CHOOSING A BUSINESS ENTITY
By: Matt Mathews
The question of choosing the appropriate business entity under which to operate may come up in a variety of situations. Frequently, the question arises at the startup of a new business. However, a similar analysis should occur when, for example, an existing business considers converting to a different business entity.
Realizing that the ultimate choice of a business entity will depend largely on the type of business operation, the analysis should focus on general principles that differentiate between the available business entity choices. However, these basic characteristics are just the first step in determining which entity is best. A close examination of the owners' specific requirements relating to ownership, control, management, growth, taxation, liability, compensation, cost, administration and flexibility is also necessary.
The common business entities from which to choose are:
(1) Sole Proprietorship; a sole proprietorship is a business conducted by an individual who owns all of the property and business assets. The sole proprietor is personally liable for business obligations.
(2) General Partnerships; a general partnership is defined by Florida Statutes as an association of two or more persons to carry on a business for profit as co-owners. Partners are generally liable personally for the obligations of the business
(3) Limited Partnerships; a limited partnership is a partnership that has one or more general partners (who are liable for the obligations of the partnership) and one or more limited partners (liable only to the extent of their actual or committed investment in the partnership). The formation of a limited partnership requires filing a Certificate of Limited Partnership with the Department of State.
(4) Limited Liability Partnership; the 1999 statutory revisions to Florida Partnership Law now authorize a general partnership to elect the status of limited liability partnership (LLP) simply by filing with the Department of State a Registration, and a Statement of Qualification.
(5) Corporations; a corporation is a legal entity formed under State law that provides its owners, the shareholders, with limited liability.
(6) S Corporations; an S Corporation, also known as a small business corporation, has made the required election under Internal Revenue Code Section 1362 to be treated as having certain partnership characteristics for tax purposes, while continuing to exist as a corporation.
(7) Limited Liability Companies; a limited liability company (LLC) is a non-corporate entity organized under State law that provides its owners, who are called members, the limited liability of a corporate shareholder while allowing the pass-through tax treatment of a partnership.
Matt Mathews was in business and commercial land development for eight years prior to starting his law practice in 1990. Since then he has been dedicated to helping clients develop successful strategies in business plans, estate plans, contracts, real estate and mortgage law.
Florida Limited Liability Company Facts
The business entity formation process begins in our office with a review of certain information from a prospective client. After analyzing the information, Matt Mathews contacts the client to discuss preliminary recommendations. If you want to begin the process, contact our office to request a copy of our Business Entity Formation Questionnaire for your completion. Alternatively: 1) print out the following form and send it to our office by mail or fax; or 2) save the form to your computer, complete the form on your computer and send it to our office by email to thefirm@mathewslawfirm.com,or deliver it by mail or fax.
Download the Business Entity Formation Questionnaire
If you have any questions about the form, call our office at (850) 681-9303.
For assistance with corporate research, contact CorpDirect Agents
corpdirect.com
