You only need one person to set up an LLC in Florida and the process is not complicated, but you must fully understand how this will affect your company’s taxation and what protections it offers you personally.
If you decide that this is the proper structure for your business, you must study the Florida LLC statute before setting up your limited liability company.
Most businesses have trouble fully understanding all statutes in relation to LLC status, which is why professional filing services and business lawyers are available for guidance. To get started, read through this information to determine whether you are interested in this business structure.
What is a Florida LLC ?
A limited liability company, or LLC, is often thought of as an alternative to forming a corporation. There are advantages to forming a corporation, but not all businesses want the double taxation that comes along with that business structure. That business structure may also just be too overwhelming or confusing for some small businesses or new startups. For other businesses, it is simply unnecessary when basic protections can be achieved through the less rigorous LLC structure.
A limited liability company does not come with the double taxation that comes with a corporation. Each stock holder in the company receives the profits of the business, and they are responsible for filing taxes on those profits with their personal income taxes each year. Yet, they are still protected against all liabilities that may legally be lodged against the business.
What does this really mean for your company? It means your company may accumulate debt, but you will not personally be held responsible for that debt. It means someone can file a lawsuit against your company, but they will only be able to go after the assets of the company. Your personal assets remain off limits, given you are running your business properly and abiding by all Florida laws while following the Florida LLC statute closely.
Florida LLC Advantages
Most business owners initially consider an LLC or corporation because they want to protect their home, car, and other personal assets from any liabilities that may be lodged against their business. With so many people looking for any small reason to take a company to court and win money, even the smallest startups are now concerned with lawsuits. Many will look at incorporation first, only to back down to the LLC option when they find the double taxation of incorporation too much.
The peace of mind that comes with knowing your personal assets are always secure from business liability is the biggest advantage to forming a Florida LLC, but there are some other advantages to consider:
- No double taxation (the LLC is not taxed itself)
- Choice of taxation model: corporation, S-Corp, sole proprietorship, partnership
- Shareholders are not required to meet each year, as they would with a corporation
- Power to make decisions is not placed on a board of directors, as it would be with a corporation
- The business remains in existence if the owner dies, even in the case of sole proprietorship
In general, the LLC structure is much easier to set up and keep up with over time. You don’t have to fill out as much paperwork or maintain as many records for your company; and you never have to turn power of the company over to a board. You can file on your own, with a partner, or with multiple partners. You can select the taxation model that fits your company best, so you have control over what Florida LLC statutes you must abide by in regards to paying taxes.
Florida LLC Disadvantages
There are a lot of advantages to forming a limited liability company, but you also have to keep the potentially negative aspects in mind. The biggest disadvantage may simply be the time required to read through Florida LLC statute and learn how to properly form this type of business so you remain eligible for that valuable personal protection from liability.
For instance, you will have to select the right taxation model when forming your LLC. It is an advantage that you won’t be double taxed, but you also have to keep in mind that each taxpayer involved will have to pay self-employment taxes on the income they receive from the business if you do not select the best taxation mode when establishing your LLC.
You also have to consider that limited liability corporations are treated differently in different states. If your business expands beyond state borders, you could struggle to keep up the statutes in every applicable state.
One of the biggest concerns with an LLC is the fact that your business can lose certain privileges if certain things are done or certain criteria are not met as expected. You have to do your research and completely understand how to operate your business within the confines of this structure. Business decisions will have to be made in relation to the Florida LLC statute or you could risk losing some of the advantages that convinced you to file for LLC in the first place.
Is a Florida LLC Right for Your Business?
If you want some protection against lawsuits and debts of your company but also want to maintain control over your company, then a Florida LLC may be the best business model for your venture. You receive the protection that would come with filing for a corporation, but you don’t have to worry about the complicated structure and statutes that come along with that business model.
If you decide that you want to file for Florida LLC, it is important to read through the Florida LLC statute before filing. It is also a good idea to study up on a corporation structure so you know what the differences are and make the right choice for your business.