To start a business in Florida, you need to choose a business name and decide on a company structure. There are several types of business entities, including sole proprietorships, limited liability companies (LLCs), limited liability partnerships (LLPs), and corporations.
Sole proprietorship
A sole proprietorship is a non-corporate business with only one owner. Unlike corporations, the income of sole proprietorships is taxed as the personal income of the business owner. If you decide to become a sole proprietor, you will be personally responsible for the debts and obligations of your business as a business owner. If you do business in Florida, there is no Florida income tax, but you must collect sales tax if applicable.
Freelancers and gig workers often start out as sole traders and then upgrade to an LLC when their business profits allow them to support the costs of forming an LLC.
Limited liability company (LLC)
Unlike a sole proprietorship, an LLC is a separate legal entity with one or more owners or members. Once you form an LLC, creditors cannot legally go after your personal assets, as long as those assets are secured by the LLC and not by you personally. If the LLC goes bankrupt, your personal assets are protected from liability from creditors and employees. LLCs can choose to be taxed as a sole proprietorship, partnership, or corporation.
There are many different ways to form an LLC in Florida. The best LLC services will handle all the details of business formation, including obtaining a federal employer identification number (EIN) and filing the legal documents required by the state of Florida to form a business.
Limited Liability Partnership (LLP)
LLPs are similar to LLCs in that they provide legal protection to the owner-partners. However, in Florida, the LLP is still personally liable for the partnership's debts. An LLP protects each partner from the liability of the other partners. LLPs are often used by people who provide professional services, such as architects, lawyers, and accountants. Some states do not offer LLPs, but Florida does.
An LLP is a pass-through tax entity, meaning the partners pay income tax on the company's profits on their personal tax returns.
Co., Ltd.
Forming a corporation is similar to forming an LLC, but the structure of the corporation is different. Like an LLC, a corporation is a separate legal entity that protects the personal assets of its owners, but it also has shareholders, directors, and officers. Corporations are subject to other requirements, such as holding regular shareholder meetings and maintaining corporate records.
An S corporation (S-corp) is a type of corporation that provides certain tax benefits to those who qualify for S-corp status. Large organizations that wish to issue multiple classes of stock or rely on attracting venture capital typically incorporate as a C corporation (C-corp).
