Business / Non-Profit Formation
Incorporating an entity in Florida can be deceptively simple, and that’s why Frank N. Lago, Esq. and BACC in Tampa, FL are here to help. Common questions are: LLC or corporation? “S” or “C” corporation? What does “disregarded entity” mean? If I have an LLC can I be sued individually? Should I incorporate in Florida, Delaware, or Nevada?
These are but a few questions that the typical client has when determining what business entity to form. BACC can help you decided what the best structure is for you. BACC focuses on reducing income tax liability and provide flexibility in growing the business. BACC looks at how the business will grow, what investors might look for and how best to anticipate that growth and create the most efficient structure to meet those needs.
When it comes to selling ownership in your business, either in Tampa, Florida or elsewhere, raising capital, or otherwise selling a security, it can be very complicated. Frank N. Lago, Esq. and BACC have helped with these issues before and can help you determine if the sale has to be registered with the Securities and Exchange Commission? Does it qualify for an exemption under Rule 504 or 506? Is a Reg. D filing necessary? Is there enough treasury stock to sell to an investor or do the articles of incorporation have to amended? These, and many others, are the questions that plague selling stock or ownership interest to the public or to private investors. If you find yourself in this situation, BACC can help.
BACC’s Recommendation: a Florida Corporation taxed as an S Corporation.
When considering an LLC over a corporation, we consider generally start out analysis with liability and taxation. We might consider investor protentional, voting, loans, future investment, location, and citizenship (if applicable) however, for the standard 1 or 2 person owned business, a Florida corporation taxed as an S corporation is the best option.
In regards to liability, there is a nasty little case in Florida called the Olmstead case which states creditors of an owner can go after the assets of a business solely owned by that person. That means, in a single member LLC, if that person owes money, people trying to collect a debt may go after the assets of the LLC. This however is not true of a Florida corporation, assuming you don’t treat it like your personal pocket book and pierce the veil of limited liability.
Secondly, taxation, an LLC is taxed a multitude of different ways however, generally speaking an S Corporation will be the most efficient system for reducing your tax bill because it allows for the avoidance of employment taxes on a portion of the income derived by the owners. There are however restrictions on who can be an S corporation owner and some very strict tax rules that apply. The breaking of which will result in a C corporation which is possibly the most unfavorable tax vehicle and therefore each owner needs a good accountant to help them.
Lastly, LLCs are just more expensive in Florida, more expense to start and more expensive to maintain. When I say more expensive I’m referring specifically to the filing fees. LLCs are about $50 more to start and $50 more a year in annual filing cost, and while that’s not a lot, there’s just no reason to pay the $50 if you don’t have to.
Non-Profits: Forming a not-for-profit corporation in Tampa, Florida or in the State of Florida can be simple. That being said, did you know that to get and keep a tax-exempt status, e.g. 501(c)(3) status, which is primarily used to market that donations are tax deductible, an organization as to have i) a prohibition against political spending, ii) a conflict of interest policy, iii) at least three directors and iv) a provision stating that the assets upon liquidation will be sent to another tax exempt entity. Lastly, did you know you have to register with the Department of Agriculture of Florida to solicit for donations? Staying compliant with the various not-for-profit laws is difficult but BACC is here to help you comply and thrive in the non-profit marketplace.