Factors To Consider In Choosing How To Form Your Business
When a person is looking to start a business in Florida, there are a host of different factors that they must consider before opening their doors, in order to give the business the best possible chance to endure. The type of business one chooses to form is perhaps the most important factor, as different Florida entities place very different responsibilities on their owners and operators.
Necessary To Balance Interests
While there are very few restrictions on who can form a business in the United States, there are certain legal structures that all businesses must follow. Licenses and permits are necessary depending on the type of business one wants to run, but beyond that, a business must be set up in a manner that will efficiently grow its reach and make profit for its shareholders. An owner can decide which type of legal entity they want their business to be, but must make an informed choice based on balancing the potential issues. Examples include:
- Tax considerations;
- Potential personal liability risks to the owner;
- How many executives will be involved (for example, a sole proprietorship is a poor choice for a business where three people have equal amounts of authority);
- Your plans for expansion, both fiscally and geographically; and
- Trying to maintain a level of adaptability so as to avoid stagnation, among other intangibles.
Every business will have different requirements, but the most common legal structures in Florida are partnerships, S-corporations, C-corporations, and limited liability companies (LLCs).
Personal Liability Matters
Perhaps the most significant factor for many new business owners is the issue of how much personal liability they will be forced to bear if their business is pulled into litigation. Many novice owners are unaware that in Florida, merely beginning to do business, without any kind of paperwork or even a business name (also referred to as a d/b/a or dba name), creates a sole proprietorship. (That said, if you do choose to do business under a fictitious name, Florida law does require you to register it with the state.)
Sole proprietorships have no ‘wall’ between the business and the owner, so if the business is sued, the owner cannot protect their assets without running afoul of the law. Conversely, a limited liability corporation (LLC) allows an owner to preserve personal assets since the business is a separate entity from them. LLCs are referred to as pass-through entities, which means that an individual owner or shareholder will report their profit and loss on their taxes, rather than doing so for the entire business.
Contact A Seminole, FL Business Entity Formation Attorney
Creating a business can be one of the most important things a person can do. If you have questions or concerns about getting yours off the ground, calling a Florida business entity formation attorney from the Hunt Law Group can be the best choice for you. Contact us today at (727) 471-0444 for a consultation.