Is Incorporation Worth It?
A person who has put in the work to launch their own business is generally a self-starter, who is ready, willing, and able to do their due diligence to ensure that all the relevant paperwork is in order. However, depending on the nature of the company, they may decide that a sole proprietorship is best for their tax and overall business needs. If you have a small business and are debating incorporation in Florida, it is important that you understand exactly what this might entail.
More Work Required To Incorporate
A sole proprietorship is defined by the Internal Revenue Service (IRS) as an unincorporated enterprise owned by one person. No paperwork is required to get a sole proprietorship off the proverbial ground – at least not in Florida – though it might be necessary to trademark your company’s name. By comparison, a corporation is a business which is legally and financially separated from its owner, with a separate tax return and separate accounts.
In order to do business as a sole proprietorship, one must simply open their doors. A corporation requires what are known as Articles of Incorporation, which contain certain specific pieces of information. The bare minimum requirements are the name and address of the enterprise, the name, address, and signature of each incorporator, and the number of shares the corporation will issue (along with any secondary offerings, which allow potential shareholders to be the first to purchase additional stock if more becomes available in the future).
Which Is Best For Me?
There are positives and negatives to each choice, depending on the specific situation of your business. If a corporation is sued, the personal assets of the owner are generally unreachable in terms of satisfying a judgment – but that protection does come with much more paperwork and more reporting requirements, to say nothing of owing a fiduciary duty to shareholders if your company goes public. A failure to keep up with these requirements can put your business in trouble.
Keep in mind that there may be other alternatives for your business that suit your needs better – for example, a limited liability company (LLC) can have one or more members, and unlike sole proprietorships, LLCs do have liability protection even though they do not have separate tax returns from their proprietors. Every business entity has its own story, and with the right legal help, you can ensure that yours is on the best possible legal and financial footing.
Contact A Seminole, FL Business Entity Formation Attorney
Florida’s business formation laws can be confusing, particularly for those who are just getting on their feet in the business world. A Florida business entity formation attorney from the Hunt Law Group can assist you with choosing the best path for your situation. Contact our office today at (727) 471-0444 to schedule a consultation.
