

An attorney who has substantial experience advising and representing business owners can ensure that the best interests of your company and your employees are fully legally protected.

WHAT’S THE BEST WAY FOR A COMPANY TO ISSUE EQUITY TO EMPLOYEES?

How a Florida business owner should handle the issuance of equity to a company’s first employees will hinge on the company’s particular circumstances and the answers to the following three questions.

Below, you will learn how the answers to these questions will affect the way that a business issues equity:

1. What are the long-term goals of the business?
2. How old (or young) is the business?
3. What is the business worth?

WHAT ARE THE LONG-TERM GOALS OF THE BUSINESS?

Is your business on track for rapid growth and an IPO? Or will it stay private and grow slowly and incrementally? The answer needs to be taken into account when you determine how to provide equity to your earliest employees.

The options available for issuing equity compensation will depend on whether your business is a limited liability company (LLC), a C corporation, or an S corporation. Corporations more often issue equity to their employees, but LLCs also have ways to issue equity.

Corporations usually provide equity through stock options or restricted stock. With both methods, there are usually restrictions on how the stock may be transferred or sold. Of course, when the company is sold or goes public, employees may then sell their shares.

HOW DO LLCs SHARE EQUITY?

Obviously, in a limited liability company, other arrangements for issuing equity have to be made. Limited liability company owners often reward employees with some type of profit-sharing.

The most common approach to sharing equity in an LLC is to share “profits interests.” A profits interest is comparable to a stock appreciation right.

While it is not precisely a profit share, a profits interest is instead a share of the rise in the value of the LLC over a specified period of time.

Equity compensation is more common in corporations, so the answers to the next two questions will focus on how (and when) a corporation should issue equity to employees

HOW OLD (OR YOUNG) IS THE BUSINESS?

How well-established is the company? When you decide what type of stock compensation to issue, you should take into account whether the business just started or if it has already been in operation for several years.

In a company’s earliest stages, the least expensive and easiest way to issue equity is with restricted stock.

When you are still building your company with the original personnel, restricted stock is superior to stock options as a motivational tool.

Restricted stock makes the holder an owner of the business when the stock vests, unlike stock options that do not entitle the holder to ownership until the option is exercised at a future date.

However, if your company is well-established, has revenue, or has raised significant investment money, you may decide to go with stock options when you reward your employees.

WHAT IS THE BUSINESS WORTH?

As your business increases in its value, using restricted stock to reward employees becomes a less attractive option. For a flourishing company that is making good profits, establishing an option pool is the most common choice for issuing equity to employees.

To create an option pool, the business sets aside fifteen or twenty percent of its outstanding shares so that those shares may be issued to employees in the future as part of a stock option plan.

If you are the founder and owner of a startup in Florida, offering equity to your first employees can be a superlative motivational tool. But you must take into account the advantages and disadvantages of the various ways that equity can be distributed.

However you choose to do it, there will be considerable tax consequences for both yourself and your employees. You must be careful to adhere to all of the state and federal financial laws and regulations, or you – and potentially even your employees – could face tax penalties.

IS IT IMPORTANT TO HAVE A WRITTEN BUSINESS PLAN?

If you plan to start up a business in Florida, creating a business plan in writing – before you do anything else – could be a genuine key to success. A proper plan defines your business, its mission, its goals, and its operating procedures.

A business attorney can help you draft a workable business plan that satisfies your goals and protects your interests.

With a trustworthy business attorney representing you and your business, you can know that your company’s legal matters are handled properly.

IN WHAT OTHER WAYS CAN A BUSINESS LAWYER HELP?

A good business attorney will protect your company’s intellectual property, help you draft and negotiate contracts, and represent you as your corporate registered agent.

As a business owner, you already know that you must have reliable legal advice from an experienced business lawyer who can help you put solutions in place before legal problems arise.

Your business isn’t a hobby. Get the legal advice that you need. It’s only a phone call away.

Breaking Up With Your Business Partner

Posted on: May 16, 2018 by in Business Law
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In 2015, the number of partnerships doing business in the U.S. surpassed two million. That may sound impressive, but if you take a closer look, you’ll find that most business partnerships seldom endure.

What’s the best way to break up a partnership? What are the challenges of breaking up with your business partner? What are the potential advantages and disadvantages?

Every business in Florida is unique. Whether you are launching a partnership or dissolving one, you’re going to need the personalized advice and insights of an experienced Daytona Beach business attorney.

HOW FREQUENTLY DO PARTNERSHIPS BREAK UP?

“Breaking Up is Hard to Do” was a hit song forty or so years ago, but when it comes to breaking up business partnerships in the 21st century, it happens all the time, and it’s probably more common than you think.

Entrepreneur.com, for example, reports that the business partnership breakup rate in the United States now exceeds the divorce rate.

Below, after some terms are defined, you’ll learn how to protect yourself, your business, and your best interests if a dispute arises with one of your business partners.

WHAT IS A PARTNERSHIP? WHAT ARE THE TYPES OF PARTNERSHIPS?

A “partnership” is a business – that is not a corporation – that’s owned (or more precisely, co-owned) by more than one person.

The three forms that a partnership can take are:

1. General partnerships: When two or more persons jointly do business for profit, it’s usually a general partnership, and every partner is defined as a general partner.

2. Limited partnerships: The owners of a limited partnership must include a “limited” partner or partners as well as a “general” partner or partners. Personal liability for the debts of the business belongs to the general partners but not to the limited partners.

3. Limited liability partnerships (LLPs): LLPs protect partners from liability or responsibility for another partner’s misconduct or negligence.

ARE YOU PREPARED FOR A PARTNERSHIP BREAKUP?

Every business person knows that it’s mart to prepare your business for the future. If another partner suddenly dies or unexpectedly suffers a debilitating injury or illness, or if unresolvable differences emerge, what will happen?

Partners need to know.

Understanding how to dissolve a partnership properly, and putting a dissolution plan in place for your own partnership, is imperative.

If it’s not handled properly, dissolving a partnership can damage your business with disruptions and bad publicity. In the worst scenario, dissolving a partnership can put you out of business. In some states like Arizona, the laws are different, so an Arizona business succession lawyer may be able to help.

HOW CAN A BUSINESS LAWYER HELP?

With diligent advance planning, breaking up with your business partner does not have to disrupt or negatively impact your business.

Far too frequently, ex-business partners accuse one another of intentional interference, property conversion, breach of contract, and a number of other charges.

But with a good business attorney’s sound advice – right from the start – partnerships in Florida can prosper, and a business or personal disagreement doesn’t have to grow into a difficult legal dispute. If you are in New York, a New York civil law attorney may be able to help.

HOW CAN YOU PROTECT YOURSELF IN A BUSINESS PARTNERSHIP?

Listed below are some recommendations for partnerships or for anyone starting a partnership here in Florida:

1. Have a business lawyer draft your partnership agreement.

2. Have the books kept by a commercial accountant or accounting agency.

3. Record and keep the minutes of all business meetings.

4. Decide if partners should sign non-solicit agreements or non-compete agreements.

5. Spell out in writing how the partnership’s dissolution will be handled.

6. Ensure that each partner understands his or her own fiduciary duty.

7. Spell out in writing how partners are to be compensated and assets are to be divided.

Attorney Melody Lankford suggests, “…in an ideal situation, the governing documents of the company will address how to handle the situation when one of the business partners leaves the company either voluntarily or involuntarily. I recommend that my clients create these governing documents when they are first forming the company. This is similar to a honeymoon period for the business partners and even though it can be uncomfortable to discuss “what ifs,” this is the best time to make those decisions.”

She adds, “in some cases, a business partnership will not come to fruition because they partners could not agree from the outset. I tell my clients that is the best time to realize that you will not make a good partnership. On the other hand, if this is not discussed in the governing documents, the situation will be analyzed in light of state law. In most of these cases, both parties will retain legal counsel and the process will be long and drawn out. I highly recommend that these situations be addressed at the inception of the company.”

HOW DO PARTNERSHIP BREAKUPS HAPPEN?

Business partnerships seldom go bad unexpectedly. More often, disappointments, disagreements, suspicions, and tensions incrementally rise over time, slowly eroding trust and respect among partners.

And sometimes, the most trivial disagreement or dispute is the last straw when partners are ready to call it quits.

Your partnership agreement should spell out each partner’s responsibilities, and it needs to guarantee that partners have access to all company records, books, client lists, and company correspondence.

But as you might imagine, even the precisely-written agreement sometimes can’t stop a legal dispute from emerging.

HOW ARE BUSINESS PARTNERSHIP DISPUTES RESOLVED IN FLORIDA?

Legal disputes between partners don’t necessarily have to be contested courtroom trials. In Florida, most partnership disputes are resolved out-of-court through arbitration or mediation, saving both sides money and time while protecting your business from disruption or damage.

If you’re convinced that breaking up with your business partner is unavoidable and imminent, determine your priorities.

When there’s no dissolution plan in writing for the partnership, you may need to consider a buyout, and you may need to change your company’s business structure. Take into account your personal finances, your liabilities, and your business and personal goals and needs.

Partners must protect their interests, so when partners split, who gets what can very quickly become the only really important question.

The genuine value of a partnership is based on a variety of factors, so in some cases, the testimony or statement of a valuation expert will be needed to determine precisely what the business is worth – and who gets what.

IN A PARTNERSHIP BREAKUP, WHY IS A LAWYER’S ADVICE IMPERATIVE?

If you’re breaking up with your business partner, try not to let your emotions influence you. Think clearly and objectively. Seek a business lawyer’s insights and advice.

Unfortunately, and far too frequently, a business owner will wait until the last possible minute to retain the services of a business attorney. But when you work with a good business lawyer from the start, that lawyer can usually put legal solutions in place before legal disputes emerge.

After reviewing the facts, a good business lawyer can suggest the best ways to handle a partnership breakup and the most constructive ways to move forward after the breakup is final.

The demands and challenges of owning and operating a partnership in Florida can be daunting. Business owners need all the help they can get.

Before your dreams and hard work are put at risk by a partnership breakup or by any other potential legal dispute, put an experienced business lawyer to work on your behalf.

Owning Multiple Businesses: Do I Need To Form A Holding Company

Posted on: April 16, 2018 by in Business Law
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Holding companies are established for the purpose of owning and organizing one or more other companies.

In the state of Florida, many entrepreneurs own several small businesses. Would these Florida business owners benefit by creating holding companies? Can a business formation lawyer in Daytona Beach help?

Here are some answers and a brief introduction to the advantages for business owners of establishing a holding company in Florida.

EXACTLY WHAT IS A HOLDING COMPANY?

A holding company is a corporation or a limited liability company (LLC) which owns the outstanding stock in other companies. Those other companies are called operating companies or subsidiaries.

A holding company may also be called a parent company or an “umbrella” company.

Here in the United States, for example, Berkshire Hathaway is a famous holding company which wholly owns both Geico, the insurance company, and Dairy Queen, the ice cream and fast food chain, along with a number of other companies.

But establishing a holding company might also be the right move for someone who owns several small businesses here in Florida, for reasons that you are about to learn.

A holding company typically does not produce goods, offer services, or conduct any activities apart from borrowing, lending, and making investment decisions.

WHY ARE HOLDING COMPANIES FORMED?

For the owners of small businesses, the most important benefits of establishing a holding company are the protection of assets and the reduction of taxes.

Small business owners in Florida usually choose to form a holding company as an LLC, because a corporation’s structure typically does not offer the best asset protection.

Business owners can maximize their asset protection by forming two LLCs, one as an operating company and one as a holding company. Provided that the companies remain distinct legal entities, a holding company is not responsible for the debts of an operating company. If you are a Texas business owner, an asset protection attorney in Texas may be able to help.

WHAT WILL IT COST TO FORM A HOLDING COMPANY IN FLORIDA?

If you choose to form a corporation – rather than an LLC – as a holding company, Florida currently charges a $70 filing and registered agent fee. The final cost of incorporation, however, will depend on factors like your location and the kind of corporation you form.

A business attorney can help you form either a corporation or a limited liability company here in Florida. For an LLC, the state currently requires a $100 filing fee and a $25 registered agent fee.

ARE THERE RESTRICTIONS ON BUSINESSES OWNING OTHER BUSINESSES?

Legal business entities may own other legal business entities in Florida, with only these restrictions:

1. If an LLC owns a corporation, that LLC must choose C corporation tax status. An LLC may not own an S corporation. Only trusts, estates, and individuals may own S corporations.

2. Sole proprietorships may not own other businesses.

ONCE YOU FORM A HOLDING COMPANY, HOW SHOULD YOU MANAGE IT?

To maintain their independence as distinct companies, an operating company and a holding company must keep separate accounting records and bank accounts.

Most of your resources should be held by the holding company, which can then make loans as needed to the operating company or companies.

If the operating company was started before the holding company, transfer the operating company’s business assets into the holding company.

You must maintain accurate records of transactions between your holding and operating companies. A holding company also must claim income for whatever it earns from the operating companies in rent or lease payments.

You must perform any operating activities – such as the sale of products or services – through an operating company. To keep a holding company from any liability to an operating company’s creditors, a holding company must never conduct operating activities.

WHAT DOES “PIERCING THE CORPORATE VEIL” MEAN?

“Piercing the corporate veil” is the legal phrase that describes what happens when holding companies are held accountable for the debts of operating companies.

When the finances and activities of the companies are mixed, a holding company can be ordered by a court to pay an operating company’s debts.

You must ensure that employees who perform operating tasks are the operating company’s employees and are paid by the operating company – not by the holding company.

There are benefits to using an LLC as a holding company, but the importance of keeping a holding company’s activities and finances separate from an operating company’s activities and finances cannot be stressed strongly enough. It’s imperative.

Accounting shortcuts, improperly documented transactions between the companies, and commingled funds could cause a court to “pierce” your “corporate veil” if a creditor sues an operating company.

And that would defeat one of the primary purposes of establishing a holding company.

WHAT ELSE SHOULD YOU KNOW ABOUT HOLDING COMPANIES?

Most of the cash should be kept in the holding company’s account, earning interest, and loans may be made to the operating company as needed. Cash in a holding company account is not subject to any other company’s debts or liabilities.

You must file separate tax returns each year for each company. Do not hesitate to seek tax help from your accountant and/or your business attorney.

In Florida, all LLCs, corporations, and limited partnerships must file an annual report with the state between January 1st and May 1st each year. And depending on your location and the type of businesses you own, you may also be responsible for a number of other fees and taxes.

An experienced Central Florida business attorney can help you keep track of fees, licensing requirements, and deadlines, and can answer all of your questions about establishing and maintaining a holding company here in Florida.

In some cases, it may actually be more advantageous – at least in terms of your taxes – to have your operating company or companies registered in Florida and your holding company established in another state.

HOW CAN A BUSINESS ATTORNEY HELP?

In summary, a Central Florida business attorney can help you determine:

1. whether you would benefit from establishing a holding company
2. whether it should be an LLC or a corporation
3. whether it should be established in Florida or in another state

Business is booming in Florida in 2018, so if you are a business owner, you want to take advantage of the opportunities while they last.

Obtain the legal advice and services that your business or businesses will need.

Partner with an experienced business lawyer who can not only help you establish a holding company and but who can also provide the entire range of legal services that a Florida business owner genuinely needs.

Should I Convert My Business Into A Corporation?

Posted on: March 19, 2018 by in Business Law
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What are the new changes to federal tax laws, and how will those new changes impact small and mid-sized business owners in the state of Florida? Can a Central Florida business law firm help? Here are the details:

The key elements in the Tax Cuts and Jobs Act of 2017 are a reduced rate for corporate taxes and a substantial new deduction for pass-through entities.

The federal corporate tax rate, which was previously 35 percent, is now set at 21 percent as a result of the Tax Cuts and Jobs Act, which became law in December.

HOW WILL THE NEW TAX LEGISLATION AFFECT YOUR FLORIDA BUSINESS?

If you are the owner of a small or mid-sized business in the state of Florida, how will the new legislation impact your business? How will it impact your taxes?

By lowering the taxes imposed on corporations, Congress hopes that more new corporations will start up and that established foreign corporations will move to the United States.

The owners of many small and mid-sized businesses are also now thinking about transitioning those businesses into C corporations to benefit from the corporate tax rate of 21 percent.

Is that a good idea for business owners in Florida?

You’ll want to keep reading if you own a business here, because several state laws that you will need to know about must be considered if and when that decision is made.

HOW IS A “C” CORPORATION DISTINCT FROM AN “S” CORPORATION?

A C corporation’s profits are taxed separately from its owners under subchapter C of the Internal Revenue Code. In an S corporation, the profits are passed on to the shareholders, and are taxed based on personal returns under subchapter S of the Internal Revenue Code.

C corporations are owned by the shareholders, who elect directors to make business decisions and determine policies. A C corporation’s owners have limited liability.

C corporations pay taxes at the lower, new 21-percent tax rate.

Owners of pass-through businesses – partnerships, S corporations, sole proprietorships, and LLCs – pay taxes on their own share of the operation’s income at the higher rate for individual taxpayers – as much as 37 percent now under the Tax Cuts and Jobs Act.

WHY SHOULDN’T A PASS-THROUGH ENTITY BECOME A C CORPORATION?

Nevertheless, there are good reasons – like the state of Florida’s tax laws – why business owners in Florida may choose not to convert a pass-through entity into a C corporation.

One reason: There is actually a double tax, in effect, on a C corporation.

A C corporation pays taxes on its profits at 21 percent, but there is, in effect, another tax when a corporation distributes its profits to shareholders as dividends. Shareholders are then generally taxed at a 23.8 percent tax rate.

This makes for a combined shareholder and corporate and tax rate (for top bracket shareholders) of 39.8 percent. If the company is a pass-through business, an owner’s highest tax rate is only 37 percent.

Most small and mid-sized business owners in Florida are in a lower tax bracket. When the additional tax is accounted for, converting a Florida company to a C corporation may not be a good idea.

WHO PAYS FLORIDA’S ONLY STATE-LEVEL “INCOME” TAX?

Additionally, in this state, C corporations alone are subject to a state-level income tax. Converting to a C corporation in Florida adds an extra 5 percent to the company’s taxes. That five percent would pass through to the owners in a pass-through business.

Because of that 5 percent tax in our state, the tax for a top tax bracket owner of a C corporation would be 43 percent, rather than the 37 percent top rate for a pass-through business.

The Tax Cuts and Jobs Act also creates an automatic 20 percent deduction for most pass-through businesses, so if the income of your Florida business totals $100,000 in 2018, for instance, only $80,000 of that total will be taxable.

When a Florida business is eligible for the 20 percent pass-through business deduction, the total tax for a pass-through business owner is 29.6 percent.

WHY DOESN’T CHANGING A FLORIDA BUSINESS TO A C CORPORATION HELP?

In states with an individual income tax, a pass-through entity’s owner pays tax on the income the business earns. Florida has no personal income tax, so converting to a C corporation does not help a business owner in our state.

Even among the states that do not collect an individual income tax, Florida is different.

Other states without an individual income tax impose gross receipts or franchise tax on both pass-through businesses and corporations. In these situations, a mediation attorney in Houston, TX may be able to help.

Therefore, the owners of businesses in those several states are not disadvantaged – like Florida’s business owners – when they convert a pass-through business to a C corporation.

WHEN SHOULD YOU CHANGE THE STRUCTURE OF YOUR BUSINESS?

Only after consulting with a Central Florida business attorney and with your tax advisers should any Florida pass-through business be converted to a C corporation.

The single exception to the 20 percent deduction rule is that owners of service-oriented businesses may take advantage of the deduction only if their operations earn under $157,500 a year (for an unmarried owner) or less than $315,000 (for a married owner).

When will Florida’s business owners begin to see the effects of the Tax Cuts and Jobs Act of 2017? It could take some time. The legislation only became law in December, so many business owners have been revising their budgets and business plans for 2018.

The typical wage earner and the typical business owner may not have their personal taxes lowered before 2019. Take-home pay will rise immediately, but only slightly.

HOW CAN A BUSINESS ATTORNEY HELP?

Sound legal and tax advice from a business lawyer can protect a business owner from making the wrong decisions and from paying too much in taxes. Every business owner needs an attorney.

Do not wait until you need a lawyer’s help; that may be too late. You need a reliable legal partner at your side right now who will constantly be working on your behalf.

With the right business lawyer on your team, routine legal matters will be dealt with expeditiously and unanticipated legal issues will be handled by someone you know and trust.

If you own a business in the state of Florida, and if you have any questions regarding the Tax Cuts and Jobs Act or the structure of your business that have not been answered here, an experienced Daytona Beach business attorney can help.