BUSINESS & CORPORATE LAW ATTORNEY - BUSINESS & CORPORATE LAW LAWYER
Business start-ups can be difficult for even experienced entrepreneurs. Determining the type of entity for your business requires a detailed analysis of balancing the needs and scope of your business with the established legal requirements and provisions. Determining whether your business structure will be a sole proprietorship, a partnership, a corporation, or a limited liability corporation requires careful consideration and close attention to the detailed needs of your business. It is often necessary to develop customized operating agreements, bylaws, minutes, articles, share certificates, and other documents needed to get up and running.
The most common forms of business entities include:
(1) Sole Proprietorship: A sole proprietorship is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business. The owner receives all profits and has unlimited responsibility for all losses and debts. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor's. This means that the owner has no less liability than if they were acting as an individual instead of as a business.
(2) Partnership: A partnership is an association of two or more persons who carry on as co-owners in a business for profit. There is no requirement to register a partnership with a state, but most partnerships use a partnership agreement to clarify the relationship. The partners are taxed from the income (or loss) of the partnership on their personal income tax return. In Florida, there are several different types of partnerships whose structures vary depending upon the partner’s desired personal liability. Such partnerships include general partnerships, limited partnerships, and limited liability partnerships.
(3) Corporation: A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. An important feature of a corporation is limited liability. If a corporation fails, shareholders may lose their investments, and employees may lose their jobs, but neither will be liable for debts to the corporation's creditors. Because a corporation has its own existence, it pays taxes on its own income. That said, a corporation can elect to be taxed as a “S-Corp” which will convert it to a flow through federal tax entity.
(4) Limited Liability Company (LLC): A limited liability company (LLC) is a flexible form of enterprise that blends elements of partnership and corporate structures. An LLC, although a business entity, is a type of unincorporated association and is not a corporation. The primary characteristic an LLC shares with a corporation is limited liability, and the primary characteristic it shares with a partnership is the availability of pass through income taxation. It is often more flexible than a corporation, and it is well suited for companies with a single owner.
Once you have chosen what type of business entity you will establish, formation documents must be filed with the Florida Department of State to legally create the entity. You will need a company name, principal address (which must be a physical Florida address) and a mailing address for the company, which may be a PO Box if preferred. You will also need the names and addresses of all the owners and an email address for correspondence from the state.
Next, the business should obtain an EIN or Federal Employer Identification Number from the IRS. This is a unique tax ID for your new business and needs to be used with any transactions for the business. Think of it as your businesses social security number. A FEIN is also crucial to acquire a business license or occupational license with the county. A business license/occupational license or business tax receipt is required by most counties in Florida to have the legal ability to do have a business in that county. Finally, a bank account must be established since all monies coming in and going must travel though the company bank account.
The next step is to prepare the internal governing documents for your business. Depending on the type of entity chosen, this could take the form of Bylaws, Operating Agreement, Partnership Agreement, Etc. These agreements are necessary to clearly spell out your personal liability protection, how profits will be split up, how major business decisions will be made, and the procedures for handling the departure and addition of owners. Further, these agreements help to avert misunderstandings among the owners over finances and management. It allows you to create your own operating rules rather than being governed by the default rules in Florida’s laws, which might not always be to your benefit.
Once you have all these steps in place, then you are ready to begin your business and are legal in the state of Florida.
Although Florida does not require that a lawyer be involved with the incorporation process, at Rice we analyze your specific business situation, and advise you on your choices between the various business forms, or advise that you don't do anything at all. Unlike the online document preparation services, you will receive legal advice from a real Florida business lawyer, not a machine. Our lawyers will discuss your business structure, goals and challenges, as well as perform the necessary filing procedures. Our experience and client dedication allows us to help you avoid common incorporation mistakes including: choosing the wrong entity, having insufficient capital, or not treating your corporation as a separate entity.
At Rice, we offer guidance and expertise that will help you realize your business dreams as seamlessly as possible. Our attorneys have assisted many businesses in starting-up, and are prepared to meet with you for a consultation to see how your business goals can be most readily fulfilled. Contact us so that we can begin the process of incorporating your business today.
Back to Business & Corporate Law main page.