Forming an LLC in Florida – Benefits and Drawbacks
Florida has become the most desirable state in the country to conduct business, and to form llc in Florida. The state’s prime focus is job creation, economic development and simple registration regulations. Starting a business in Orlando, Florida has never been easier. When you form an LLC (Limited Liability Company) in Florida, you benefit from maximizing credibility the ‘llc’ abbreviation gives to your business name, gaining tax advantages and protection of your personal assets. Forming an LLC in Florida offers the following benefits;
BENEFITS OF FORMING AN LLC IN FLORIDA
- Pro-Business tax structure – Incorporating in Florida allows you to enjoy low taxes. Employees benefit from the no personal income tax policy. The owner/s report their share of the LLC’s profit or loss on their individual tax returns; any tax due is then paid at individual level. This is called Pass-through taxation. Pass-through taxation evades the double taxation incurred when income is taxed at the business level and again at individual level if business profits are distributed as dividends to shareholders.
- Competitive cost of doing business – Starting a business in Orlando, Florida offers a cost-efficient alternative to other states. Land, labor and capital are more economical. To incorporate in specialized industries, the state offers additional financial incentives. These factors can be important when you are deciding to form an LLC in Florida.
- Flexibility – The owners have flexibility in structuring the management of the company. Generally, there are not limitations on the number of members or owners allowed. Unlike typical partnerships where the share is 50-50 on profits, there is room for flexibility if you incorporate in Florida.
- Easier and quicker permitting – Incorporation in Florida provides you with State and local government regulations that expedite your permit process. The regulations provide faster, cost-efficient and more predictable permitting process for significant economic growth.
- Fewer Formalities – Incorporating in Florida requires no business resolutions; this allows the LLC to be more compliant. However, holding annual members meetings and documenting major business decisions is recommended.
- Resources – Orlando offers access to capital from private, state, federal and other sources. The state has implemented capital formation initiatives that help business expand by offering specific services such as market information, strategic support and business management tools.
- Subsidiaries – LLCs in Florida are allowed to have subsidiaries without restrictions.
DRAWBACKS OF FORMING AN LLC IN FLORIDA
When considering to form an LLC in Florida, it’s important to know the drawback as well. Though they are not very relevant, they should be in your consideration.
- Initial and ongoing fees – Forming an LLC in Florida is more expensive than proprietorships and general partnerships. Nevertheless, they are cheaper compared to other states like New York, Washington, etc.
- Limited flexibility in ownership transfers – Ownership is harder to transfer in LLCs. The members must highlight in the operating agreement whether ownership can be transferred or not, and if so what authorities are required to make it effective.
- Minimal law protection – As the LLC is a newer business structure in the state of Florida, there is not much case law in place.
When you incorporate your business, consult with your account whether it is suitable for you to start a small business or form an LLC in Florida. With the business friendly government, now is not a bad time to get your dream business started.
Why Should You Incorporate?
Benefits of Corporation or LLC
Many Americans dream to be their own boss. Florida offers incentives and easy startup procedures to help you live your dream. Starting a business in Orlando, Florida is easy in comparison to other states, with the state’s focus on job creation, economic growth and less regulations. Incorporating in Florida has many benefits to your business, regardless of the nature or size of it. Advantages of forming a corporation or LLC include:
- Personal asset protection – Both corporations and LLCs allow you to detach and protect your personal assets in case a lawsuit is filed against your business entity. In a well structured and managed company, owners should have limited liability for business debts and obligations. This remains one of the biggest benefits of incorporation in Florida.
- Additional credibility – Adding Inc. or LLC after your business name adds authority. Clients, vendors and partners usually prefer to do business with an incorporated company.
- Name protection – When forming an LLC in Florida, the state does not file your exact corporate or LLC name in Florida. This helps protect your company’s reputation from being tarnished by or confused with another company of a similar sounding name. This aids your business in terms of name-recognition, marketing and branding efforts.
- Perpetual existence – Corporations and LLCs continue to operate regardless of ownership or management changes. Sole traders and partnerships end if an owner dies or leaves the business. Forming an LLC in Florida ensures that your company’s legacy remains, as well as continues to provide employment and services for clients should any changes in ownership occur. A well functioning LLC or corporation is good for the state too.
- Tax flexibility and incorporation tax benefits – Typically in an LLC, profit and loss are recorded on the personal income tax returns of owners. An LLC can elect to be taxed as a corporation in Florida. Likewise, a corporation can avoid double taxation of corporate profits and dividends.
- Deductible expenses – Both corporations and LLCs may deduct normal business expenses before they allocate income to owners. These can include salaries
Should you incorporate or form an LLC in Florida?
Corporations and LLCs both have separate business structures with certain protections by the law and important benefits. Most people tend to form a legal business structure to safeguard their personal assets. Benefits to form an LLC or incorporate in Florida allows you to conduct your business without worrying that you might lose your personal belongings like your car, home and so on because of a business liability.
The decision to incorporate is an important step in the life of a business. Weigh your options carefully and further analyze some of the additional benefits of incorporation in Florida.
If you need more information about our business development services, please contact us at 407-344-1228. FreedomSBS is a marketing, graphic & web design, accounting, internet marketing, business development, and corporate law resource firm all in one! FreedomSBS is your one stop shop to start, grow and mature your business. Our services include: incorporation services, graphic design, logo design, web design, web development, internet marketing, search engine optimization (SEO), marketing consultations and corporate law resources. Our services are provided nationwide, but since our main office is located in Kissimmee, FL, we mainly help businesses in the Central Florida market to areas like Orlando, South Orlando, Kissimmee, St. Cloud, Poinciana, and Hunters Creek, FL.