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What business structures can you use in Florida?

| Nov 2, 2020 | Business Law |

Before forming a business in Florida, you will need to decide what structure to use. Florida Division of Corporations explains the business structures you may choose from. Your decision will depend on whether you have any partners, what your relationship with them will be, how you want your business to operate, and a few other factors.

You may form a sole proprietorship, a limited or general partnership, a limited liability company or a corporation.

Sole proprietorship

It comes as no surprise that the simplest of the business structures is also the most common. A sole proprietorship is a business you alone own and operate with no partners.

If you decide to form a sole proprietorship, you will need to operate under your personal name unless you register a “fictitious name” with the Division of Corporations. This fictitious name will be publicly connected to your legal name in the state’s database.

Partnerships

Partnerships exist when more than one person owns a business together, sharing the profits and losses. Partnerships can be limited or general. Limited partnerships include at least one limited partner and at least one general partner, and general partnerships consist entirely of general partners.

Limited partners operate as investors or silent partners. They can limit their personal liability for expenses, losses and debts but still share in the business’s profits. Limited partners cannot manage the business or make decisions about how it operates.

General partners are partners who share equal liability, responsibility and profit from the business. In other words, they manage the business together, split any profits evenly and are each liable for debts and expenses.

Limited liability company

An LLC is a business structure in which owners limit personal liability by establishing the business entity apart from their persons. In other words, you as an owner may form an LLC, and the entity itself incurs any debts and obligations.

LLCs and corporations are similar; however, LLCs are typically more appropriate if you want to manage the business yourself instead of leaving some management decisions open to shareholders.

Corporation

A corporation, like an LLC, establishes a business entity apart from the owners, so it offers similar liability protections. Corporations may legally operate as persons, so the corporation will itself incur all debts and obligations instead of you. This structure leaves many management decisions about your business open to shareholders.