How Can I Organize My Small Business?
If you’re reading this, odds are you own a small business or you’re seriously considering starting one. You’ve probably spent years pulling together your initial funding, drafting a business plan, looking at commercial real-estate, and doing all the other myriad tasks required to get a new venture up, open, and making money.
Likewise, you probably know that a business must be formed legally, as well as factually.
Without a specific filing, most states will treat, by default, an unincorporated business as a sole-proprietorship. A sole-proprietorship is perhaps the least advantageous type of business arrangement there is. The sole-proprietorship offers no liability shield it’s owners–this means if a person is negligently hurt on the premises (i.e., if a person slips and falls, etc.) the owner will be personally liable for the damages associated with their injury. Further, because a sole proprietorship has no special designation in the law, it does not convey the steady, professional, image that a business designated with an “inc” or “llc” receives.
Fortunately, Florida offers many alternatives to the sole-proprietorship, the most popular of which being the Limited Liability Company, or L.L.C., for short.
What Is An LLC?
An L.L.C. is a type of business arrangement that is often described as a simpler, more flexible, version of the corporation. A corporation allows owners to divide ownership by share, it presents certain tax advantages, and it creates a wall between the personal liability of the shareholders and the liability of the corporation. Put another way, incorporating allows shareholders to protect their personal assets from adverse judgments taken against the corporation.
The larger a business grows, of course, the more likely it will be to have an adverse judgment entered against it. That’s why incorporation is often associated with growth. Generally, a business will only incorporate when it becomes necessary–thus incorporation may be seen as a sign of stability and strength as well.
The L.L.C., however, is a little different from a standard s-corporation or c-corporation. An LLC allows the “shareholders” or “co-owners” of an organization to forgo paying corporate or business taxes, treating profits earned by owners as personal income subject to the individual income tax as opposed to corporate profits which are governed by an entity-specific tax structure. In this way, registering as an LLC can be significantly better for small and medium sized entities.
But as in a regular corporation, an LLC’s shareholders are protected by the limited liability this setup provides. In this way, LLC’s are considered the best of both worlds–they offer the tax simplicity of a partnership or sole-proprietorship combined with the personal protection from legal judgments associated with standard corporations.
Furthermore, the establishment of an official LLC brings with it more than legal protections and tax benefits; it also conveys an air of authority and professionalism when attached to the name of your business. Experts have found that consumers are more likely to trust and do business with an organization that presents itself as an LLC or other formal legal entity. Put another way, would you trust a business that had not done its utmost to protect itself and its own interests?
How Can I Setup An LLC?
While there are many websites and organizations that advertise easy, do-it-yourself, LLC filings, these resources are one-size fits all and can often cause more problems than they solve. The best way to form your limited liability company is to contact an experienced business attorney who can help guide the legal formation of your life’s greatest ambition.
You wouldn’t trust a new born baby’s life to inexperienced, unqualified, hands (or a downloadable form), likewise a small business is also a precious, temperamental, and delicate thing–it deserves an equally delicate touch when it comes to its “birth,” as well.
Attorney Shivon Patel and the legal experts at the Principal Firm are just the experienced professionals your business needs to start healthy and stay healthy. Contact our business specialists at (407) 322-3003 today!
