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Business Formation

In Florida, like any other state, residents who are interested in forming a business must comply with specific filing requirements. Failing to comply with these rules can have serious legal implications, so if you are a Florida resident and are considering forming a business, it is important to speak with an experienced business formation attorney who can walk you through the process and help you decide which business model will best serve your interests.

Forming a Corporation

One of the most common types of business that is formed in Florida is the corporation. This type of business model is a good choice for owners who want a degree of protection from personal liability, but also want to be able to attract investors by issuing stock. Other attributes that help convince business owners to incorporate include:

  • The established management structure that comes along with incorporation; and
  • The opportunity to provide employees with either stock benefits or stock options.

Unfortunately, the incorporation process is often expensive and time-consuming, requiring owners to pay a significant amount of fees and prepare a series of documents. For instance, to form a corporation in Florida, business owners must choose a corporate name, which must include one of the following terms:

  • Corporation;
  • Incorporated;
  • Company;
  • Corp.;
  • Inc.; or
  • Co.

The name must also be recognizably different from the names of other companies in Florida. Aspiring business owners are then required to file the company’s Articles of Incorporation, which must contain specific information, including:

  • The company’s name and address;
  • The company’s purpose;
  • The number of shares that the company is authorized to issue;
  • The name, address, and signature of the person designated as the company’s agent for the purpose of service of process;
  • The names and addresses of the officers and directors; and
  • The name and address of the incorporator.

To complete the corporation formation process, the owner must also set up a corporate records book, obtain a federal Employer Identification Number, and create corporate bylaws that set out the basic rules for the company’s operation. Although companies are not legally required to have bylaws, owners are strongly encouraged to create them as they help establish a business’s legitimacy to banks and creditors. Finally, all for-profit corporations in Florida must file an annual report to maintain active status.

Potential business owners should also keep in mind that the profits from traditional corporations may be double taxed. This means that the business itself will be taxed for any profits earned and individual stockholders who earned profits in the form of dividends will also be taxed a second time.

Sole Proprietorships

Those who are looking for a simpler formation process may want to consider establishing a sole proprietorship, which does not require the owner to submit an official state filing. Instead, he or she must only obtain a business or occupational license. Although forming a sole proprietorship is much simpler than forming a corporation, the business owner will be considered personally liable for any of the company’s debts, including all liabilities and taxes. This is because with sole proprietorships, there is no separation of the individual’s personal assets from those of the business. Instead, the profits and losses pass through to the owner, who is then required to pay income taxes on those profits. If a person wishes to form a business with another person, he or she can choose to create a general partnership, which has the same basic characteristics of the sole proprietorship, but with the addition of a partner.

Limited Partnerships

Florida business owners can also choose to create a limited partnership, which is a business entity with two or more owners. Generally, there must be at least one limited partner and one general partner in every limited partnership. The general partners are held personally liable for the debts and liabilities of the partnership, while the limited partner avoids liability as long as he or she does not participate in the active management of the business. In order to form a limited partnership, the potential partners must file a certificate with the state.

Limited Liability Companies

The limited liability company (LLC), combines the best aspects of partnerships and corporations. For instance, LLCs protect corporations from the owners’ personal liability, while also offering the same ease of administration as a partnership. Other advantages include:

  • Pass-through taxation, which means that owners are only required to report their share of profit or loss on their individual tax returns;
  • Flexibility, as there are few if any restrictions on the number of members an LLC is allowed, members can structure management as they see fit, and owners can select one of a variety of different types of profit distribution; and
  • Fewer formalities, as LLCs are not required to keep corporate minutes or record resolutions.

Although there are many advantages to forming an LLC, there are a few drawbacks. For instance, LLCs are more expensive to form than sole proprietorships or general partnerships. Ownership is also harder to transfer than with a corporation.

Those who decide to form an LLC, must take the following steps:

  • Choose a name for the business, which must end with “Limited Liability Company” or a variation of its abbreviation;
  • File the company’s Articles of Organization, which must include the identities of the company’s members as well as the identity of the person designated as the business’s agent for service of process;
  • Obtain an Employer Identification Number;
  • Create an operating agreement;
  • Open a Florida bank account; and
  • Pay all necessary filing fees.

Although the process of forming an LLC is simpler than that required for a corporation, those who are considering filing should speak with an experienced business formation attorney before beginning the process.

Call us Today to Speak With an Experienced Business Formation Attorney

Forming a corporation can be a complex and time-consuming process, so if you are considering starting your own business, please contact Clearwater Business Law at (727) 785-5100 to speak with an experienced business formation attorney who can address your concerns.

TESTIMONIALS

I strongly endorse Andrew Mongelluzzi. He is a very skilled and able business attorney focused on customer service and results. On the front end, Andrew deftly advises new businesses on organizing properly, acquiring necessary licenses, contracting with vendors & customers, and dealing with various compliance issues that may arise. On the back end when things go south, Andrew counsels and navigates businesses through complex commercial disputes and aggressively represents them in negotiations, mediation, arbitration, and in litigation so that businesses can legally move on and get back to business. Andrew’s ability to identify legal issues and approaches to resolve business-related issues is a strength that I have learned from and professionally relied upon in approaching the business matters and cases that I handle. I regularly refer business to Andrew knowing that he will diligently represent his business clients and their best interests.
Relationship: worked together on matter

- Frank N. Genco, Florida Bar No. 440086

We hired Andrew to help us when our insurance company denied our claim when water and sewage damage completely destroyed our Florida Condominium. Even though Andrew made several phone calls and wrote an initial letter, the company continued to deny our claim. He was persistent and continued to help us negotiate with the company until we finally received a fair monetary settlement. He was always quick to respond, helpful, and courteous when working with us. I would recommend him to anyone who is fighting an unjust insurance settlement.

- Harvey

Andrew has represented my business for several years in the area of corporate law, business transactions, collection matters, contract matters, employee disputes, and more. He has always been more than approachable, accommodating and understanding. His approach is not like other lawyers in that he deals with you on your level and is able to incorporate his legal strategies into our business plan/model; instead of allowing lawsuits to takeover the business. Further, his education and practical experience in the business world equates to a valuable understanding of my business.

- Chris

Attorney Mongelluzzi and his team provided excellent and quality service. I always felt that my needs were met and that the firm was invested in me and my case. The quality services I received at Mongelluzzi’s firm were remarkable. From the initial meeting they were responsive to my calls, questions and concerns. All issues were handled professionally and timely, easily accessible, got back to me quickly, aggressive and got me the results that I wanted. Attorney Mongelluzzi and his staff all gave my case their personal attention and provided the quality of work that anyone would want when hiring an attorney.

- Client

Andrew is very thorough defining the outcome expectations. In my case, it was setting up a new corporate entity. He advised me on the most beneficial option and he then executed on that path. Andrew is a very pleasant person to work with. He is determined, skilled and committed to his client’s success.

- Gil Pinney

Andrew helped me through a difficult situation with American Express and we won the case. A great job by Andrew! He also helped me with T&C’s in my company. I would recommend Andrew highly as an attorney.

- John Sams

As a business owner for 12 years I have seen my fair share of ups and downs. Some of the downs would include landlord/tenant disputes and creditors that may have not been fulfilled to agreement. Andrew has met both of these situations for me in a timely, positive, and affordable manner.

- Rich Mattes

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