Anyone interested in purchasing or starting a business in Florida must be aware of the multiple distinctions among existing types of business structures.
In this sense, knowing about the benefits of opening an LLC may help your business to thrive in the Sunshine State. Given the inherently touristic nature of the state, Florida offers many opportunities for companies from different niches and structures.
In this article, we provide you the essential information about the benefits of an LLC in Florida.
Back to Basics – What Is an LLC?
LLC is an acronym for Limited Liability Company, which is the US-specific form of a private limited company. This business structure can combine elements of both corporations and partnerships, as explained by the US Small Business Administration (SBA).
An LLC is not a corporation under state law, which means it is a legal form of a company that provides limited liability to its owners in many jurisdictions.
One of the main reasons why people choose to structure their businesses as LLC is because LLC owners are not personally liable when an LLC files for bankruptcy or faces a lawsuit. In other words, business owners use this business structure to protect their assets, such as properties, bank accounts, and others in case the LLC is at risk.
LLCs Have Flexibility
The first benefit offered by an LLC is its flexibility. In the state of Florida, LLCs are quite easy to set up under the Florida Revised Limited Liability Company Act.
Besides, state laws do not place any restrictions on the number of members in an LLC. While in some states across the US this is not possible, a single person can form an LLC in Florida on their own.
A good advantage of opting for an LLC in Florida is that the nature of business laws in the state are inherently more flexible when compared to other states. It allows business owners to choose whether to manage the business themselves or to hire managers who are not owners of the company.
LLCs Have Taxation Benefits
LLCs are known as “pass-through” companies, meaning that LLC owners can profit from the business without necessarily facing business taxation over these profits. Plus, anyone who receives profits from an LLC can include those profits on a personal income tax return.
In this sense, claiming these profits on a personal income tax return benefits the person receiving the profits. It happens since those profits are not classified as earned income.
Hence, the LLC member in this case does not have to pay self-employment tax on those profits.
LLCs Help Protecting Personal Assets
Certain entity types are afforded limited liability, which is the case of LLCs. Consequently, owners and managers of LLCs can protect themselves from being held personally accountable for any debts, obligations, or misdeeds of the company.
It is an advantage for anyone interested in starting a business in Florida, as it is possible to form an LLC without being concerned about having personal assets subject to liability.
Nevertheless, we need to remember that asset protection for single-member LLCs may be limited in Florida. This fact is due to a Florida Supreme Court case that took place in 2010 (Shaun Olmstead, et. al v. Federal Trade Commission), in which the Florida Supreme Court ruled that single-member LLCs only are entitled to limited personal asset protection.
Seek Guidance From an Expert Attorney
If you are interested in establishing an LLC in Florida or need professional guidance on other legal issues, we can help you.