If you start up a small business in the state of Florida, you will have to decide how the business will be structured. It’s an important decision. Every business owner needs to examine carefully the benefits of incorporating the business or establishing it as a limited liability company.

Starting a new business venture means making some tough choices. New business owners inevitably encounter all kinds of unanticipated dilemmas and obstacles. A Daytona Beach business attorney can give you answers to questions like these:

  • Which business structure is best for you and most compatible with your goals?
  • Should you incorporate your business?
  • What does incorporation require?
  • What are the benefits of incorporating?

WHY IS CHOOSING THE RIGHT BUSINESS STRUCTURE SO IMPORTANT?

In Florida, deciding how your business will be structured determines:

  • what kind of paperwork you will have to file with the state and how much
  • how you will be taxed and what your tax rate will be
  • the extent of your personal liability as a business owner

WHY IS BUILDING A TEAM OF ADVISORS ALSO IMPORTANT?

According to business attorney Melody Lankford, “It is critical that business owners begin to create their team of advisors – attorney, accountant, insurance agent, banker, etc. – from the outset.”

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“These advisors work with the business owner to determine which type of entity and what type of coverage makes sense for the business owner as an individual and from the business perspective.”

Attorney Lankford adds, “We also take into account the strategic plan for the business, which can affect entity selection. It can become expensive down the road to change entities because the strategic plan was not considered at inception.”

EXACTLY WHAT ARE CORPORATIONS?

Corporations and limited liability companies (LLCs) are business structures that provide a number of important benefits and important legal protections to their owners.

A corporation is the most flexible business structure. Corporations are chartered by the state and have legal rights similar to the rights of persons. A corporation must name directors, hold regular meetings, and record the minutes of those meetings.

Corporate ownership is changed by the transfer or sale of stock. Most corporations are either “C” corporations or “S” corporations.

C corporations are taxed at the standard corporate rate. However, in S corporations, income and losses are divided among shareholders and “pass through” to their personal taxes. Insurance companies, banks, and several other kinds of businesses may not incorporate as S corporations.

HOW ARE LLCs DISTINCT FROM CORPORATIONS?

LLCs have some of the advantages that corporations enjoy, and along with the limited liability an LLC provides, LLC managers and members are not legally required to hold regular meetings, so the paperwork for an LLC is less cumbersome than the paperwork required for a corporation.

WHY SHOULD YOU CONSIDER FORMING AN LLC OR A CORPORATION?

Limited liability companies are affordable and easy to form in Florida.

business formation

The advantages of forming a corporation or a limited liability company include:

  • Protection for your company’s name: When you create a corporation or an LLC in Florida, no other corporation or limited liability company in this state may use that name.
  • Credibility with the public: The ability to use “LLC” or “Inc.” as a part of your name tells clients and investors that your operation is a legally established, responsible business.
  • Perpetual existence: LLCs and corporations enjoy perpetual existence, while partnerships and sole proprietorships end when their owners die or close the business. A corporation exists “in perpetuity” until the shareholders and directors choose to dissolve it.
  • Asset protection: LLC and corporation owners can keep personal assets separate from their businesses. In sole proprietorships and general partnerships, owners are personally liable for the company’s debts and obligations.
  • Taxes: Double-taxation can be avoided when a business becomes an S-corporation or a limited liability company. In partnerships and sole proprietorships, taxable income flows to the owners, but a corporation’s taxable income is taxed first with a corporate tax.
  • Deductions: Limited liability companies and corporations may deduct their business expenses and employees’ salaries before the profits pass through to the owners.
  • Liquidity: If an owner leaves your company, incorporation allows that owner’s interest to pass easily to someone else. Incorporation allows shareholders to transfer their interest freely to someone else without the consent of the other shareholders.

HOW DO YOU INCORPORATE A FLORIDA BUSINESS?

To establish a limited liability company or a corporation, you must file documents with the Florida Division of Corporations. You must decide on a company name, and you’ll need to make sure that it’s available by going to the Division of Corporations’ website at www.sunbiz.org.

business documents

For a corporation, you must submit “articles of incorporation,” and for a limited liability company, you must file “articles of organization.” Let an experienced Florida business lawyer help. These documents must adhere to a detailed format and must include:

  • the name of the limited liability company or corporation
  • the principal business address of the limited liability company or corporation
  • the name and address of your registered agent
  • the names and addresses of the managers (or managing members for an LLC)
  • the names and addresses of the corporation’s directors and officers
  • the effective start date of the limited liability company or corporation
  • the filing fee

HOW WILL FLORIDA BUSINESS LAW FIRMS HELP YOU?

Your business structure choice will have long-term effects. If you are starting up a new business in Florida – or simply considering a new business – the best step you can take is to meet with an accomplished business attorney to discuss the structure and future of your business.

An experienced business lawyer can address all of your legal concerns regarding zoning, taxes, trademarks, copyrights, and hiring and employment laws. A business lawyer can also help you set up practices and policies that can prevent minor disputes from becoming big legal problems.

Every day, Florida’s business owners grapple with legal challenges that can directly impact their operations: discrimination claims, personal injury claims, intellectual property concerns, advertising and environmental regulations, and the ever-present tax issues.

WHEN SHOULD YOU SPEAK TO A BUSINESS ATTORNEY?

Florida’s business owners need legal help now more than ever before. Whether you set up your operation as a sole proprietorship, a partnership, a corporation, or a limited liability company, you have the right to the insights and advice of an experienced Daytona Beach business lawyer.

business lawyer in FL

If you’re a new business owner, a business attorney can help you to decide which business structure is best for you, your business, and your ultimate business goals. Your business attorney can also draft or review the legal documents that a new business must create.

It is imperative for business owners in Florida to exercise their rights and to take advantage of the knowledge and resources that a good business attorney can provide. Speak to a business attorney promptly. It may be the best investment that you can make.

By: Melody Lankford
After graduating from Davidson College, Melody Lankford earned her J.D. from Florida State University’s College of Law in 2004 and was admitted to the Florida Bar that same year. Ms. Lankford joined Raydon Corporation as in-house counsel in 2004. She worked there until 2012, when she founded the Lankford Law Firm. She is an experienced Daytona Beach small business attorney who offers sound legal counsel and experience-based insights to her business clients.