Another aspect of Estate Planning and Asset Preservation, involves the decision to place a business, or an investment, within a legal entity, such as a Corporation or a Limited Liability Company. The reason for using one of these legal entities, recognized and licensed by the State of Florida, and the other 49 states, is to protect your personal assets from business losses, investment losses and creditors.
While everyone is hopeful at the outset, that a business venture will be successful, all generally involve some sort of risk. In addition, there is a desire to separate our “personal affairs” from our “business affairs”. The safest way to achieve the goals of security, protection and privacy is to set up a corporation, or limited liability company (L.L.C.) for your business. Either legal entity acts as a separate “person”, apart from the owners of the entity. If organized correctly, and if managed properly, the individual owners should be shielded from personal liability.
The owners of a corporation are called “shareholders”, or “stockholders”, and their ownership is represented in the form of stock certificates. The owners of an L.L.C., are known as “members”, and their ownership is represented by the percentage share of the business. Both are established through the Department of State of the state of Florida. The filing fees are slightly different for each, but the process of formation is very similar.
The differences between the two entities can be important and significant. Each entity has available some tax deductions that are not available to the other entity, though most of the tax issues are similarly handled. I always suggest that a Certified public accountant, or tax accountant be consulted, or retained, when forming a business. Also, the administrative requirements vary between the two entities. Finally, the level of protection offered by the two entities can be substantial, especially as it relates to real estate investments.
Valrico Law Group P.A. provides the legal advice that you will need in choosing the correct, or preferable, entity. We will then prepare all of the documents necessary to register your entity with the State, establish a strong and binding Shareholders’ or Membership Agreement between the “business partners”, obtain your Tax Identification Number from the I.R.S., request a preferred tax status from the I.R.S. (i.e. Subchapter-S tax treatment) and obtain your ‘corporate books’. If you desire, we can also act as your Registered Agent, or assist you in acting as your own registered agent. After the formation process is complete, we can continue to serve as your business advisor, or can assist you in any transaction that the business may attempt or encounter.
Contact Valrico Law Group P.A. to schedule your complimentary consultation today.