Starting a business is exciting, but can often feel overwhelming. It’s crucial to educate yourself on the choice of business entities that are available to you in order to choose what’s best for your small business. Below, you’ll find descriptions of the entities to help you decide how to move forward with your new venture. Whether you need a LLC, DBA, or INC, we’re here to help!
Sole-Proprietorship
Sole-proprietorships are formed when an individual begins operating a business in Florida (and other jurisdictions) and takes no other action, such as incorporation or forming a partnership. There is no requirement for an individual to get an Employee Identification Number (EIN) nor file paperwork with the state. However, this structure offers no liability protection and the individual is completely responsible for the debts and wrongdoing of the business.
Limited Liability Company (LLC)
A LLC, or Limited Liability Company allows owners (called members) to have limited personal liability for business debts. They allow for flexible management structures, as well as pass-through taxation, in which profits and losses pass through to the owners’ personal tax returns. A pro is their simplicity. They generally involve less paperwork and formalities when compared with corporations.
However, members may be subject to self-employment taxes, and some states have a dissolution requirement if a member leaves. Moreover, initial setup and annual fees may be higher than a DBA.
Corporation (S-Corp or C-Corp)
In a corporation, shareholders have limited personal liability, and it’s easier to raise capital through the sale of stock. The corporation can also continue to exist beyond the death of shareholders, as well as offer attractive employee benefit plans.
However, they are more complex to set up and maintain, and have more regulatory requirements and formalities, such as regular meetings and record-keeping.
C-Corps may also face double taxation at the corporate and individual levels.
At Hernandez Joshi, we’re dedicated to empowering you with all the information you need to feel confident in starting your business. We’d love to discuss your options and provide legal help to launch a thriving operation. Reach out today to get started!
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