Florida Business Florida Business EntitiesEntities

(Basic Guide to Start a (Basic Guide to Start a Business)Business)

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Basic organizational form in which its owner owns and operates the organization. No formal state filings needed and all profitsare taxed as personal income.

Two or more persons carrying on a business as co-owners. Generally, no legal formation requirements--not even a written partnership agreement. If there isno written agreement in effect, the state’s Uniformed Partnership Act (UPA) will control the partner’s relationship.

Partnership CharacteristicsPartnership Characteristics

Continuity: Continuity: Each time a Each time a partner leaves (or a new partner leaves (or a new one is admitted), the one is admitted), the existing partnership is existing partnership is dissolved and a new one is dissolved and a new one is created. The withdrawing created. The withdrawing partner is entitled to partner is entitled to his/her share of the his/her share of the partnership assets. partnership assets. Termination can occur Termination can occur upon partner’s disability, upon partner’s disability, death, or bankruptcy.death, or bankruptcy.

Control: Control: Unless agreed Unless agreed to otherwise, each partner to otherwise, each partner has one vote and actions has one vote and actions must be approved by must be approved by majority vote.majority vote.

Liability: Liability: All partners are All partners are fully liable for partnership fully liable for partnership debts.debts.

Taxation: Taxation: Partnership itself Partnership itself pays no taxes but individual pays no taxes but individual partners report their income on partners report their income on their own personal tax returns. their own personal tax returns.

Indemnity Clause

Limited liability partnerships are similarto LLCs but generally address specialcircumstances surrounding business associations among licensed professionalsSuch as attorneys, CPA’s, Doctors

Two classes of partners--limited and general. The limited partner merely contributes capital to the partnership. Thelimited partner has no right to participate in the decisionmaking. The limited partner’s liability is limited to his/herinitial investment. Usually a written agreement specifyingthe relationship between the partners is required as well asa filing with the states division of business entities.

An entity separate and distinct from its owners that doesbusiness under a charter provided by the state. It is generally advantageous if a business will have many factors of production and/or require large amounts of capital. Owners usually can transfer their shares freely

CorporationCorporationCharacteristicsCharacteristics

Cost: Cost: Typically Typically greater start up greater start up costs then costs then partnerships or partnerships or proprietorships proprietorships because of excesses because of excesses legal formalities of legal formalities of incorporation. incorporation. Control: Control: Depends on Depends on stock ownership division and stock ownership division and voting rights.voting rights.

Liability: Liability: Limited Limited liability and the liability and the individual shareholder’s individual shareholder’s liability is limited to the liability is limited to the value of their value of their investments.investments.

Taxation:Taxation: Unless a Unless a Subchapter S, the Subchapter S, the corporation will pay taxes on corporation will pay taxes on any income it earns and any income it earns and shareholders must pay taxes shareholders must pay taxes on income distributed to on income distributed to them--- “Double Taxation”them--- “Double Taxation”

Have the best characteristics of bothpartnerships and corporations. They are not double taxed like regular corporations but are limited in theirownership organization.

Limited Liability Companies have the liability advantages of corporations and tax advantages ofpartnerships, but are generally not subject to the same size restrictions as Subchapter S corporations.They are made up of members.

LLC’s can have managers running the operationWhich can be members or non-members

The Corporate VeilThe Corporate VeilCorporations & LLCs Corporations & LLCs enjoy a suit of armor or enjoy a suit of armor or “corporate veil” to “corporate veil” to avoid personal liability avoid personal liability by the shareholders or by the shareholders or owners. However, this owners. However, this protection can be lost if protection can be lost if the company is the company is committing crimes, committing crimes, fraud, disregard of fraud, disregard of corporate formalities corporate formalities and form, or and form, or undercapitalized.undercapitalized.

Don’t forgetInsurance

For all entities!

Available to all entitiesAvailable to all entities

“Doing Business As”– d/b/a– lasts for five yearsUnder Fla. Law and can be renewed.

Review of the basic State filing Review of the basic State filing formsforms

State business entity forms can be found at:State business entity forms can be found at:– www.dos.state.fl.uswww.dos.state.fl.us

– www.sunbiz.org www.sunbiz.org

   

                                   

                                 

                                 

                                           

Additional FormsAdditional FormsLocal County/Municipal Licenses:Local County/Municipal Licenses:- http://ci.ftlaud.fl.us/onestopshop/OccLicense- http://ci.ftlaud.fl.us/onestopshop/OccLicense

- http://www.broward.org- http://www.broward.org

Don’t forget professional license (CPA’s, Doctors) Don’t forget professional license (CPA’s, Doctors) Issued by the State via various administrative agencies—see Issued by the State via various administrative agencies—see

department of business and professional regulation. department of business and professional regulation. http://www.state.fl.us/dbprhttp://www.state.fl.us/dbpr

INS Form: www.ins.govINS Form: www.ins.gov– I-9 (verify US legal residency)I-9 (verify US legal residency)

IRS Forms: www.irs.govIRS Forms: www.irs.gov– SS-4 (FEI or EIN number)SS-4 (FEI or EIN number)– 2553 (election for a s-corporation)2553 (election for a s-corporation)– W-4 (employee tax form)W-4 (employee tax form)

Let’s Not ForgetLet’s Not Forget

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Stephen C. Muffler, Esquire(954) 563-1069www.floridaclosings.comscmuff@msn.com

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