April 16, 2014

Start-Up Guide

Choosing a Legal Structure

Choose your legal structure carefully. It will determine what kind of taxes you'll pay, who's liable financially and legally and what forms to file

Barbara Miracle | 6/1/2006

Sole Proprietorship
Sole proprietorships are easy to set up and easy to disband. Profits are taxed at the owner's individual federal tax rate, with the amount reported on Schedule C or Schedule CZ. Sole proprietorships do not file Florida corporate income tax returns, but owners have unlimited personal liability for any debts or other obligations the business incurs. In Florida, that liability is limited by the state's homestead rights laws, preventing creditors from seizing an owner's home.

Partnership
Partnerships can be formed as easily as sole proprietorships. These unincorporated businesses allow two or more people to share liability and provide capital. Business income is reported on partners' individual tax returns. A partnership can't be dissolved on a whim, so be careful if you enter into one. Limited partnerships must file with the Florida Department of State, Division of Corporations and pay $35 to designate a registered agent and $965 in filing fees for new partnerships; $500 annually.

Limited Liability Company
Limited liability companies, or LLCs as they are known, are a hybrid form of business that combines elements of partnerships and corporations. In Florida, LLCs may elect whether to be taxed as partnerships or corporations. (The Internal Revenue Service allows LLCs to choose whether to be taxed on the federal level as partnerships or corporations, also.) LLCs must file with the Florida Department of State, Division of Corporations ($125 for new LLCs; $50 annually).

Corporation
Corporations are separate legal entities that must be incorporated with the Florida Department of State, Division of Corporations.

The two types of corporations are the C-Corporation and the S-Corporation. With a C-Corporation, the corporation rather than individuals pays taxes and assumes liabilities. Florida's corporate tax is 5.5%.

An S-Corporation allows up to 75 shareholders to share income and expenses and to report them on their individual income tax returns.

In 2005, there were 168,182 new for-profit businesses registered with the Florida Division of Corporations.

Also, 130,558 new limited liability companies and 5,377 partnerships filed documents. In total, Florida had 869,198 registered for-profit corporations.

Resources

Florida Business News

Florida Trend Video Pick -

Okeanos Explorer 2014
Okeanos Explorer 2014

ROV Deep Discoverer (D2) has arrived on the seafloor at site “Northwest Gulf Mid-Depth”. The purpose of the dive is to explore the steep slope of a mound feature and look for deep-sea coral habitats. Click to watch the video or go here for more info.

Earlier Videos | Viewpoints@FloridaTrend

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