There are many advantages to incorporating your business, including liability protection, legal separation between you and your business, and more. Therefore, incorporation is generally recommended for most businesses. And although incorporating your business can help you avoid many problems, filing your business formation paperwork incorrectly can create new ones. Fortunately, by working with an experienced Florida corporate and business law attorney, you can avoid many of the common mistakes that business owners make when filing incorporation paperwork. In this article, we review the top mistakes to avoid when filing business formation paperwork.
Choosing the Wrong Business Structure
The three most popular basic business structures that require filing are the limited liability company, S corporation, and C corporation. Each of these entities has advantages and disadvantages, so it’s important to choose the correct one for your business.
Of the three, the LLC is the simplest structure. An LLC provides protection to your personal assets with a minimal amount of paperwork. LLCs are hybrid entities that combine the characteristics of a sole proprietorship or partnership with a corporation.
As noted above, the two most popular types of corporations are the S Corporation and C corporation. An S corporation is taxed in a manner similar to a partnership. However, with an S corporation, taxes are allowed to pass through to individual business owners.
A C corporation, on the other hand, is usually a larger company with several shareholders that enjoys the benefits of tax breaks on profits. However, the profits of a C corporation are taxed a second time when they are distributed to shareholders.
Incorporating in the Wrong State
In most cases, if your business has under five shareholders, then you should incorporate in the state where your business is physically located. However, larger businesses that have more shareholders should consider incorporating in either Nevada or Delaware because these states have laws that are more business-friendly and flexible than other states.
Failing to Comply with Your State’s Requirements
Finally, it’s important to follow your state’s requirements when filing business formation paperwork. For example, even though LLCs are subject to few regulations, failing to follow your state’s LLC-related rules can subject you to personal liability. In addition, as a business owner, it’s important to understand which tax returns and other legal documents you must file in your state of incorporation and with other states where you operate in order to avoid penalties and other negative outcomes.
Failing to Contact a Florida Corporate and Business Law Attorney
As a business owner, small mistakes during the business incorporation process can cause big problems. Therefore, to obtain help with your business incorporation needs, the distinguished Florida law firm of Gueronniere, P.A., is here for you. When you come to us for assistance, experienced corporate and business law attorney Grace de la Gueronniere will review your situation and take the steps necessary to incorporate your business. Please contact us to arrange an initial consultation with our experienced attorney.