Business Law Attorneys: Corporation & LLC Formation
Starting a business is an exciting and often worthwhile venture. Many business formations begin with an idea and some funding and grow into the owner’s lifelong dream. But an idea alone can’t get you very far in the business world — most owners form a company, such as a corporation or limited liability company (LLC) in order to get their big ideas off the ground. There are advantages and benefits to each type of business formed, and the business law attorneys at Warner, Sechrest & Butts can help you establish your business in Gainesville, FL so you can realize your dream.
Corporation & LLC Formation Lawyers
There are several ways to form a business, but for those who intend to have several employees and want to limit the personal liability involved in forming a business, a corporation or LLC can prove to be a more fitting option. There is no one “better” answer when it comes to business formation, even if it’s a local business in North Central Florida. Because business strategies and structures are unique to each company, we find that whether a corporation or LLC is “better” depends entirely upon the business owner and the direction intended for the company.
Corporate Business Formation
The term corporation can seem a little overwhelming, but our business law attorneys can help you determine if your company is idea for the corporation structure.
Corporation formation can be advantageous when you have several shareholders in the business. Shareholders can include:
- The business owner/s
- A member of the board of directors
- Individuals placed in charge of daily operations
This type of business formation generally provides personal liability protection for all of the shareholders involved. However, these protections can lapse if the structure of a corporation is not followed correctly. For instance, shareholders choose a board of directors which then oversees the company’s goals and long-term direction. The board of directors appoints individuals to take charge of the corporation’s daily responsibilities.
Now that you understand the personnel structure of a corporation, it’s important to note that the corporation is considered a separate entity from the shareholders, which is where the personal liability protection comes into play. The shareholders are not held liable for certain responsibilities, such as debts, for which the corporation can be held liable.
In a perfect business world, liability protections would never be revoked. Unfortunately, our corporation formation attorneys often see these protections taken away because certain restrictions or guidelines were not followed. An example of a situation where the personal liability protection could be revoked is when a corporation pays for the personal expenses of a shareholder, director or employee. Signing contracts that provide a personal guarantee can also void liability protection. And in the biggest cases, shareholders and board of director members who commit unlawful acts can be held liable for damage that is caused by those acts. This may include faulty construction or poor repairs. To learn more about maintaining the liability provided through the formation of a corporation in Gainesville, FL, contact a business law attorney at Warner, Sechrest & Butts, P.A.
C-Corporation or S-Corporation
Choosing to have your business become a C-corporation or S-corporation won’t affect your liability protection. The sub-chapters are tax elections and may provide an opportunity to save money. Small businesses that remain private usually benefit from becoming an S-corporation. However, there are many intricacies in dealing with the IRS and tax law, so when we recommend that you consult with a business law or tax expert before making any final decisions. As we mentioned, each business is unique, which means each tax situation is unique as well. Contact Warner, Sechrest & Butts to discuss whether a C-corporation or S-corporation best fits with your new business.
Limited Liability Company (LLC) Business Formation
There are a lot of rules and restrictions, as well as paperwork, that govern the formation of a limited liability company. Even choosing a name can become tricky, but our LLC formation attorneys in Gainesville can help you every step of the way.
Choosing a name for a limited liability company might seem easy — just pick a name that fits with your company’s service, products and image, right? Well, LLC names have to comply with the rules laid out by each state’s LLC division. Florida requires that business names include “Limited Liability Company” or one of the approved variations, such as “Ltd.” or “LLC.” An LLC name must also be different from any other LLCs that operate in the same state and that are already on file with the Florida Department of State Division of Corporations. You can check the availability of LLC names online, but you cannot reserve a name prior to organizing your business.
Those who want to create an LLC in Florida must file Articles of Organization with the state. These articles include the names and addresses of the company, its registered agent, the managers, and the effective date of the business. The registered agent must also provide a signature on the documents. Filing fees are $125, and the articles may be filed through the mail or online. If you’re having trouble filing your Articles of Organization, contact a business law attorney today.
As mentioned in the previous step, a registered agent for your LLC must provide his or her name, address and signature on the Articles of Organization. Therefore, you must appoint a registered agent, which can be a person or a business entity. The registered agent serves as a representative who accepts legal documents on behalf of the limited liability company, particularly if the LLC is sued.
Unlike many other states, Florida does not require an LLC to prepare an operating agreement. However, our business formation attorneys highly recommend completing this step anyway. This agreement allows the business formation members to outline the financial and working responsibilities and relationships with shareholders and co-owners. An operating agreement generally includes the business structure, the responsibilities of each owner, the percentage of the company that each owner holds, the owners’ shares of losses and profits, and the direction of the company should one or more owners leave. It can be extremely advantageous to have all of these points clearly defined before continuing with your business venture, and it also adds a layer of protection should a co-owner wish to leave or decides he or she wants more of the profits.
Taxes and reports may be a part of every business, but LLCs are held under close scrutiny both with the IRS and the State of Florida. LLCs are required to obtain an Employer Identification Number (EIN) through the IRS. And all of the limited liability corporations located within Florida must file annual reports in order to keep a status of “active.” LLCs may also have to obtain further business licensing depending on Florida’s regulations.
Get Help From a Business Formation Attorney
Whether you opt to form a corporation or limited liability corporation, the process can be confusing. Contact a Gainesville attorney today so that you can properly protect yourself and your assets while starting your business adventure. The attorneys at Warner, Sechrest & Butts, P.A., are ready to help you establish your business within Florida’s laws and regulations so that you can achieve your dream.