Legal entities include corporations, limited liability companies and various forms of partnerships. For business owners, it’s often beneficial to form an entity for some or all of the following reasons:
Liability protection – A properly formed entity is recognized as a separate legal being and, typically, an owner is not personally responsible for the entity’s liabilities and obligations.
Tax savings – Forming an entity may allow an owner to deduct pre-tax expenses or write off otherwise unavailable “business expenses.” Moreover, entities often enjoy “pass through” taxation or S corporation status, thereby not incurring any additional tax liability than a sole proprietorship or individual.
Credibility – Customers and third parties may feel more secure conducting business with an established entity rather than a sole proprietorship or individual.
Formality – Conducting business as an entity may allow for needed formality in management, operations, and banking aspects, thus reducing problems associated with commingling personal and business matters and accounts.
Perpetual duration – An entity may have a perpetual duration, thus allowing it to exist and conduct business beyond the death or illness of an owner.
Control over the transfer of ownership – an entity’s ownership interest (stock, membership interest, or partnership interest) may be easily transferred. Certain safeguards and limitations may be implemented to carry out the intent of the owner(s), such as prohibiting the outright sale of an ownership interest without giving other owner(s) a right of first refusal.
Confidentiality – Generally, Florida law does not require the disclosure of an entity’s owner(s). However, the names and addresses of directors, officers, managers, and registered agents are normally public record.
Should you wish to form an entity or discuss legal issues facing your business, please contact Scot B. Copeland with Emmanuel Sheppard & Condon.
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