When deciding to form a business in Florida, there are several options available. The most common business entities are corporations, limited liability companies, partnerships and sole proprietorships.
Corporations and LLCs
A corporation is an independent entity that exists separately from the people who own, control and manage it. The corporation can enter into contracts, pay taxes and transact business. The owners have limited liability.
Limited liability companies (LLCs) are similar to corporations, but there are a few key differences. The owners have limited liability, but an LLC is not required to hold regular stockholder meetings, management meetings or comply with other corporate requirements.
Partnerships and sole proprietorships
A partnership exists where there are two or more people who co-own a business. They share the profits and losses of the business. Usually, each of the partners contribute something to the business such as money or property.
Partnerships can either be general or limited. In a general partnership, each of the partners have equal rights and responsibilities. Each partner is responsible for the business’s debts and obligations and each partner can act on behalf of all of the partners in this arrangement.
In a limited partnership, each of the partners can decide whether to limit his or her personal liability. Limited partners are not responsible for the partnership’s actions, debts and obligations, but they do not have a right to manage the business.
A sole proprietorship is a business owned and operated by an individual. There is no distinction between the business and the owner in this type of structure.
An experienced attorney can help prospective business operators determine which structure is right for them.