What is the Best Legal Structure for My Florida Business?
While the type of business can help determine which legal structure will help drive its growth, the number of parties involved in its creation, operation, and success will ultimately determine whether you form a sole proprietorship, general partnership, LLC, or corporation.
Here is what new business owners need to know about starting their vision on the right — and legal — foot.
Is a Sole Proprietorship Legal Structure Right for My Florida Business?
The most basic legal structure for a Florida business is a sole proprietorship.
Like it sounds, a sole proprietorship means you — solely — are the business.
Sole proprietors must register the business under a name that is not their own and renew it every five years with the Department of State Division of Corporations.
The advantages of sole proprietorships include having zero equity interests issued to other parties, no restrictions on how the company operates, and the ability to transfer its ownership freely.
The most common disadvantage of owning and operating a sole proprietorship is that there is no protection from its creditors, making the business owner personally responsible for all debts associated with the company.
That means all creditors, including vendors or a property owner who holds the company’s lease, can sue the business owner personally.
To help avoid the risk of creditors successfully pursuing your business for its debts, consider creating a partnership, LLC, or corporation to protect your interests.
Is a General Partnership Legal Structure Right for My Florida Business?
When two or more people form a for-profit business in Florida, it is called a Partnership.
While no formal registration is needed to start a Florida partnership, all standard business enterprise rules apply once it is up and running, including how your business operations are governed by Florida’s Revised Uniform Partnership Act.
In short, creating a partnership agreement establishes a rulebook for your business.
This legal document dictates how the:
- Business is run, including the relationships between the partners
- Profit and loss sharing is distributed
- Conflicts will be resolved
Talk to our skilled Florida business start-up attorneys today to learn if a general partnership is right for your company, so we can help you get started.
Is a Limited Liability Company (LLC) Legal Structure Right for My Florida Business?
Forming a limited liability company (LLC) in Florida provides its owner(s) with limited liability protection, so personal assets are not at stake in the event your business is sued or cannot pay its debts.
There are multiple advantages to the LLC legal structure, too, including the ability to create a legally binding operating agreement and address member disputes without litigation.
Is a Corporation Legal Structure Right for My Florida Business?
A corporation’s legal structure offers liability protection to the owner, so all assets and liabilities can be in the name of the corporation.
Once the owner files for, and receives confirmation of Articles of Incorporation, he or she should sign all leases, contracts, and other legal documents in name of the corporation only, and not personally.
The advantages of incorporating your Florida business include:
- Limited liability for debts and actions of the corporation
- Personal asset protection for shareholders
- The ability to raise funds and generate capital through the sale of stock
- Corporations file taxes separately from their owners, providing the ability to only pay taxes on corporate profits paid in the form of salaries, bonuses, and dividends
- Shares of ownership can be transferred unless restricted by articles of incorporation, shareholder agreement, bylaws, or another agreement between the corporation and its other shareholders
Determining which business structure is best for your company can be complex. Our skilled Florida Business Litigation attorneys help simplify the process, so you can make informed decisions about your future success.
Contact MLG Business Litigation Group in Florida Today to Get Started
We will review your documents and/or offer our legal advice using a flat fee, so you can plan and pay for your legal costs upfront, so you can take the next steps and schedule your initial Zoom meeting today.