At What Point Should You Start a Florida LLC?
4 Points to Consider Before You Start a Florida LLC
While many sole proprietors, general partnerships, and new business owners plan on starting or reorganizing their businesses as limited liability companies, or LLCs, figuring out the best time to make that change is a different matter altogether. The best time to start a Florida LLC depends on your situation, so consult with a lawyer or CPA first. However, sooner is better than later in most circumstances. Here’s why.
Optimized Tax Advantages
There’s a strong chance that forming a Florida LLC could present you with multiple opportunities to minimize your taxes on top of their other well-known benefits detailed below. However, you should check with a local business attorney or CPA to make sure before filing. You also have tax elections to consider. Unlike other entities, LLCs decide how they’d like to be taxed – either as a disregarded entity or as a corporation. This latter category, known as an S Corporation, is sometimes mistaken for a traditional corporation but isn’t subject to the same formalities and record keeping requirements as traditional C Corporations.
Protection When Hiring Employees
Employers as well as business owners who plan on hiring employees can start a Florida LLC to protect their assets and gain other benefits. Sole proprietors and general partners are personally liable for their employee’s actions on company time. This means that if your company is sued or faces serious financial trouble because of an employees’ neglect or bad behavior, everything from your home to your car could be placed at risk. When forming a Florida LLC, the business owner’s personal assets are separated from those belonging to the business. An LLC’s limited liability protections, combined with the appropriate employment agreement, can help shield your assets in certain worst-case scenarios.
Signing Contracts as Your Business
Starting a Florida LLC can also provide coverage when signing contracts. Entering into an agreement on behalf of your LLC rather than yourself limits any liability associated with that contract to the business. In other words, your personal assets will be kept safe safe even if the deal falls through. Hiring a lawyer to help draft or review your agreements can further strengthen these protections and potentially save you money, too. It’s also important to note that forming an LLC won’t limit your liability for contracts that you sign personally.
Protection When Adding Partners
Starting a Florida LLC can also be beneficial for partners looking to do business together. This is because business owners in general partnerships can be held liable for their partner’s mismanagement or misconduct. Debts, penalties, and the like are distributed between the partners regardless of individual responsibility. Forming an LLC means that your assets will be protected from your partner’s poor decisions. Your LLC’s organizational documents will also be useful for tracking everyone’s stake in the company, and a Florida operating agreement can set important ground rules that reduce the likelihood of disputes and help ensure your business’s continuity well into the future.
When you start a Florida LLC, it’s better to act sooner rather than later. Our firm has helped organize countless LLCs for entrepreneurs across the state. Of course, we offer post-formation support, too. To learn more about our business formation services, visit our business formation page or call (727) 279-5037.