Want to know about Florida business formation? The difference between a Corporation and a Limited Liability Company, in Florida, is mostly a matter of degree.
Some sole proprietors elect not to form a corporation or a limited liability company at all.
Instead they conduct their business using a fictitious name.
However, there are important legal and tax considerations that each type of business entity conveys to the owners.
According to the Florida Division of Corporations, a corporation is a legal business entity which is given many of the same legal rights as an individual.
Corporations are formed in order to grant the actual people involved in the business of the corporation limited liability protection.
This limited liability protection is one of the many advantages to incorporating a Florida business. A corporation is incorporated (or formed) under the laws of particular state or country.
The corporation is then governed by the laws of that particular state or country. Corporations are owned by shareholders and a board of directors usually makes most of the major decisions.
For a more in depth discussion of Florida Corporations and how to forms one, have a look at our Florida Corporations page.
A limited liability company or L.L.C. is not a corporation. Although some individuals often incorrectly believe the abbreviation “L.L.C.” stands for “limited liability corporation,” it does not.
The abbreviation “L.L.C.” stands for “limited liability company.” A limited liability company is a hybrid Florida business entity having characteristics of both a corporation and a partnership.
It is similar to a corporation because it provides its owners with limited liability for the actions and debt of the company, but it is taxed more like a partnership.
An L.L.C. does not have stockholders.
An LLC is composed of members.
The members are the owners of the company and are usually considered the equivalent of stockholders.
In the case of a limited liability company with only one member, the IRS considers it a pass through and the individual member is taxed rather than the L.L.C.
For a more in depth discussion of Florida Limited Liability Companies and how to form one, have a look at our Florida LLC page.
Another Florida business entity is a "DBA" or fictitious name. A DBA is not a company or corporation, rather, it is the published and recorded intention of a corporation, LLC or other entity to use a name rather than its own to do business - and allow banks, for example, to take checks and open accounts in the fictitious name if desired.
As an example, XYZ Corporation may have several interests, so would register "XYZ Healthcare Services," and "Holy Cow Ice Cream Sales" as fictitious names under which it operated. If a business uses only its own name, there is no need for a fictitious name registration.
Additionally, a fictitious name registration does not convey license or exclusivity to the name so registered, only that the intent to use that name has been registered with the state.
For a more in depth discussion of Florida DBA's and how to file for a Fictitious Name, have a look at our Florida DBA page.
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