If you are a Florida entrepreneur, you probably are thinking of starting a new business. Your choice of business entity will have lasting consequences with regard to who owns it, how it will be managed and how it will pay taxes.
As the Florida Division of Corporations explains, you can form one of the following four types of businesses:
- Sole Proprietorship
- Limited liability company
A sole proprietorship is the simplest business structure you can form. You and you alone own and operate it. There is no distinction between you and it. If you choose not to operate your sole proprietorship under your legal name, you must register a fictitious business name with the Florida Division of Corporations.
If your business is going to have owners in addition to yourself, you may wish to form a partnership. In a simple partnership, each of the partners contributes something to the business, such as money, real property, etc., but these contributions may not necessarily be of equal value.
Should you and your partners decide that all partners will share equally in the rights and responsibilities of the business, this is a general partnership. Each partner can act on behalf of all other partners and each partner shares equal responsibility for the debts and obligations of the business.
If you and your partners choose to form a limited partnership, it will be composed of both general and limited partners. While both types of partners share in the business profits, only the general partners operate it. In addition, limited partners have only limited personal liability. They are not responsible for the actions of general partners or the debts and obligations of the business.
If you establish a corporation, it is its own legal entity, separate and apart from any of its owners and/or those who control and manage it. Corporations pays their own taxes and the owners have limited liability for debts and obligations. Should one of the owners die or sell his or her share of the business, the corporation does not dissolve.
Limited liability company
If you form a limited liability company, you will have many of the same benefits, including limited personal liability, as you would if you formed a corporation. One of the biggest advantages of an LLC is that it need not comply with many of the rules to which a regular corporation is subject. For instance, an LLC does not have to hold regular stockholder or management meetings.
Starting a new business is a serious undertaking. The information presented here is only intended to educate and should not be interpreted as legal advice.