Running a business in Florida requires a basic understanding of the business law and the financial frameworks that govern the various day-to-day components of company ownership. These include company formation, holding and transferring shares of the company, protecting the interests of the business owners, drafting and reviewing business documents and managing business disputes when they arise.
In all of these areas, a strong working relationship with an experienced Florida business attorney can help to proactively avoid the pitfalls of business ownership in this state. Having an attorney to represent the business and the interests of the business owners is a good way to ensure that matters are resolved swiftly and favorably should they develop into disputes.
Florida Company Formation
When forming a company in Florida, whether for-profit or non-profit, the business type chosen has a direct effect on the requirements for financial reporting, tax liability and ownership structure.
The types of business structures available in Florida include:
Corporations. This is the most complex and potentially costly of business structures. The owners or “shareholders” of the corporation enjoy limited legal liability but have increased reporting and tax obligations. One of the most commonly cited matters relating to tax liability for the owners of corporations is that owners are likely subject to “double taxation”. This means that profitable corporations and their shareholders are taxed twice: once due to tax liability of the corporation and again due to the individual tax liabilities of the owners. Working closely with a Florida business lawyer in structuring the company and its assets, as well as with an experienced accountant can help reduce or, depending on the situation, eliminate the cost of this double tax liability.
Partnerships. These are company formation structures where two or more individuals share ownership and, in some cases, liability. Florida partnership formations include three different sub-structures each with their own ways of allocating ownership and assigning liability.
Limited Liability Companies. Also known as LLCs, this popular company formation type enjoys limited liability similar to that of a corporation and is viewed as a pass-through entity for tax purposes. This specifically means that the tax liability of the business and the owner are combined so that there is not the issue of “double taxation” that exists with corporations.
Sole Proprietorships. This is the default business structure and is also the least complex. The business. Sole proprietorships are businesses where the business owner, usually a single individual, is indistinguishable from the business in terms of tax, financial and legal liability.
“… a strong working relationship with an experienced Florida business attorney can help to proactively avoid the pitfalls of business ownership in this state.”
Florida Buy-Sell/Buyout Agreements
A buy-sell agreement is a legally binding contract that outlines how a partner’s share of a business may be reassigned if that partner passes away or otherwise leaves the business. These types of agreements are sometimes referred to as “business wills” or buyout agreements. The buy-sell agreement establishes under what conditions, to whom and at what price an owner, partner or shareholder can or must sell a business interest. In the case of a deceased partner of the business, buy-sell agreements establish the responsibilities of the decedent’s estate thus playing a role in that person’s estate planning.
A buy-sell agreement will also outline triggering events, or events that push the terms of the agreement into action. Examples of triggering events might include the death or disability of a partner, voluntary or involuntary departure of a partner, bankruptcy, divorce or retirement. Partners will define the conditions of the buy-sell agreement and the subsequent triggering events that would enact the buy-sell agreement.
Florida Sales Agreements
When one business engages another in a transaction, a written sales agreement can protect both parties. Sales agreements, or sales contracts, are legally binding written agreements that govern a transaction between a buyer and a seller.
When drafting or reviewing a sales agreement for a business, an attorney must ensure that the document covers all bases required to ensure that all elements of the transaction run smoothly. The contract must also provide for remedies should the transaction not go as expected.
Having a well-drafted sales contract benefits both sides of the transaction. The document increases the chances that the transaction will go forward without disputes or interruptions. Should disputes occur, the sales agreement’s description of how disputes are to be handled can significantly streamline the resolution process and result in a less cost to both parties.
Florida Business Disputes
Having experienced Florida legal counsel in place can help to resolve issues before they develop into disputes. Well-drafted partnership agreements, sales contracts and joint venture agreements all serve to reduce the risk of disputes. However, disputes may still occur and these documents can be drafted in ways that reduce the cost and severity of the disputes for both parties.
Common provisions that help streamline the dispute process include designation of venue and governing law. These clauses within a document ask both parties to agree to where and under which laws potential disputes will be resolved.
When disputes occur, having a legal representative present during the stages of resolution can result in less escalation, less cost in the long term and a higher chance that conflicts can be resolved in the favor of the party represented by legal counsel.
The stages of commercial dispute resolution include negotiation, mediation, arbitration and litigation. Read more about these stages here.
Florida Commercial Lease Agreements
Another important reason to hire a Florida attorney is to manage the process of leasing commercial property in that state. Commercial leases can be complex and involve multiple steps in order to be completed. Commercial lease agreements are important, legally binding documents that govern one of a business’ most important assets: its place of work. The business’ success as a provider of goods and services, as an employer and as a financially viable entity will hinge on the terms and conditions laid out in the commercial lease agreement.
Business owners should be sure not to “go it alone”. It is essential that businesses hire an experienced real estate attorney with an understanding of the local commercial market and have them review all documentation from the Letter of Interest to the final lease agreement.
South Florida Law
Having a successful presence in Florida requires a strong relationship with an experienced legal partner who can represent your company in matters of business formation, transactions and real estate. South Florida Law has the resources and experience to work with individuals and companies all over the world who wish to do business in Florida. Whether you are a Florida resident, out-of-state resident or outside of the United States you can rely on the attorneys of South Florida Law to represent your interests and ensure local compliance. With offices in Broward and Miami, we cover all of South Florida and are licensed to provide legal services throughout the state. Contact us today on (954) 900-8885 or via our contact form.