Each would-be entrepreneurs want to start their new venture with the right basis. Without an appropriate structure, a new business owner will have difficulty to generate real business of the company's sales and profit growth. Moreover, the structure of the business entity is not working properly can easily become a series of chronic problems that affect the unity line for years to come.
In recent years, the Florida limited liability company (LLC or company)has emerged as an ideal investment instrument and business entity for both business owners and property investors. How can you expect, there are numerous economic and legal issues in the formation of a new Florida LLC.
The purpose of this article is threefold. First, it explains why the Florida LLC has become a popular investment vehicle. Secondly, this article provides an explanation of the most important business and legal issues that must be addressed if education is aFlorida limited liability company. Finally, this article explains why it is important that the advice of an experienced and competent lawyer, if your Florida unit, so that expensive mistakes that could cripple your new business from the outset, can be avoided.
WHY THE FLORIDA LLC has become an IDEAL investment vehicle and business entity
Florida has become a paradise for investors and entrepreneurs. One of the most important factors that the popularity of the Sunshine State have contributed to the positive laws that govern companies with limited liability. An LLC is a hybrid business entity having characteristics of both a traditional business and partnership. The primary corporate objective is characteristic of limited liability. The primary partnership characteristic is the availability of pass-through taxation (ie) no double taxation agreement.
In recent years, the undisputed king of Florida, LLC. The > Florida secretary of state registered 135,851 new companies with limited liability in 2007. This facility offers an attractive combination for smart investors - some protection against creditors and lawsuits and freedom from federal and state taxation.
Investment vehicle PREFERRED FOR FOREIGNERS
The limited liability company is the preferred investment vehicle for foreign nationals who want to invest in Florida real estate or to create a company in the presence> Florida. It is also the preferred investment vehicle for passive investors who want the benefits of limited liability with the tax advantages of partnership taxation.
One or more persons may form a company with limited liability in Florida. "Entity" means any natural or legal person. There are no restrictions or prohibitions relating to the nationality of an individual. Therefore, a foreign person or entity, the only member of Florida, LLC. How Toexplained later, an alien may obtain an individual Taxpayer Identification Number from the Internal Revenue Service for the purpose of payment of United States Federal income tax.
Determining the business of the enterprise may be very broad. Florida law defines a limited liability company business, like any trade, profession or occupation, and other lawful business, purpose or activity, whether or not pursued for profit.
Unless the articles of organization oroperating agreement provides otherwise, each Florida, LLC has the same powers as a person over all things necessary to carry out its business and affairs to be done. These powers include the power to acquire, possess, keep, improve, and otherwise used with real or personal property where they are to enter into contracts, borrow money, invest or reinvest its funds, and also Otherwise the conduct of their businesses.
PROFESSIONAL limited liability companies
Florida law allows licensedProfessionals to organize a special category of LLC. A professional limited liability company is organized for the sole and specific purpose of providing professional service and has as members only other professional limited liability companies, professional firms or individuals who are properly licensed or otherwise legally authorized to make the same professional service as the limited liability company. Thus, doctors, lawyers, architects, brokers andother licensed professionals get the equal protection of the LLC form of grants.
Under Florida law, a professional company is organized and operated in the same way as a traditional LLC, with the proviso that a professional limited liability company must be limited with several specific requirements for membership of licensed professionals to meet and maintain the integrity of the licensed profession. For example, is a professional limited liability company prohibitedthe granting of the capital stock to anyone other than a professional company, a professional limited liability company or a person duly licensed or otherwise authorized by law, the same specific professional services as those for which the company was incorporated to make. In addition, no shareholder of a professional LLC may enter into a voting trust agreement or any other type of agreement vesting in another person the authority to exercise voting rights at allor has all of that person.
There is also a prohibition against a person as a member of a professional LLC, authorized, unless that person is a professional company, a professional limited liability company or to an individual, each of which is duly licensed or otherwise legally authorized to have the same specific professional services as those for which society is organized with limited liability. After all, no member may enter a professional limited liability companyany type of agreement vesting in another person with the authority to one of its voting rights in the exercise of professional limited liability company.
ADVANTAGES OF LLC
The main advantages of a Florida limited liability company are as follows:
1. Taxation. For United States Federal income tax an LLC is treated as a partnership, unless the members choose to tax the limited liability company as an individual, corporation, company, or C corporation. Taxation as a partnership results in the pass-through income and deductions for individual members, which are then compared to the Internal Revenue Service for tax return reported that owner. Thus, the LLC is not taxed itself. Unlike a corporation, there is no double taxation (taxes on income and profit of the company before any dividends or distributions to shareholders and the taxation of dividends and distributions received once as income to shareholders).
2. Limited liability. A>Florida limited liability company's members are protected from some liability for the acts and debts of the company in the same manner than a corporation's shareholders are shielded from personal liability for the corporation's acts and debts.
3. The LLC has far fewer formalities than a corporation. There is much less administrative paperwork and record maintenance requirements than a traditional corporation.
4. The entity is an ideal investment for passive investment owners want the flexibility and convenience to keep even the personal liability and to avoid double taxation.
5. Attractive investment vehicle for foreign investors. An LLC must have a distinct advantage over an S-Corporation, as can an S-Corporation, only 100 shareholders and the shareholders are U.S. citizens and companies do not.
DISADVANTAGES OF THE LLC
You should see the following possible disadvantages of forming a Florida limited knownLiability:
1. The structure of the company and the role of their authority may not be familiar. For example, a company with limited liability of the members belonging to and managed by a manager or managing member. A company is owned by its shareholders and is governed by a board of directors and officers.
2. Since Florida law allows an LLC, operating with either a written or oral operating agreement, members, conduct the business without a written agreement will be operatinglikely to encounter many problems.
3. It may be difficult to raise investment capital for new businesses, as some investors are more comfortable with more traditional corporate structures.
4. The creditors will often require members of the new units in person limited liability company's loan guarantee. Thus, the members will be held personally liable for the loan obligations of the limited liability company.
5. The directors of Florida LLC to use many differentTitle - member, manager, director or member. For this reason, it can be difficult to determine who actually commit the necessary legal powers to contract the company with limited liability.
FLORIDA LLC NAME REQUIREMENTS
Florida law contains specific requirements for the name of a company with limited liability. These basic requirements are that an LLC Name:
1. Is the phrase "limited liability company in question," the abbreviation "Ltd." or the designation "LLC" asThe last words of the name of each limited liability company formed under the provisions of this chapter. The word "limited" may be abbreviated as "Ltd." and the word "enterprise" can be abbreviated as "Co." The renunciation of the expression "limited liability company", the abbreviation "Ltd." or the designation "LLC" in the use of the name of the company with limited liability shall apply to any person who knowingly participates in the omission, or knowingly tolerates the omission, liable forIndebtedness, damage or liability, by the close the gap.
2. Language can not be claimed or suggested that the company is organized for a purpose other than as permitted in Chapter 608, Florida Statutes, and its articles of organization.
3. Language can not be claimed or suggested that the company with a state or federal agency or a corporation or other entity which is connected chartered under the laws of the United States.
LLC FORMATIONPROCESS
To view the Florida Limited Liability Company, Articles of Organization form must be with the Department of State by one or more members or authorized representatives of the Company are filed with limited liability. The articles of organization are the first, last, and adapted articles of organization of an LLC.
The comments are giving to the organization of the Florida Secretary of State Division of Corporations and has submitted the name of the limited liability companyCompany, principal and mailing address, registered agent information manager (s) or managing member (s) and a statement of the date of entry into force of the limited liability company.
Unless a delayed date is specified, the company's existence begins with the date and time when the goods are brought to the organization, as required by the Department for the date and time of the state endorsement on the original document or on a date specified in Articles Organization is assigned, whicheverwithin five working days before the date of filing.
The articles of organization may specify a delayed effective date and time when the existence of the company, and if so, is intended to apply the articles of organization are effective and the limited liability company existence begins at the time and date indicated. If an article deadline, but no time is specified, then the objects of the organization are to take effect, and is the limited liability companyLife begins at the end of the fiscal year on delayed effective date. Unless otherwise permitted by Chapter 608, Florida Statutes may, a delayed date for a document later than the 90th Day after the date on which the document is stored.
The Department of submission of the State of the statutes of the organization is conclusive proof that all prerequisites have been satisfied unless the organization to cancel a proceeding by the state or revoke theOrganizational or administrative dissolution of the organization.
Under Florida LLC is not a law, the handling of business or no debt, except that which is unimportant, their organization or subscriptions for the receipt or payment of contributions until the actual date and time of commencement of the limited liability company.
Operating Agreement
The operating agreement of a limited liability company is of crucial importance for the success, because it determinesdefines and distributes the rights and obligations of members. Although Florida law allows more flexibility in developing an operating license agreement, the document must be carefully developed to ensure that expectations of future members are met. The operating agreement is not filed with the State of Florida Division of Corporations and is usually managed as a private document on the relations between the members, managers and managing members.
TheOperating agreement is part of the oral or written provisions that set out for the management and regulation of the affairs of society and that the relations of the members, managers or managing members and the LLC. The members of a company may, prior to an operating agreement, to or at the time the articles of organization have been filed and the operating agreement shall enter into force on the date of the founding of the LLC or on another date in the providedOperating agreement.
Florida law provides that certain rules for the operation of a limited liability company, the consent may be waived. Sun is not in the operating agreement:
1. Unreasonably restrict a right to information or access to the records;
2. Eliminate the duty of loyalty;
3. Inappropriate reduction of due diligence;
4. Eliminate the obligation to act in good faith and fair dealing;
5. Vary the requirement to be in the company's business or
6.Restrict the rights of a person, other than a manager, member, or transferee of distributional effects of the interest of a member.
AVOIDING LIABILITY
Most people work very hard to acquire and build assets such as homes and businesses. Given the contentious nature of our society, it is important to proactively protect these assets. Except as provided in Chapter 608 are provided, Florida Statutes, the members, managers and managing members of a limited liability company is not Floridarests solely on the basis of being a member or serves as a manager or member of management, under a ruling, decree or order of a court or otherwise, for a debt, obligation or liability of the limited liability company. The member, managing member, manager, or any other person's duties and liabilities may be expanded is limited by provisions in the articles of the company or organization operating agreement.
Asset protection is an important objective in the formation of an LLC. It isimportant that you have specific measures to safeguard your assets and companies such as:
1. Purchase as much insurance as you can afford to protect all your real estate and business assets to. Maintain a written record of insurance shows that your company is named insured book. If you transfer to your real estate company, did not receive it for insurance coverage naming the LLC as an insured, you can expect the insurance company to refuse to supply.
2. Hold title to your real estate assets in the name of theYour limited liability company. If a complaint comes in which includes a property in the name of the company with the title, the LLC, the defendant did not you as a person. This concept is crucial for the real estate asset protection. If real estate prices in your individual names, all of which is titled Your personal assets are at risk. To gain the protection provided by your company with limited liability, you have to actually ownership of the property for the company through the mediation of real estate and Recording of the deed in the province where the property is located. It is a complete waste of time, effort and money to a Florida LLC, and they are not then transferred to the property market in the name of the company with limited liability. Although this is a fairly common problem, it can be easily corrected.
3. Manage your assets in a professional and appropriate manner. Although an LLC can reduce their risk, it can not completely rid of it. For example assumes that you correct a Form> Florida limited liability company and hold a real estate asset in the name of the company with limited liability. When you install a gas barbecue grill negligence on the grill exploded and hurt or kill one of your tenants, you will probably be a defendant in a lawsuit. To minimize the exposure to these types of lawsuits, to manage your assets in a professional and appropriate manner by reducing or eliminating these situations you to danger. For example, instead of personally building aMulti-level deck and stairs, you hire a licensed contractor to perform this task on your behalf.
The formation of a COST FLORIDA LLC
Compared to other states, the registration and associated costs for Florida, LLC, are relatively inexpensive. The registration fee for a new Florida LLC is $ 100.00 and the registered agent is $ 25.00. Maintenance of a limited liability company requires me to log an annual report (and supplemental) in the amount of $ 138.75 per year. In contrast, the firstRegistration fees for a limited liability company in Illinois and Massachusetts are $ 675 and $ 512 respectively.
ERLANGEN an Employer Identification Number
Once your Florida company was formed, you must have a Federal Employer Identification Number. The EIN application, the Internal Revenue Service (IRS) on the submitted Toll-free telephone, fax, mail or Internet.
The Internet EIN application is the preferred method for customers and for the applicationObtain an EIN. Once the application is complete, the information validated during the online session and an EIN is issued immediately. The online application is available for all companies whose principal business, office or agency, or legal residence (in the case of an individual), is located in the United States or U.S. territories available. The principal officer, general partner, grantor, owner, trustor etc. have a valid Taxpayer Identification Number (Social Security Number mustEmployer Identification Number or Individual Taxpayer Identification Number) to use the online application.
ACQUISITION OF INDIVIDUAL Taxpayer Identification Number
A foreign natural person is not entitled to work in the United States is not entitled to receive a Social Security number. Instead, the foreign person may, for an individual Taxpayer Identification Number (ITIN).
What is an ITIN?
An ITIN is a tax processing number issued by the InternalRevenue Service. It is a nine-digit number that always begins with the number 9 and has a 7 or 8 into the fourth spot, for example 9XX-7X-XXXX. IRS issues ITIN to individuals are required to have a U.S. taxpayer identification number but do not have, and will not qualify for a Social Security number (SSN) from the Social Security Administration (SSA) to.
ITIN will be issued regardless of immigration status because both domestic and foreign aliens U.S. tax return and havePayment responsibilities under the Internal Revenue Code. The individual must request a file and have obtained a valid file federal tax returns with an ITIN, unless they too do not meet an exception.
What is an ITIN used for?
ITIN is only for federal tax reporting and are not intended to serve any other purpose. An ITIN does not authorize work in the United States or give entitlement to social security benefits or the Earned Income Tax Credit. ITIN does not apply outside of the identificationTax system.
IRS issues ITIN to help individuals comply with U.S. tax law and a way to work efficiently and to respond to provide tax returns and payments for those not entitled to social security numbers.
Who needs an ITIN?
IRS issues ITIN foreigners and others who qualify federal tax reporting or filing requirements and not for social security numbers. A non-resident alien individual not eligible for a Social Security number is required to submit a U.S. tax return only to claima refund of tax under the provisions of U.S. tax treaties, must be the ITIN.
Examples of people who ITIN must contain:
1. Non-resident alien filing a U.S. tax return and not eligible for a Social Security number
2. U.S. Resident Alien (on the days in the United States) filing a U.S. tax return and not eligible for a Social Security number
3. Dependent or spouse of a U.S. citizen / Resident Alien
4. Dependent or spouse of a non-resident alien visa holder
How do I know if I have a need forITIN?
If you do not have a SSN and are not likely to receive a Social Security number, but you have to provide a requirement for a federal tax identification number or a file a federal tax return, should you opt for an ITIN.
CONCLUSION
The Florida limited liability company is a versatile choice for real estate investments and other businesses.
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