Business Law, Planning & Formations
Table of Contents:
What Business Services Does Easler Law Provide?
Starting a business is one of the most stressful and exciting decisions a person can make; let Easler Law reduce stress by creating and executing a plan that is right for you.
We integrate years of experience and specialized legal knowledge to achieve your goals while mitigating risk.
Our primary objective is to ensure that we provide the tools and information you need to build a strong foundation for your business.
We strive to maintain lasting relationships with our clients and take pride in seeing clients succeed.
Below are just some ways Easler Law can assist you with labor and employment matters:
- Filing Incorporations, LLCs’, and Partnerships
- DBA/Fictitious name registration
- Articles of Incorporation
- Annual Meetings
- Contractual Agreements
- General Counsel Services
- Ongoing Compliance – Hyperlink “Administrative, Licensing, & Regulatory”
- Training – Hyperlink “Administrative, Licensing, & Regulatory”
- Securities Compliance – Hyperlink “Securities, Fundraising, & Finance”
- Licensing – Hyperlink “Administrative, Licensing, & Regulatory”
Starting and Forming a New Company
There is a difference between simply starting a business and building a foundation for a lasting enterprise. The fact that you have made it to this point means you are likely more interested in starting a new business or expanding your existing business. No matter the reason, we are here to help.
Starting a business is like sailing the open sea because getting lost can be easy but if you have your compass to navigate, you will never be off course. Here at Easler Law, we are your compass; we will guide you through every step of the way to ensure your business sails.
Our business planning and formation team is comprised of experienced entrepreneurs—those who have not only planned and formed businesses, but those who have followed through with growing businesses, deployed in multiple markets, raised capital, conducted mergers, and taken enterprises public.
We have a unique combination of legal theory and practical business experience that ultimately serves to benefit you.
Who Can Form a Company?
Unlike many countries in the world, there are few restrictions on who can form a company in the United States. There are no particular residency requirements for most business entities, and no restrictions on age. The S-Corporation does have restrictions on the number and types of shareholders in order to obtain and maintain its S-Corporation status.
While there are few restrictions on who can form a company, most businesses require licenses and permits to start in addition to registration with the appropriate authorities. For example, if you want to open a construction contracting company throughout Florida, you must have your Florida Contractor’s license as well as any applicable licenses issued by county and local authorities.
Choosing a Legal Structure
There are several different ways to structure your business. Each has its own advantages and disadvantages, so it is important to consider all relevant factors and discuss your plans for the future with your attorney before deciding on a structure. Factors to consider include:
- How many partners you have or plan to have in the future,
- Tax considerations,
- Risk of the business operations and liability protections,
- Burden of compliance,
- How you plan to grow your business,
- The type of business operations, and
- The geographic reach of the business now and planned for in the future.
Common business entity structures include sole proprietorships, partnerships, limited liability companies, and corporations.
What is a Sole Proprietorship?
An unincorporated business owned and conducted by one person is a sole proprietorship. This type of business is automatically created by default when a person establishes and carries on a business but fails to file the paperwork necessary to create a separate and distinct business entity. This type of structure does not pay federal income tax directly; instead, the sole proprietor would file taxes through their personal tax return. There are few advantages to owning a sole proprietorship such as easy formation, inexpensive compliance and operations, and having ultimate control over the business. These advantages are outweighed by the disadvantages.
The main disadvantage is that there is no liability shield. If the business is found liable (legally responsible) for any of its operations, the sole proprietor alone is responsible. Those costs will be attributed to the sole proprietor personally. This puts the business owner at risk of losing not only the business, losing property, and having judgments and/or liens. This type of business structure is not recommended due to the exposure to liability, difficulty in raising capital, and its inability to grow. Our goal is to prevent these common new business mistakes.
What is a Partnership?
This structure is an association of two or more persons who own and operate the company as co-owners. Similar to a sole proprietorship, this entity can be formed by default when the partners fail to file the paperwork necessary to create a separate business entity. This type of agreement can be formed orally, in writing, or just by the conduct of the partners.
General Partnerships also have simple taxation rules, each partner files the profits and losses on their personal tax returns (generally using a Schedule E). There are several issues that arise when there are multiple partners such as disagreements between co-owners. Preparing a partnership agreement is ideal to determine how the business will operate and how decisions are made in the event disputes arise. Generally, if no partnership agreement exists, each partner has an equal right to manage the partnership.
In addition, a major problem with general partnerships is that there is no liability shield. The lack of a liability shield results in unlimited personal liability to the partners. However, creditors generally must exhaust partnership assets before going after the partners personally. Converting a general partnership to a limited partnership or a limited liability partnership or transitioning to another business entity is one way partners can mitigate some of this risk.
What is a Limited Liability Company (LLC)?
A limited liability company (LLC) is a type of business structure that shields owners from personal liability for certain debts, torts, and other business obligations. In Florida, Articles of Organization must be filed in order to register the business as a limited liability company.
Another advantage to starting an LLC is taxation. This structure allows profits and losses of the company to “pass through” the entity (essentially skipping the LLC) and be attributed instead to the owners’ personal taxes. The benefit of this type of taxation is that there is no double taxation. Money earned by the business (and losses incurred) can be applied to only the owners’ taxes and not to both the LLC and the owners.
A distribution is when a business transfers some portion of profit to its members. Limited liability companies allow for unequal distributions to owners, known as members, and allow members to elect to have either equal governance power or unequal governing power. Thus, the members could all agree to allow a manager to run day-to-day operations while the other members essentially act as silent partners until an extraordinary event occurs.
While distributions can be given to another individual, governmental and informational rights cannot. This means a member can give her right to any company distributions to her spouse, for example, but without the appropriate consent she can’t transfer voting rights and the right to inspect the books to her spouse.
LLCs, one of the most popular business entities in Florida, can provide liability protection while remaining fairly simple and cost-effective to stay in compliance. Easler Law can assist with LLC formation, ongoing compliance, and strategies for growth.
What is a Corporation?
A corporation is a type of business structure that not only offers liability protection but also allows for the issuance of equity in the form of stock. This entity is generally designed for those who dream big. A corporation is the popular choice for those who intend to have many owners (known as shareholders in a corporation) and who aspire to raise significant capital.
A person who plans to start a corporation is called the incorporator. Incorporators make the initial decisions on the direction and governance of the corporation. There are no limitations on who can be an incorporator; however, there are restrictions on who can serve on the corporation’s Board of Directors (must be 18 years of age or older). Generally, the directors of the corporation are responsible for assigning corporate officers who then handle the day-to-day operations of the corporation.
To start a corporation, Florida law requires the filing of the corporation’s initial Articles of Incorporation, which become the backbone of the company. While these articles can be amended later, it is important to evaluate your options for each article before incorporation, such as who your initial directors will be, who the initial shareholders will be, how many shares and which types of classes will be issued, and the scope of the corporation’s stated purpose. Once the initial stock is issued, the corporation belongs to the designated shareholders.
The formation of a corporation requires the following information:
- Corporate name including a suffix (Corp., Inc., etc.),
- A principal place of business,
- A mailing address,
- A stated purpose,
- The number of shares of stock authorized to be issued,
- The names, addresses, and titles of the board of directors,
- The name and Florida address of the registered agent, and
- The name and address of the incorporator.
If you decide a corporation is the best entity for your business, you must then decide which type of corporation best suits your strategy and plan for the future. Easler Law can assist with any of the following corporation types:
- For-Profit C-Corporation: This type of corporation is a for-profit corporation. What this means is that the goal of the company is to make money through its operations for the company.
- For-Profit S-Corporation: This type of corporation is similar to a C-Corporation but does not carry double taxation like a C-Corp. However, there are specific qualifications necessary to keep an S-Corporation status, such as a limit on the number of shareholders and their residency.
- For-Profit Social Purpose Corporation: A relatively new type of corporation, the Social Purpose Corporation has gained traction throughout the United States (and the globe) for giving corporate leadership more freedom to consider specific and narrow social purposes in making business decisions, rather than being bound to consider only profit.
- For-Profit Benefit Corporation: Like a social purpose corporation, the benefit corporation requires the consideration of its stated social purposes, but adds the option for the incorporator to require the consideration of generalized public benefit.
- Non-Profit Corporation: This type of corporation is created for any purpose other than making a profit. Generally, a nonprofit corporation is a religious institution or charitable organization, but can also be used in other situations such as a homeowner’s association.
The benefits of a corporation include, but are not limited to:
- Liability protection: The corporation becomes a separate legal entity and shareholder’s risk is limited to their investment.
- Unique Tax Strategies: Although income from corporations is subject to double taxation, they are eligible to deduct certain expenses that can offset overall tax rates.
- Business Continuity: The corporation is designed with a plan. If a business leader leaves, the directors or shareholders replace them. This helps minimize business interruption and allows the business to function long-term.
- Raising Capital: The ability to issue shares and establish classes of stock makes it a valuable prospect for investors and lenders alike.
What is a DBA?
DBA stands for “Doing Business As.” Sometimes also written as “D/B/A”, this is the business’s official trade name and is designed to put the public on notice that the company operates under that chosen name. This is also called a “fictitious name”; for most established business entities, advertising in a local newspaper and registering a fictitious name is required by Florida law.’
When to Set a Consultation
The earlier you talk to an attorney is often the better. If you are just starting, it is probably a good idea to have at least a couple of the important elements of the business in mind such as who and where your target market is, how you will be conducting sales, and where you might want your business to be in the next year, five years, or ten years. However, you should speak to an attorney before you begin any advertising or sales.
What to Expect
Every business idea is unique. This means what worked for the last person will not necessarily work for you. We will need to know everything we can about your business or business idea and your plans for the future. Taking that into account, we can provide several paths to take to reach your goals. Most paths, however, start with the basics.
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