A limited liability company (LLC) is a business structure that offers its owners limited liability just as a corporation or limited partnership does while also having a partnership’s structural and tax flexibility.
The LLC’s limited liability feature shields the personal assets of its members from the company’s creditors and liabilities, especially those that arise from litigation in which the corporation may become involved. A limited liability partnership in Florida would do the same.
The incorporators of an LLC are free to decide whether the company should be taxed as a corporation or on a pass-through basis like a partnership.
What Conditions Must an LLC Meet?
Like corporations, LLCs can only be established as required by state law. As a result, each state has different regulations and protections for LLCs.
Although there is a lot of flexibility in Florida when it comes to forming and structuring LLCs, the initial documentation, the Articles of Organization, must include the following:
- The company’s name in which the words “Limited Liability Company” or the letters “LLC”;
- The LLC’s main office’s street location and its postal address;
- A Florida-based registered agent for the corporation: Legal service of claims against the corporation and notices from the Secretary of State are delivered to this agent. To qualify to serve as a registered agent, a person must live in Florida, be 18 or older, and have a physical address in Florida.
- This address becomes the “registered office,” and it can be the same as the LLC’s business address. However, an
- LLC cannot serve as its own registered agent;
- A list of all LLC managers, together with their names and addresses.
If different from the date the documents are filed, a start-up date for the corporation is optional.
If the founders are not yet prepared to start the LLC right away, they may reserve their LLC business name by submitting a letter to the Secretary of State with the following information:
- The desired business name;
- The full name of the founder who wants to reserve the name;
- The founder’s current address.
If the Florida Secretary of State finds the name is available, the person may pay $25 to hold it for a period of up to 120 days.
What Are the Filing Requirements for a Florida LLC?
The Florida Department of State Division of Corporations offers forms and instructions for forming an LLC. You can mail them the Articles of Organization and a processing fee or personally present them to their address.
What Is the Cost of Setting up an LLC?
It costs $100 to set up an LLC in Florida, plus an additional $25 to designate a registered agent, making the current total cost $125. If a person hires an online service or attorney to file paperwork for them, then they would pay additional fees. A person wants to do their own research and check with the state before starting the LLC process.
Can I Start an LLC in Florida if I Do Not Live There?
It is possible for a person who is not a resident of Florida to form an LLC in that state. The LLC must maintain a registered agent for service of process and a registered office in Florida. A person who is a shareholder in the LLC does not have to reside in the states.
Do I Need a Business License if I Have an LLC?
Florida is not a state in which every business is required to obtain a business license. State business licenses are required only if the business conducts certain specified business activities. If the business operates in a regulated industry, then it may have to have a state license. The industries that require a license are as follows:
- Architects, interior designers;
- Engineers;
- Construction contractors;
- Real estate brokers;
- Insurance brokers and agents;
- Security services;
- Medical professionals, especially physicians and surgeons;
- Barbers and cosmetologists;
- Accountants.
Many Florida cities and counties have their own local requirements for business licenses. In addition, if a person plans to sell or lease tangible property, they would need a seller’s permit from the Florida Department of Revenue. An experienced Florida lawyer would be able to explain these requirements.
What Are the Benefits of an LLC?
There are several reasons for which a person would want to set up their company as an LLC:
- Limited Liability: Similar to a corporation, an LLC insulates the personal assets of its owners from the obligations and legal liabilities of the business;
- Tax Flexibility: An LLC can choose between being taxed as a corporation or on a pass-through basis, like a limited partnership. When a business entity is subject to double taxation, it means that the business pays income tax on its revenue, and then when the profit is distributed to partners or shareholders, it is taxed again as income to them. This may be avoided with the LLC structure.
What Are the Disadvantages of an LLC?
Although an LLC’s restricted responsibility and tax flexibility may be alluring, there are several drawbacks to setting up a company as an LLC:
- Fees and Filing: LLCs must file Articles of Organization and pay some administrative costs, unlike general partnerships or sole proprietorships;
- Ownership Transfers May Be More Difficult: Unlike a corporation, an LLC only permits ownership transfers per the procedures provided in the Articles of Organization. So, there is less flexibility in this regard;
- Limited Case Law Protection: Compared to other types of business organization LLCs are still rather new in Florida. For this reason, there is less state case law available to guide lawyers and courts. This increases the possibility of inconsistent treatment of LLCs in court and increases the likelihood of legal action. But this is probably a minimal risk.
What Is Protected by the LLC? What Does It Not Guard Against?
Even while the LLC form shields members’ private property from a lawsuit, things change if the case alleges a member of the LLC was negligent. A member of an LLC may be personally liable for their own negligence if a court finds the member to have acted recklessly.
Additionally, an LLC member is personally responsible for deliberate torts. For instance, an LLC member would be personally liable should they commit a battery during negotiations with another company.
When Would LLC Members Be Individually Liable?
The LLC structure shields owners from personal liability for misconduct committed by other members while the business operates. The LLC, not a specific member or owner, is responsible if the violation occurs while conducting business.
If members negligently cause harm to another person while conducting business, commit fraud, or steal LLC assets, they are held personally accountable.
LLCs frequently purchase general liability insurance to cover the costs associated with lawsuits alleging carelessness. This insurance covers these injuries’ expenditures. Therefore, it is unnecessary to transform business assets into cash to pay a court judgment.
Individual managers, members, and staff are all capable of acting negligently. Plaintiffs in negligence claims may demand significant financial awards.
The LLC can be forced to dissolve if it lacks general liability insurance and has insufficient assets to cover losses. Professional limited liability companies (PLLCs), often known as LLCs, operated by professionals, should consider acquiring both general and professional liability insurance. Lawyer and medical malpractice insurance are examples of professional liability insurance.
Where Can You Find the Ideal Attorney?
If you are setting up a business in Florida and considering the LLC structure, you want to contact a local Florida corporate attorney for their help and guidance. LegalMatch.com can connect you to a lawyer who can review all the options and help you decide which structure best suits your unique business needs. Your lawyer can assist you with respect to other start-up needs as well.
