There comes a point in many peoples’ careers when they’ve considered opening their own business and becoming their own bosses. They’re tired of working for someone else and they’re convinced they can make more money working for themselves. While being your own boss offers its advantages, it also offers disadvantages. You and your business partners are responsible for your successes, as well as your failures.
It’s estimated that there are approximately two and a half-million business entities currently active in Florida today. More than 300,000 of those businesses are registered as Limited Liability Companies, or LLC’s. There are distinct reasons for this, as discussed below in more detail. In creating an LLC for my clients, I’m often asked by them what the differences are between a Limited Liability Company Law and Corporate Law?
In understanding the differences between LLC Companies and types of corporations, it’s important to first understand what an LLC is. An LLC, otherwise known as a Limited Liability Company, combines a corporation’s liability protection with the tax advantages of a partnership. As indicated, it is becoming one of the most popular ways to set up a new business entity. The laws pertaining to a limited liability company are set forth in detail in Chapter 605 of the Florida Statutes.
But what is corporate law? Corporate law refers to the laws, rules, and regulations that pertain to corporations.
What Exactly Is a Limited Liability Company?
- A Limited Liability Company is one of the simplest types of business entities you can form.
- A Limited Liability Company is owned in its entirety by one or more individuals.
- Since the Limited Liability Company is so simple to form, it’s fast becoming the most popular form of business entity to set up in Florida.
- A Limited Liability Company is relatively inexpensive to register and quite easily manageable.
- The Limited Liability Company is not subject to taxes.
- The State of Florida recognizes the LLC as a totally separate business entity.
- If you organize your business as a Limited Liability Company, the courts rarely allow creditors to go after the owners’ personal assets.
- Limited Liability Corporations offer much less paperwork than other corporate entities.
- There are far fewer formal requirements involved with a Limited Liability Corporation.
What Is Florida Corporate Law?
- In Florida, a corporation is considered a distinct, separate entity from its owners.
- A corporation is usually the business entity of choice made by larger companies.
- Legally speaking, corporations are considered completely separate entities from its owners.
- Another popular form of incorporating is the corporation which then applies for Chapter “S” status with the IRS. This status allows the individual shareholders individual protection, while still be taxed as a “pass-through” entity. This means that instead of the corporation being taxed once and then the shareholders being taxed a second time, whatever profits or losses occur in the business are passed through directly to the tax returns of the shareholders resulting on being taxed only one time.
- An S Corporation is also considered a pass-through type of entity, shielding its owners from certain risks, such as any financial or any legal risks.
- The owners of an S Corporation are considered shareholders of the company.
- In an S Corporation, the shareholders are paid a salary. If there is any additional business income remaining, it’s distributed to the business owners. This income is not subject to self-employment taxes.
When setting up your business in the State of Florida, it’s important to set up the right corporation that fits your specific business needs and created by an experienced attorney.
Expert Business Attorney In Coral Springs
If you are considering opening a business in South Florida and are unsure as to which entity is best suited for your specific needs, please contact the Law Offices of Gary I. Handin at (954)796-9600 to schedule an appointment for a consultation. We are experts in business law, our practice is your solution.