When you are ready to start a business, you have several decisions to make. These decisions will affect the way you run and, more importantly, how the Internal Revenue Service taxes the business. The type of entity you choose also affects you financially because you might be financially responsible for lawsuits and creditors. Additionally, owning a business also means that you will most likely need asset protection should something unexpected happen, such as an accident or an illness.
Before jumping in, seek the counsel of the experienced attorneys at France Law Firm.
Choosing the Proper Entity
While Florida makes it relatively easy to organize a business, someone without the legal knowledge of setting up the business could find themselves in a financial mess under certain circumstances. Florida allows you to set up a business as:
- A sole proprietor – This option does not offer any protection from creditors and lawsuits. The IRS taxes all income in your tax bracket.
- A general partnership – This option does not offer protection from creditors and lawsuits.
- Corporation (profit or nonprofit) – This option protects the owners / board members from lawsuits and creditors as long as you do not mingle business funds with personal funds. The IRS taxes each partner’s share at the partner’s personal income tax bracket percentage.
- Limited liability companies – Depending on how you set up a limited liability company, this entity protects you from lawsuits and creditors as long as you do not mingle personal and business funds. How the IRS taxes you depends on how you set up the LLC.
- Limited liability partnerships – Offers some personal protection.
France Law Firm can help you determine the best entity for the type of business you are building.
Florida Business Taxes
Various laws and regulations require Florida businesses to pay taxes. Some taxes are handled at the county and city levels. Thus, an owner could have several types of taxes and licenses to pay or purchase.
- Professionals in certain industries must have special licenses.
- Businesses with employees must purchase workers’ compensation insurance.
- Businesses selling goods and / or services must pay sales tax and certain other taxes.
- Corporate income tax, self-employment taxes, and other federal taxes.
- State taxes, including sales tax, reemployment taxes, alcohol and beer taxes, tobacco taxes, transient guest taxes and more.
- County taxes.
- City taxes.
While no one wants to think about it, accidents and illnesses happen. To protect your interests and employees, owners should have an asset protection plan in place. A sudden illness or death could devastate the business if the business owner does not have an asset protection plan in place.
The asset protection attorneys at France Law Firm are also business and tax attorneys who can advise you on setting up a business and creating an asset protection plan for the business to keep running should something happen to you.
After Registering a Business
Once you choose an entity, you must also create all of the documents. Different entities require different documents. Every business must file an annual report with the Florida Department of State, Corporations Division.
Corporations should have articles of incorporation, and limited liability companies should have articles of organization to dictate rules and regulations. These documents hopefully keep corporate board members and LLC members from fighting over the company. They might regulate voting, number and type of shares, adding and removing members, when a business can take out major loans, and much more.
Contact France Law Group
Setting up and running a business is more complicated than most people believe. If you miss a tax filing deadline, you could incur severe penalties. If you miss filing an annual report, the state could administratively dissolve your company. If a board member, partner, or member decides to act on his or her own, spends company money, and loses it, it could devastate a business. Too many situations could destroy a business if it is not properly covered with the correct contracts, insurances, and licenses.
If you are ready to start a business, contact France Law Firm for a consultation.