Setting up a new Southwest Florida Business
So you’ve decided to start your own business or expand into Southwest Florida. Need to know what’s required of you legally? Confused about how to set up your company?
Want to ensure that you won’t get a fine for violating county rules? Our handy guide puts confusion to rest.
Select the Structure
The business start-up process begins with some important decisions about legal structure and steps to make your operation legal. How your business is structured determines its tax status and how much paperwork may be required.
Here’s a quick overview (although it’s important to consult an accountant and attorney about the details):
Sole Proprietorship: The most common and simplest
structure, consisting of a single owner, requires no federal
Advantages: Easy to start. Inexpensive to create and operate.
All profits belong to the owner and are taxed just once,
at the individual rate. Business losses can be deducted.
Disadvantages: Owner is liable for business debts. Owner
may pay higher taxes.
Partnership: Association of two or more co-owners. A maximum of 500 partners are allowed. Income from the business is reported on the partners’ individual tax returns.
Advantages: Partners share ideas, capital resources, responsibility
and liability. Avoids double taxation.
Disadvantages: Personal assets are not protected. Each
partner can legally bind all other partners.
Limited Liability Company or Limited Liability Partnership: A hybrid form of business combining certain elements of partnerships and corporations. Provides some protection by limiting business liability to each partner’s capital investment. Maximum of 500 owners.
Advantages: Flexibility. Owners or partners are not personally liable for business debts, but enjoy the tax advantages of reporting earnings on personal tax returns.
Disadvantages: Restrictions on transferring ownership interests.
C-Corporation: Establishes an organization owned by an unlimited number of shareholders that also protects individuals and assumes liabilities. With this, the corporation pays taxes. Formed at the state level.
Advantages: Each owner’s liability is limited to his or her investment as a shareholder in the company. More favorable for fringe benefits.
Disadvantages: More organization, more paperwork and record keeping are required than other legal structures. Annual report filings are required. May be “double taxed.”
Losses are deductible only at a corporate level.
S-Corporation: Allows up to 75 shareholders to share income and expenses. Individual shareholders report earnings and expenses on their income tax returns. Formed at the state level.