Forming an LLC in Florida can be a daunting task, especially if you aren’t familiar with the legal process. There are a lot of steps to go through just to be sure you have dotted all of your I’s and crossed all of your T’s appropriately.
There are resources to help you through the process and it’s always a good idea to have a legal resource on your side when it comes to the business side of things. You never know when you might need someone to guide you in the process or back you up on things with your new LLC.
We’ve put together a simple guide to help walk you through the details and everything you might need to know about forming a Florida LLC.
LLC stands for limited liability company. This is a type of business structure much like a corporation but with different rules that pertain to operations and liability. This business structure is specific to law in the United States. It deems that the owners are not held liable for the company’s debts or liabilities.
A limited liability company is a hybrid that uses characteristics from both corporations and partnerships or sole proprietorships and combines them into its own unique format. An LLC protects your personal assets and separates them from the business while also utilizing some of the pass-through tax practices that you see with sole proprietorship setup.
An LLC is made up of members. There can be a single member or multiple members that form the limited liability company.
Why would you form an LLC when you can just form a corporation or a sole proprietorship for your business? There are some great reasons that an LLC might be ideal. There are both benefits and downsides, just as there are for other business model structures.
An LLC offers a mix of the best benefits of corporations, sole proprietorships, and partnerships. All of these have unique characteristics and an LLC grabs from each of these to give you a dynamic solution that provides a myriad of advantages.
For example, a corporation can be owned by another business and offers owners limited liability protection but the owners cannot use profits and losses on their own personal tax returns. Those are strictly held to the corporation.
A limited liability company does not require annual meetings, offers owners limited liability protection, and offers owners the ability to report profits and losses on their personal tax returns as well.
Here is another example. A partnership or sole proprietorship cannot issue stock for the business, while a corporation can. A limited liability company can also issue stock.
You see, there is a cross over. Where one structure draws a line, another fills that place, and limited liability companies often allow you to cross both sides of that line, without having to pick a side.
The LLC offers an array of benefits. Here are a few, with detail about just what the benefit is.
In an LLC, profits are divvied up among the owners. They report those profits on their individual taxes, which means that the taxes are only taxed a single time. They are not taxed at the corporate level and the individual level but rather just the individual level.
In most cases, the owners of an LLC will not be held responsible for debts or lawsuits pertaining to the LLC. This protects the personal assets of the owners in the event of bad debt or being sued. The only exception to this rule is in the case of fraud or criminal activity.
An LLC allows you to structure the business in a flexible way. You can multiple members or a single member and there are even different ways to manage the members depending on the design of the LLC.
Limited liability companies keep it simple. There is not a ton of paperwork for every piece of the process. You do not have to designate officers and there are no annual meetings required or the requirement for resolutions and recorded minutes.
Follow these simple steps to form an LLC.
You will need to settle on a state that will allow you to form an LLC. Your home state is always a great choice but some other popular states for forming LLCs include Wyoming, New Mexico, Nevada, and Delaware.
Next up, you need a name for your LLC. The requirements for choosing a name could vary depending on the state. For example, in Florida, your company is required to have L.C., LLC, or some form of the terms limited liability company as part of the business name.
You can check the state’s database to be sure the name you are considering is unique and available.
Florida requires that an LLC appoint a registered agent. This agent is responsible for service of process. This means they will accept the legal documents on behalf of the LLC. They must have a physical street address within the state but it could be an individual or a business entity.
Not all states require operating agreements for LLC’s but we recommend that you have one in place regardless of the requirements. This document basically structures your LLC and explicitly states the structure, including members, managers, and the responsibilities of each.
This is a standard business setup that leaves no questions about how things should operate.
Now, you are ready to file articles of organization and officially create your Florida LLC. You file these with the secretary of state in the division of corporations, or a similar office depending on the state. These articles will need to include the following information.
In Florida, the cost for filing articles of organization or formation is $125. They can be filed through the mail or even online.
An LLC is a great option for a small business that wants to be able to protect personal assets. This provides the individual owners with protection against business issues and places the liability solely within the confines of the business resources.
A small business should absolutely take a look at this business structure to see if it is right for them. There are some disadvantages. The income and profits pass through to the owners so even if they didn’t receive cash as a disbursement, the individuals may find themselves responsible for paying taxes anyway.
This makes corporation and businesses with high profits unattractive to the rules of an LLC and not a great option.