Forming an LLC in Florida

Due to its reputation as a tax-friendly, pro-business state, Florida currently forms the most LLCs of any state. The State of Florida, in order to promote the formation of the Florida LLC they provides a complete filing package. This package includes a booklet, “Florida Limited Liability Company Act,” a “Fictitious Name Registration Packet,” a fill-in-the-blanks Articles of Incorporation form and complete instructions.

When starting a new business, one of the first things to take into consideration is what type structure ithe company will have. A new owner must choose between forming a sole-proprietorship, a partnership, an S-Corp, a C-Corp or an LLC. While each has its advantages and disadvantages, the LLC is becoming increasingly popular as more people become familiar with its features.
The LLC began in Wyoming, in 1997, to create a business structure that was taxed and managed like a partnership, but protected from liability like a corporation. Today, all 50 states allow limited liability companies. Except in the District of Columbia and Massachusetts, there is no minimum or maximum number of members an LLC can have.

One of the primary reasons for forming a company is to avoid personal liability for any debts the new company may incur. If a new business owner forms a sole proprietorship, he is at risk of losing nearly everything he owns if the business fails. This is also true of a partnership.

LLC stands for Limited Liability Company. As the name suggests, in an LLC, liability is limited. No member is liable for the debts of the company. By forming an LLC, each owner, called a member, only risks the capital he puts up to start the venture.

Many times, an LLC is less expensive to form than a corporation. This makes the LLC one of the least expensive ways to structure a business and still have the protections needed.

An LLC is not required to comply with all of the legal formalities that are required of corporations, such as meetings and minutes. Dividends are only taxable to the recipient and not to the LLC, avoiding double taxation.

Another advantage, of an LLC over an S-Corporation, is that S-Corporations are not permitted to have IRAs as their shareholders. An LLC is permitted to have two types of memberships, while S-Corps can only have one type of stock.

LLCs are very popular with people who have self-directed IRAs and want more control over their investments as well as more flexibility in their investment vehicles. Having an LLC allows an IRA investor to run a business with his IRA. Assets are acquired in the name of the LLC instead of the IRA. The IRA is treated the same as if it were a stockholder. It is protected from liability for any actions of the LLC.

An LLC is especially favorable if the business owners wish to invest in real estate. By appointing a manager, the LLC enables the owners to simplify the processing of all of the documentation required for a real estate purchase. If they invested into the property as co-tenants, all of the owners would be required to sign the copious paperwork.

Each year, many states revise and refine their laws and rules pertaining to LLCs. What was required in the past will most likely be changed in the future.

Although some states have made it seem easy to form an LLC, the process should not be undertaken without the advice of a professional. As with any other legal entity, there are pitfalls that take expertise to be avoided. A competent professional can provide answers and guidance that will more than justify his fees.

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