If you are starting your business in the State of Florida, you should register your business as soon as you start the development of your product and service, and before you launch your product or service. Why? Registering your business creates a legal business entity, which shields you from personal liability and risk. In our litigious society, a shield from personal liability is absolutely necessary. Also, registering your business with the Florida Department of State, Division of Corporations establishes the date when your business was formed, which is helpful if and when you apply for business loans and other types of funding.
You do not need to wait until you have been in business for a couple of years, or have a certain amount of revenue to register your business. If you have committed to starting and running your own business, registering your business from the start is worth the yearly fees associated with maintaining it in the State of Florida.
Are you planning to launch a business but do not know where to start? Below is a brief guide walking you through the some of the types of business structures you can form in Florida.
Step # 1: Choose Your Business Name
After you have committed to starting a new business, you should choose a business name. Pick a business name that conveys who you are, what you offer, and how you want to be perceived by customers and clients.
The Florida Department of State has a ‘business entity search tool’ which you should use to see if the business name you chose is available in Florida. Your business name must include an abbreviation of the type of business structure you choose (ex. LLC, Inc., LP).
It is important to understand that a legal business name is NOT the same as a trademark. It can be, but that is not always the case. For example, Publix is one of the largest companies in Florida. One of the names of Publix’s legal entities is Publix Supermarkets, Inc. However, the trademark that we as consumers often see in their stores is just the word PUBLIX. This trademark is not identical to its legal business name. They do not have to be the same. Your business name and your trademark(s) can be completely different.
Step # 2: Select Your Business Structure
After choosing an appropriate business name, choose whether you want to register your business as an LLC, Corporation, Partnership, or Fictitious Name.
Each business structure comes with its own advantages, disadvantages, and tax benefits. Therefore, it is fundamental to choose the business structure that suits the needs and goals of your business.
Schedule a consultation with Elana Greenway Faniel, Esq., a business and intellectual property attorney based in Florida, to assist you in formal business formation.
1. Limited Liability Company (LLC)
Many small businesses and startups prefer registering as an LLC due to less compliance paperwork, more flexibility in how the LLC can be governed, and comparatively more straightforward set-up requirements. LLCs can be governed by members (owners) or by managers, which act similarly to the board of a corporation. LLCs are formed by filing Articles of Organization with the State of Florida.
Watch a webinar by Greenway Law Firm based in Florida on ‘How to Register Your LLC in Florida’. In this webinar, Elana Greenway Faniel, Esq. shows you step by step how to register your Florida LLC on sunbiz.org.
2. Corporation
If your future expansion plan includes going public and seeking funding from investors, registering as a corporation may be a more suitable option. A Corporation is formed by filing Articles of Incorporation with the State of Florida. Corporations may be managed by shareholders, and/or a board of directors.
If you decide to register your business as a corporation in Florida, you can elect to be taxed as an S-corporation or a C-corporation with the IRS. You should consult with an accountant or CPA to determine which tax election is appropriate for your business.
Greenway Law Firm offers consultations where you can consult with both an attorney and a CPA to determine the best business and tax structure for your business. Contact our office at 813-607-6060 to schedule one of our specialty consultations.
3. Partnership
A general partnership (GP) is formed when two or more persons are doing business together for profit. You do not have to register this type of partnership with the State of Florida. The biggest disadvantage of choosing this structure is that the partners of the partnership are not shielded from personal liability. They are held personally liable for any debts and obligations of the partnership.
A limited partnership (LP) is formed by filing a Certificate of Limited Partnership with the State of Florida. An LP is governed by at least one general partner, and one limited partner. Limited partners usually do not manage or control the partnership, and they cannot act on the partnership’s behalf. However, limited partners enjoy limited liability, while general partners do not. General partners are not shielded from personal liability, unless the general partner is organized as an LLC, Corporation, or other limited liability entity.
In contrast, in a limited liability limited partnership (LLP), both general partners and limited partners are shielded from personal liability.
4. Fictitious Name
A Fictitious Name, also known as a DBA (“doing business as”) in other States, is simply a registration of a business trade name or brand name under which you do business. There is no legal separation between the owner of a fictitious name and the fictitious name. Therefore, the owner of a fictitious name is not shielded from personal liability.
Also, registering a fictitious name is not the same as registering or reserving a trademark name with the State of Florida. A Florida trademark must be registered separately.
Lastly, to register a fictitious name in Florida you must file the appropriate application, as well as advertise the fictitious name in a newspaper in the county where the principal place of business of the fictitious name is located.
Step # 3: Organizational Agreements
Please note that when forming any of the above-mentioned business structures, the business is often required to adopt organizational documents such as Operating Agreements, Bylaws, and Partnership Agreements. These documents should be drafted by an experienced business attorney who can tailor these agreements to the needs and goals of the business. Greenway Law Firm can assist you in choosing and forming the business entity that is most appropriate for your new business. Book a consultation now.
