In order to properly start your new business, among the first items to do is to make a choice in regards to the appropriate legal entity form. Creating a legal entity specifically for your new business serves as a legal separation between you, as a person, separate from the business.
Your business should be able to issue shares to its owners, own its trademarks and other intellectual property, recruit employees, be part of contracts, and shield the business owner away from personal liability from business debts.
Your business should be able to issue shares to its owners, own its trademarks and other intellectual property, recruit employees, be part of contracts, and shield the business owner away from personal liability from business debts.
Sole Proprietorship
This type of business entity is not a separate legal entity by any stretch. There is absolutely no boundary between you as a person and you as the business owner. If someone sues your business they will be able to get your personal assets.
This liability also includes whatever your employees do. There’s certainly no probability of having investors, so this kind of business works if you do in fact elect to operate it yourself.
This liability also includes whatever your employees do. There’s certainly no probability of having investors, so this kind of business works if you do in fact elect to operate it yourself.
Limited Liability Company
A Limited Liability Company (LLC), offers its members limited liability. An LLC combines the best of both worlds, the convenience of a partnership with the limited liability protection offered by a corporation.
In order to create an LLC you must file the Articles of Organization with the Florida department of State and create an operating agreement, which defines profit sharing, rights and duties of members, decision-making, and allocations of profits amongst members.
In order to create an LLC you must file the Articles of Organization with the Florida department of State and create an operating agreement, which defines profit sharing, rights and duties of members, decision-making, and allocations of profits amongst members.
S Corporation
The S Corporation has similar features into the C Corporation but differs primarily as far as the tax structure. The S Corporation provides flow-through taxation in that in taxes income only once at the shareholder level.
The S Corporation has a maximum of 100 shareholders and all shareholders must be US persons. This makes it challenging to seek a funding from investors who may be foreigners or who may pool investor money. The S Corporation can only issue one call of shares making it less attractive to investors.
The S Corporation has a maximum of 100 shareholders and all shareholders must be US persons. This makes it challenging to seek a funding from investors who may be foreigners or who may pool investor money. The S Corporation can only issue one call of shares making it less attractive to investors.
C Corporation
The C Corporation is a legal entity, which is responsible for its own corporation debts and corporation obligations. The C Corporation does not stop to exist simply because its shareholders are dead. A C Corporation can offer different types of shares. The C Corporation, functions as its own taxable entity, in other words, its earnings are taxed twice: once at the entity-level and once more at the shareholder level on dividends.
Therefore, most investor’s funds rather be part of the C Corporations, given that it may issue preferred shares and protects them from any personal liability. Also, this particular type of business entity, management and ownership are separate, and its government needs to be structured. Shareholders are responsible to elect directors and everything will be laid out in the shareholder agreement.
Therefore, most investor’s funds rather be part of the C Corporations, given that it may issue preferred shares and protects them from any personal liability. Also, this particular type of business entity, management and ownership are separate, and its government needs to be structured. Shareholders are responsible to elect directors and everything will be laid out in the shareholder agreement.
General Partnership
A general partnership is created by operation of law when two or more partners act jointly. The partnership can take actions as a separate entity.
Forming a partnership is simple. However, you will be responsible for the partnership and whatever each partner does. Therefore, this makes a general partnership a very risky form of legal entity.
Forming a partnership is simple. However, you will be responsible for the partnership and whatever each partner does. Therefore, this makes a general partnership a very risky form of legal entity.
Limited Partnership
A Limited Partnership evolved from the general partnership. The entity involves a mixture of general partners, who oversee the business and undertake the liability, as opposed to the limited partners, who contribute capital and only possess limited liability. Investors like Limited Partnerships because they can invest without putting on the liability. Founders like general partnerships because they can fully control the partnership, even if it comes with full liability.
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