As the Florida economy improves, an entrepreneur starting a new business should consult with legal counsel to help determine what type of business structure to choose.
While the national economic recovery has been slow and not without bumps in the road, things are looking up for Florida, according to two May 2015 articles by Sarasota's Herald-Tribune that included analysis of governmental data.
The paper reports that University of Central Florida's economist Sean Snaith in a recent Sarasota address said that Florida's job growth rate beats the national rate, with Sarasota coming in as one of the top metropolitan areas in the state in 2014 in this area. Snaith was optimistic, despite that the job-growth rate also reflects a developing part-time employment sector.
Still, factors pushing things in the right direction in Florida, particularly Southwest Florida, are population growth, a steady rise in home values and sales, increased consumerism, tourism, and spending of retirement and investment account assets.
In this current economic climate, Floridians who have been considering new businesses may decide that now is the time to make their moves and create new businesses of all sizes.
One of the first things an entrepreneur should do is to find a business lawyer for guidance and advice early on, and one of the most important initial decisions in establishing a business is the choice of business entity.
In other words, how should the business be structured for legal purposes? The choice of business entity is heavily influenced by business goals and how the founders' vision for how they would like to see it operate, including matters of:
- Management and control
- Personal liability and acceptance of risk
- Anticipated duration of business, succession planning and exit strategies
- Source of operating funds and investment capital, and role of investors
- Size and scope of business
- Federal and state tax implications
- And more
Business entities are creatures of state law, and Florida is similar to other states in its offerings:
- Sole proprietorship: The simplest way to do business is when an individual hangs up a shingle him or herself without actually creating an artificial entity within which to work. The sole proprietor makes management decisions, pays taxes on business income on his or her personal return and is personally liable for business debts and obligations.
- Corporation: The corporation itself (and not its founders or owners personally) is normally liable for business debt. It is managed by a board of directors and officers, is liable for business taxes and has perpetual duration unless officially dissolved. Ownership is in shareholders who invest by purchasing stock and are paid in dividends.
- Partnership: The general partnership is created by two or more persons going into business together. Partners are liable for partnership debts and receive profits. Florida has other variations on the general partnership that have some aspects of limited liability (limited partnership, limited liability partnership, limited liability limited partnership).
- Limited liability company or LLC: A modern entity that is a corporation-partnership hybrid limiting personal liability of members. Taxation issues are complex and somewhat flexible.
- And more
A business owner considering opening a new business should consult with legal counsel experienced in business start ups. A business attorney can explain the different entity types in more detail and provide a cost-benefit analysis of each considering the entrepreneur's goals.
The commercial lawyer can then assist the client with drafting all legal documents associated with setting up the business and assist with required governmental filings.
From offices in Bradenton and Tampa, the business organizations attorneys at Yanger Law Group, P.A., represent Florida clients in establishing their businesses, as well as out-of-state and international clients doing business in the state.
Keywords: Florida, new business, business entity, choice, management, liability, risk, tax, sole proprietorship, corporation, partnership, limited liability company, LLC, debt