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Starting a business requires a steady buildup of capital and decision making to ensure the right business structure is established. The operations of a business and the obligations the enterprise is expected to adhere to are all factors associated with the type of business entity an entrepreneur chooses for their business. Types of business entities available include:
In Florida you can establish a sole proprietorship without filing any legal documents with the Florida Department of State. You only need a name filed as a trade name with the Department of State, appropriate licenses, permits, and zoning clearance and an Employer Identification Number. A sole proprietorship has the entrepreneur as the sole decision maker who also bears the personal responsibility and consequences of both assets and liabilities. Legal responsibilities and risks are higher for the individual considering no corporate structure exists.
Building your business entity as a partnership gives you the chance to distribute risk between the partners and also have the roles and obligations split or distributed equally. Generally having a partnership agreement can lay out contributions, responsibilities and dissolution steps. Legal responsibilities and risks are not as high for the individual considering there are shared partnership liabilities, although there is no shield from individual liability as no corporate structure exists.
Limited Liability Companies
A limited liability company can be created by partnerships, corporate entities or even a single individual. A distinct entity, registering a limited liability company will allow management duties to be handled by an executive manager or board. Widely viewed to have similar benefit to a S-Corporation, it also creates a layer of protection to the entities or persons creating the legal entity as liability will typically rest with the LLC and not its members.
This is usually for larger companies that aim to consolidate businesses of when tax advisors suggest the alternative. Options include either a C or S-Corporation. A C-Corporation can attract taxation twice (corporate and then personal level on distributions) while an S-Corporation usually just has taxation on an individual level, similar to a single member LLC. Any business registering as a Corporation is by default a C-Corporation until they file and then change their status with the IRS.
It is important to choose the right business formation structure to ensure appropriate liability protection and to consider investment considerations and tax obligations. Coordinating with a tax advisor is also strongly recommended. Failure to choose the correct business structure often results in excessive taxation, management issues and inconsistency in liability distribution and value sharing. Hutch Brock and Brock Law in Wesley Chapel have years of experience navigating thee issues and provide legal advice on business law matters. With Brock Law, you can be sure that your business will be properly represented. Visit our website or call Brock Law at 813-333-7267 to learn more about which business entity is right for you and your business.