One of the most critical aspects of entity formation is selecting the most advantageous business entity. For both big and small businesses, the options include:
- Sole Proprietorship
- This is the simplest form of a business entity in which all liabilities are the sole responsibility of the proprietor, and all losses and profits are reported on his or her personal income taxes.
- General Partnership
- A general partnership is very similar to a sole proprietorship, but has two or more owners who share responsibilities, profits, and liabilities.
- Limited Partnership
- In Florida, Limited Partnerships are governed by the Florida Revised Uniform Limited Partnership Act of 2005, Chapter 620, Florida Statutes. In this type of entity, there must be at least on general and one limited partner, each with different rights, duties, and liabilities. Typically, general partners are responsible for the liabilities incurred by the partnership while the liability of limited partners is restricted to the amount of their investment.
- Limited Liability Partnership
- Florida Limited Liability Partnerships are also governed by Chapter 620, Florida Statutes. These partnerships engage in the practice of public accountancy, law, or architecture and can only be formed by two or more partners licensed to practice in the field of the partnership.
- Limited Liability Company
- In Florida, a Limited Liability Company (“LLC”) is governed by the Florida Revised Limited Liability Company Act, Chapter 605, Florida Statutes. LLCs are one of the most popular entity choices. This type of entity offers tax advantages while limiting personal investor and owner liability.
- In Florida, corporations are governed by the Florida Business Corporation Act, Chapter 607, Florida Statutes. In an s-corporation, the shareholders and not the entity, are taxed.
- A C-corporation is a more complex entity structure in which both the entity and the owners are taxed on the profits of the corporation. This can lead to double taxation, which is why many corporations formed in Florida elect the S-Corporation entity.
Our attorneys at J&J Legal will advise you on the advantages and drawbacks of each and help you make a decision based on your unique needs, goals, and risk preferences. Contact us today to schedule an appointment.