Forming a new business involves many decisions, but choosing the type of business structure you want to form is the most important one. In the United States, you can form as either an LLC, corporation, sole proprietorship, or partnership.
LLCs offer a business structure that is a hybrid of both a corporation, as well as a sole proprietorship or partnership. You will not be liable for the company’s debts or liabilities (similar to a corporation) but are afforded pass-through taxation, (similar to a partnership or sole proprietorship).
This type of business can be formed for the purpose of owning and operating a business, but are most popular for offering the same limited liability as a corporation. They are also easier to run with fewer limitations.
How an LLC is more flexible than a corporation
LLCs protect the owner's assets, similar to a corporation, but they are much more flexible to run. For example, an LLC can be a single-owner business, a partnership, or a multi-member structure, and there are no limits to the number of members in an LLC.
Additionally, LLCs are able to elect taxation. This is either as a sole proprietorship/partnership or corporation. Although standard corporations have formalities and rules set by state laws, LLCs are able to create an operating agreement with their own rules.
Laws that govern an LLC can always be changed. They are either managed by members (owners) or managers who run the LLC. Members will automatically have an equal ownership interest but can own any portion based on what is set in the articles of organization. It can also be modified as needed.
What are the Legal Requirements of Florida LLCs?
In order to establish an LLC in Florida and be in good standing with the state you have to meet these requirements.
Each LLC is required to have a unique name. In the state of Florida, it must not be taken by any other LLC in the state. It also needs to be registered with the secretary of state.
The registered agent of an LLC accepts service of process. Every LLC must have a person or entity appointed in this role. They must be over the age of 18, have a legal address in the state of Florida, and be available during business hours.
Florida does not require an LLC to have an operating agreement, but it is recommended because it can help to solve arguments and protect the limited liability statute.
Articles of Organization
The articles of organization are also known as a Certificate of Organization. These are required in order to form your LLC and are issued by the state of Florida. They are also filed with the state and provide basic information about your business.
The Articles of Organization should include:
- Principal and mailing address
- Name and address of the registered agent
- Management structure
Different tax forms must be filed by the LLC in order to stay compliant with state laws. Because LLCs are automatically given pass-through taxation, the profits and losses of the business will pass through to the owners. Then, taxes will be paid out on their own personal tax returns.
Who is an LLC Best for?
LLCs are great for businesses of any size, especially because you can have one member or 300 members. If you are looking to protect your personal assets as a business owner, liability protection is second to none. LLCs are also more flexible than corporations and are the most common legal entity used to own rental and commercial property.
However, forming a corporation can be a good option if you are a business that wishes to offer public shares, or you want to reduce tax liability and avoid double taxation. Because corporate taxation is only 21%, sometimes this means less paid in taxes for certain owners.
Work with a Lawyer to Create Your LLC
Forming an LLC offers many benefits but, specifically, that you know you will stay in compliance with all laws. Working with a lawyer to form your LLC can help you to avoid mistakes, and enjoy the benefits that an LLC has to offer.