If you're at the critical point of needing to create an entity for your business or company, you're likely at beginning of exciting business endeavors ahead. As you embark on the next steps of creating your organization there are many important factors and steps to consider. We'll discuss your options for organizing your business, how to get started creating your company, and where you can turn to for help.

• Your business entity should be selected based on a business's current needs and future business planning.
• Every situation is unique and requires individualized preparation.
• You should seek the assistance of counsel to guide and advise you in the process of selecting a business entity.

Call Howell, Buchan & Strong Attorneys at Law (HBS) to review your circumstances. The attorneys at HBS have over 30 years of combined experience and understand the intricacies of business planning, advising a wide range of professionals.

Corporations (C-Corp and S-Corp)

To create a corporation, you must create and file Articles of Incorporation. Filing Articles of Incorporation is legally required to structure a new or established company as a profit, nonprofit, or other type of corporation. Additional formalities must be followed such as filing Annual Reports. Organizational documents should be created to govern a corporation, including bylaws and shareholder agreements. Organization documents can range in intricacy but should always have the best interest of all parties considered. Corporations exist perpetually once created until dissolved.

With the IRS, all corporations are filed as a C-Corp, and S-Corps file an additional document with the IRS – the “S Election” form.

So long as formalities are followed, shareholders in a corporation are granted limited liability from debts and claims against the corporation, regardless of participation in the management of the business.

C-Corp versus S-Corp?

A C-Corporation can be subject to double taxation in certain scenarios, so there must be a good reason to select it. If a company is going public, intends to go public, will have more than 100 shareholders, or the shareholders will not meet the Subchapter S requirements, the corporation must be formed as a C-Corp. Additionally, if fringe benefits are an important part of the compensation structure for managers and employees, there are benefits to the C-Corp.

On the other hand, an S-Corp benefits from tax advantages. The tax advantages or drawbacks are quite intricate and often very specific to the circumstances of the business and its operations. An S-Corp can take advantage of a tax-free merger or reorganization. An S-Corp can voluntarily elect to change back to a C-Corp in the future.

General Partnerships

General partnerships do not require any formal filing upon creation. However, it is highly advantageous for partners to obtain counsel to create a partnership agreement. Partnership agreements can range from simple to complex, but tax rules covering allocations of income and expense often require a more intricate agreement. Partnerships require at least two partners. Additionally, partnerships are not unlimited in duration, rather a partnership ends/dissolves upon withdrawal of a partner.

In a general partnership, partners are not granted limited liability. Though in Florida, general partnerships can be structured as Limited Liability Partnerships (LLPs) which require a formal filing with the state. LLPs are granted limited liability from debts against the partnership.

Limited Partnerships

To create a limited partnership, a Certificate of Limited Partnership must be filed. Similar to a general partnership, a partnership agreement governing the business operations should be drafted. A limited partnership creates a general partner and limited partner(s). There is no liability protection for general partners, however, in Florida, a limited partnership can file as a Limited Liability Limited Partnership (LLLP). LLLPs grant all partners limited liability.

Limited Liability Companies (LLC)

A business owner must file LLC Articles of Organization to create an LLC. Additionally, and similar to the other forms of business entities, an Operating Agreement should be drafted. LLCs require at least one member for creation. LLCs have an unlimited duration. All members of an LLC have limited liability protection from debts and obligations of the company.

An LLC can provide flexibility to the business and its members. While most LLCs are taxed as partnerships, it has the option to be taxed differently which may be advantageous based on their circumstances. Additionally, there is flexibility in the Operating Agreement as to how members are treated.

Starting the Process

Howell, Buchan & Strong attorneys can advise you on the options available to you and your business and assist you with creating your business entity. It is crucial to seek guidance from an experienced attorney if you seek to form a business in the State of Florida. HBS has over 30 years of combined experience! HBS attorneys can assist you in developing an effective business strategy and plan, walking you through the elaborate and demanding process.

Contact the law firm of Howell, Buchan & Strong at 850-877-7776 to set up a FREE no-obligation consultation.

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