5 benefits of setting up an LLC in Florida as laid out by experts at TRUiC.
On the fence about whether an LLC is the best business structure for your business? We will explore the benefits that come with forming an LLC in Florida and how they can put your business at an advantage.
What is an LLC?
An LLC is a Limited Liability Company that is recognised as an official legal entity. This type of business structure affords your business asset protection in the case that you are sued. LLC’s are owned by people or ‘members’. There can be many owners of the LLC (a multi-member LLC) or the business can be owned by one person (single-member LLC).
- Skip to set up an LLC or for more detailed information about this business structure.
Benefits of setting up an LLC in Florida:
- Control and simplicity
- Member and manager privacy can be awarded
- Protection of personal assets
- File taxes easily (with additional advantages)
- Members keep more of their LLC earnings
Control and simplicity
Registration is kept simple as you are able to complete your registration conveniently online. The registration fee is not greatly expensive ($125) which is beneficial for start-up businesses.
Another advantage is that obtaining an EIN (Employment Identification Number) is free of charge once an LLC is formed. There is no limit to the number of members or managers an LLC can have, therefore granting more control over the company’s operations.
- Note: Unlike a few other states, Florida allows for the formation of single-member LLC’s.
Member and manager privacy can be awarded
Member and manager privacy can be protected. By providing only the essential information on the “Article for Organization of an LLC” form, you can protect the LLC managers. Additionally, you can protect members (owners) of the LLC as well. This can be done by leaving the section that reads “person(s) authorised to manage your LLC” blank on the aforementioned form. By doing this, the state will automatically view your LLC as being member-managed and member privacy will be protected.
Protection of personal assets
Unlike in a sole proprietorship, this business structure affords the owner more protection. LLC’s offer a shield of legal protection of your personal assets. Should the business fall into debt, loss or incur legal fees these costs will not be settled with the member’s personal assets. Therefore, private assets such as bank accounts, cars, houses and investments will be safe. The only liability incurred by members is the personal interest they have invested in the LLC.
- Tip: You can also protect your business’s assets by applying for a business bank account and credit card.
File taxes easily (with additional advantages)
One major advantage of forming an LLC is the pass through taxation it offers. In an LLC, no taxes are paid by the business itself. In its place, the members are responsible for paying income tax on profits earned from the business. The tax duty is “passed through” to the members. All profits made by the LLC are not viewed as income tax in the eyes of the law. Therefore, no self-employment tax must be paid.
- Another benefit of LLC’s in Florida is that you can apply to get insurance for your business (offering further protection).
Members keep more of their LLC earnings
Forming an LLC in Florida allows the members to allocate profit sharing in the management structure of their choosing. Therefore, unlike in a corporation, LLC members can choose to distribute profits on an amount that differs from the percentage of the business owned.
- Having more than one member in the LLC is advised (multi-member LLC). This is because a court ruling dictated that single-member LLC’s may have less or limited protection of personal assets as it ruled that ownership interest can be claimed by the creditor if they are still owed.