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To start a business in Florida, you need to choose a business name and decide on your company structure. There are several types of business entities, including sole proprietorships, limited liability companies (LLCs), limited liability partnerships (LLPs), and corporations.
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A sole proprietorship is an unorganized business with only one owner. Unlike corporations, sole proprietorship income is taxed as the owner’s personal income. If you decide on a sole proprietorship, you will be personally responsible for your business debts and obligations as a business owner. If you work in Florida, there is no Florida income tax, but you must collect sales tax if you do.
Freelancers and gig workers often start out as sole proprietors and later upgrade to an LLC after business profits justify the cost of forming an LLC.
Limited Liability Company (LLC)
Like a sole proprietorship, an LLC is a separate legal entity with one or more owners or members. When you form an LLC, creditors cannot legally go after your personal assets as long as those assets are privately held by you. If your LLC goes bankrupt, your personal assets are protected from creditors and employee liability. An LLC may elect to be taxed as a sole proprietorship, partnership, or corporation.
There are many ways to start an LLC in Florida. The best LLC services 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 your business.
Limited Liability Partnership (LLP)
An LLP is similar to an LLC in that it provides legal protection to the owner partners. In Florida, however, LLPs are still personally liable for partnership debts. An LLP provides protection to each partner from the liabilities of other partners. LLPs are typically used by people who provide professional services, including architects, lawyers and accountants. While some states do not offer LLPs, Florida does.
LLPs are tax entities, with the partners paying income tax on the firm’s profits on their personal tax returns.
Corporation
Starting a corporation is similar to forming an LLC, although the structure of the corporation differs. Like LLCs, corporations are separate legal entities that protect the personal assets of the owners, but corporations have shareholders, directors, and officers. Corporations are subject to other requirements, such as holding regular shareholder meetings and maintaining corporate records.
An S-corp is a type of corporation that offers certain tax benefits to those who qualify for S-corp status. Large corporations that want to issue more than one class of stock or depend on attracting venture capital are incorporated as C corporations (C-corps).
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