Our Practice Areas
Creation of Business Entity
At Ser & Associates, your business is just as important to you as it is to us.
We not only help you choose the right entity for your business venture, but we also prepare the necessary documents to create and operate that entity.
We do this because the business world can be a confusing terrain to navigate alone. With Ser & Associates, you can rest easy knowing that we will be there to protect your entity’s best interests.
How do I know what entity is right for my business needs?
Let us break it down for you!
In Florida, the two most common types of business entities are a corporation and a limited liability company (LLC).
The key distinctions between the two are mainly due to management, tax treatment options, the documentation filed with the state, and the transferability of ownership.
While this information just scratches the surface, there are certain considerations that must be thoughtfully assessed to make the best-informed decision when it comes to creating a new entity.
Corporations
Corporations tend to be an attractive entity because of the limited liability provided to the owners.
The law permits this limited liability because there is a clear separation between ownership and management.
While the owners of a corporation are called shareholders, ownership is represented by the number of shares owned. However, the shareholders do not govern the operations of a corporation. Instead, the board of directors, which are duly elected by the shareholders, is the body that manages the corporation and controls the day-to-day operations.
Shares of a corporation are also great for raising capital and are generally easier to transfer to third parties (as opposed to membership interests in an LLC).
The most important document of a corporation is the Articles of Incorporation, a document filed with Florida’s Division of Corporations (Sunbiz) to create the entity.
A corporation’s governance is also supported by its bylaws, a document that governs the internal affairs of the corporation––such as voting, election of the board of directors, and recordkeeping.
Generally, if a corporation has multiple shareholders, the corporation will also have a shareholders’ agreement, which governs matters between the shareholders (including transfer of shares and disputes among the shareholders).
When it comes to a corporation and taxes, there are two types of treatment: the standard C-Corp (also known as “double taxation”) and the S-Corp. Generally, an S-Corp is granted to smaller corporations that are closely owned by a limited number of shareholders. Although harder to obtain, an S-Corp provides the benefit of single taxation by taxing only the shareholders, not the corporation itself.
However, with a C-Corp, both the corporation and the shareholders are taxed (e.g., double taxation). Unlike an S-Corp, a C-Corp can have an unlimited number of shareholders, which thus permits more capital and ownership. Understanding these key distinctions is essential because it directly affects taxation.
LLC
A Florida LLC also provides limited liability for the owners and provides tremendous flexibility in governance, which differs greatly from a corporation.
The owners of LLCs are called members, and the member’s ownership is represented by their membership interest. Members can manage the LLC directly or they may elect managers to run the day-to-day operations. LLCs are also not required to hold yearly meetings or record meeting minutes.
An LLC requires two documents: the Articles of Organization (like a corporation) and an operating agreement. Operating agreements are essential because it governs the LLC’s actions, helps it run more smoothly, and provides an opportunity for succession planning.
When it comes to taxes, an LLC has more flexibility than a corporation. LLCs can be taxed as a C-Corp, S-Corp, or partnership.
Other business entities
In addition to LLCs and corporations, there are other possible business entities including:
- Sole proprietorships
- General partnerships
- Limited partnerships
- Limited liability partnerships
- Various types of professional entities
These entities do not offer the same level of liability protection or tax treatment as an LLC or corporation––which is why none are created nearly as often. However, depending on your specific circumstances, they may be more advantageous.
At Ser & Associates, we assist clients with choosing the right business structure for their needs
Whether it be a corporation, LLC, or another entity, Ser & Associates will walk you through the different benefits of each entity and help you think through different scenarios to ensure that you pick the best entity for your specific business endeavors and long-term goals.
Ser & Associates, however, does not stop there. We also prepare all the necessary documents for formation, operation, and governance. Regardless of the entity selected, Ser & Associates will be there every step of the way to ensure you make the best-informed decision on your business’s structure.