A Limited Liability Company (LLC) is a way of structuring a business that provides limited liability to its members (owners) like a corporation, but also the structural and tax flexibility of a partnership. The limited liability aspect of the LLC protects the personal assets of its members from both creditors of the company and lawsuits that arise in operating the business. In forming an LLC, the incorporators can choose whether the business should be taxed as a corporation or as a pass-through entity such as a partnership.
Like a corporation, LLCs can only be formed under state law. As a result, the requirements and protections for LLCs vary widely from state to state. There is a lot of flexibility in creating and structuring LLCs in Florida, however, there are a few requirements that must be listed in the initial paperwork (Articles of Organization):
- Title of the company: must contain the words “LLC” or “Limited Liability Company.”
- The mailing address and the street address of the main office of the LLC.
- A registered agent of the corporation within the state of Florida. This agent is responsible for receiving legal service of claims against the company and notices from the Secretary of State.
- The name and address of any of the managers of the LLC
- Optional: a start date for the corporation if different from the date the forms are filed.
Forms and instructions for creating an LLC are provided by the Florida Department of State Division of Corporations. The Articles of Organization along with a processing fee can be mailed to them or hand delivered to their address.
There are several reasons why you might want to structure your business as a LLC:
- Limited Liability: Like a corporation, LLCs shields the personal assets of its members from the debts and legal liability of the company.
- Tax Flexibility: LLCs can choose either to be taxed as a pass-through entity or as a corporation. Both choices can have advantages and disadvantages, however, most LLCs choose to be taxed as a pass-through entity to avoid the double tax associated with corporations.
While the limited liability and the tax flexibility of a LLC can be appealing, there are a few disadvantages related to structuring your business as a LLC:
- Filing and Fees: Unlike a general partnership or sole proprietorship; LLCs require filing Articles of Organization and payment of some administrative fees.
- More Difficult to Transfer Ownership: Unlike a corporation, ownership in an LLC can only be done according to methods outlined in the Articles of Organization
- Limited Case Law Protection: LLCs are still relatively new and have less case law available than other forms of business organization. This can lead to more inconsistency how LLCs are treated in court and presents an added risk in law suits.
If you are looking for an attorney to help you with structuring your business, then contact a local Florida business lawyer today to get the help you need.