Incorporation in Florida versus LLC
Both the incorporation in Florida and Limited Liability Company (LLC) provide their owners with similar advantages and protection. The basic advantage that people seek before starting an LLC or an incorporation in Florida is the advantage of limited liability. There are many people who feel more comfortable with the flexible business structure of an LLC while there are others who see the organized nature of an incorporation in Florida as the added benefit.
This blog will give you a brief insight into both, and some advantages of each structure.
What is a Limited Liability Company?
An LLC is a separate legal entity, which means that it is treated as a separate person. In law it is considered and treated as a person who can sue, can be sued, and can file for bankruptcy. People who own an LLC are called members of that LLC. To form an LLC in Florida you need to file articles of organization with a government authority and there is also a filing fee that needs to be paid. There may be additional requirements of forming an LLC depending on the state where you are starting your business.
There are three major benefits that attract business owners to form LLCs:
- An LLC saves you from double taxation. This means that you will not be taxed both at the business level and on individual basis. Rather in an LLC, members report profit and losses in their individual tax returns, which saves them from paying tax at business level of operations.
- The second is the protection of limited liability for the owners of the firm. This means that creditors can only claim their money from the company and not from the owners provided that they have not taken any personal loans in the name of their company.
- An LLC has a flexible structure as compared to a corporation.
Incorporation in Florida – What is a Corporation?
A corporation is started by filing articles of incorporation in Florida with a government authority. A corporation is treated as a separate legal entity by the law. The law regards it as a separate person that has its own privileges, rights, and liabilities and is detached from the people who own it.
The members of a corporation are called shareholders and they are not personally liable to pay any debt due on the corporation. The liability of a shareholder is limited to the amount of money that he has invested in the corporation. A corporation is taxed at two levels, which means that the corporation is liable to pay tax on its profits and a shareholder has to pay tax on his dividends. A corporation exists even if one of the shareholders die or his shares are transferred to another owner, in contrast to the partnership and sole proprietorship.
Certain advantages of starting an incorporation in Florida are:
- The corporate structure adds value and credibility to your business which attracts more clients and investors.
- It is easier to raise capital in a corporation through selling stocks or other equity instruments like bonds.
- The company’s name is used in all the operations of the business which gives its owners anonymity.
- A corporation can outlive its owners. This means that if one of the shareholders dies the corporation continues to exist without any disruption in the operations of the business. The transfer of ownership takes place by sales of stock of the deceased.
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.