Selecting a legal structure is an important step

On behalf of Law Office of Clifford J. Hunt, P.A. posted in business formation and planning on Thursday, August 16, 2018.

Different businesses may be organized in different ways and how business owners elect to structure their enterprises can have major impacts on how those entities sell shares, establish internal leadership and pay taxes. This post will discuss some of the common ways that Florida business owners may choose to structure their new business entities, but readers are reminded that this post is not comprehensive nor does it offer any legal advice.

A business may be set up as a sole proprietorship, which means that a person is fully in charge of how their business is run but also personally liable for the financial failures of their entity. Naming an entity is one of the most important steps in establishing a sole proprietorship.

If a business owner wants more insulation from personal liability for their business’s failures they may choose to set up a corporation. Corporations differ significantly from sole proprietorships in that they are owned by shareholders rather than a single person. Also, when corporations take financial blows the shareholders who own stakes in the corporations do not have to reach into their own pockets to make up the shortcomings of the entities.

Between sole proprietorships and corporations businesses may be structured as partnerships, limited liability companies, and other business formats. Each type of format offers individuals different protections and different opportunities for controlling and growing their enterprises. There is no one right way for a business to be structured but different structures can offer their owners different advantages. The help of a business law attorney can get a business owner on the right track regarding how to set up their new entity.