Florida Business Formation Types

Sole Proprietorship

A Sole Proprietorship is simple form of business and has pass thru taxation, but leaves the business owner completely unprotected from liabilities incurred by the business.

This business formation can only be used if there is 1 business owner.

Partnership

A Partnership can be used when the business is owned by more than one individual.

Generally, there is a partnership agreement between the owners that sets forth rules that govern the business.

A Partnership has pass thru taxation, but the owners have little protection from liabilities arising from the business.

One advantage of a Partnership is the use of a “Silent Partner” - where an individual can invest in the business, but not partake in the management of the business and not be held liable outside the amount the partner has invested.

Corporation

A Corporation sets the business up as a separate legal entity and provides the most protection to the owners of the business. Another unique feature of a corporation is that it can issue shares of stock to raise capital for the business.

The primary disadvantages of a corporation are the complex administrative requirements and double taxation. All profits are taxed on the corporate level and dividends paid to the owners are taxed again.

Limited Liability Company

A Limited Liability Company is the preferred company structure for many small businesses that wish to obtain protection from liabilities and enjoy pass thru taxation.

Like a corporation, the owners of an LLC have some protection against liabilities and like a sole proprietorship the profits made by the owner are passed thru to be taxed at the individual level.