Structuring the Business Entity
Assisting clients on new business entity structuring matters in the State of Florida
Our law firm is prepared to represent rising entrepreneurs considering a new business venture. Our business attorneys can:
- Advise you as to the most appropriate legal business entity (S corporation or C corporation, limited liability company, or partnership) based on the nature of your business and business objectives, including investment procurement objectives;
- Provide assistance if you are considering changing your existing business entity to a different type of business entity (e.g., an LLC changing to a corporation);
- Provide advice and file documents for ensuring that an existing business entity is properly dissolved;
- Draft and negotiate Shareholder Agreements, Operating Agreements, and/or Partnership Agreements; and
- Draft various employment documents ranging from independent contractor agreements to employee handbooks and agreements related to protecting intellectual property to be created/invented by employees and/or independent contractors.
Establishing a Business Entity in Florida
If we are retained to file the required documentation for establishing a business entity in the State of Florida, we will also serve as the business entity’s registered agent at the request of an authorized individual acting on behalf of the new business entity.
We’ll also counsel you in risk management based on the nature of your business. We use preventive, proactive thinking to protect you against any possible liability, professional or personal. Our goal is to provide legal advice and services which will help get your business off and running with an eye towards avoiding costly internal and/or external legal problems down the road.
Benefits of consulting an attorney before forming a business entity
It is certainly true, that Florida business entities can be easily formed by electronically filing papers with the Florida Department of State, and in fact most small business owners do indeed establish their business entities in this manner without consulting with an attorney. Nevertheless, some business owners may well benefit from consulting with a business attorney concerning the entity structure; required filing documents; and other related matters based on the nature and scope of the business. For example, the business owners may not be aware of the provisions which need to be included in the electronically filed documents (e.g., the Articles of Incorporation) to address legal requirements under Florida law given the nature and scope of the business. The template forms provided at www.sunbiz.org contain only the minimum requirements for establishing the business entity (e.g., a corporation). Such template forms do not include all of the information which must be included in the Articles of Incorporation under certain circumstances specified by Florida law (e.g., where preferred stock is going to be one of the authorized classes of stock).
Furthermore, the law governing business entities does change. For example, limited companies (LLCs) have become increasingly popular business entities because state law generally imposes fewer “formal” procedures on them relative to corporations while at the same time providing the benefit of limited liability and flow through tax benefits. We note, however, that in Florida, one (1) member limited liability companies no longer enjoy the limited liability protection afforded multi-member limited liability companies. As the result of a holding by the Florida Supreme Court in Olmstead v. the Federal Trade Commission, the Florida legislature changed the statutory law which now allows a judgment creditor to seek remedies which may result in the foreclosure sale of the sole member’s interest in the LLC. Upon such sale, the sole member ceases to be a member of the LLC. Fla. Stat. 608.433(6) and (7). Most individuals contemplating establishing a single member LLC are probably not aware of this important change to the Florida’s LLC law.
As a final example, there are two types of corporations: C corporations and S corporations. C corporations are subject to taxation as a distinct entity separate and apart from the shareholders (owners). S corporations allow flow-through tax benefits for the shareholders. At first blush, S corporations may seem to be the “no brainer” way to go for a small, private corporation. Yet, S corporation status must be formally granted by the IRS, and the S corporation must comply with the imposed requirements to continue enjoying S corporate status once granted. A C corporation setup may be the preferred corporate entity if the business entity’s owners contemplate obtaining investment monies from venture capitalists. Investors themselves may also dictate the nature of the business entity in which they are going to invest.
If you need help in deciding on the “best” business entity for your particular situation and in creating the appropriate legal documents for getting your business up and running, call us at (305) 279-4740 or contact us online for a FREE consultation to discuss your new business.
