Small and mid-sized businesses form the backbone of our economy. According to data from the United States Small Business Administration (SBA), there are nearly three million businesses operating in Florida, with 99% having fewer than 25 employees. Owning, operating, and developing a small or mid-sized business is never easy. It is crucial that you have the right structure in place to protect your assets and your investments from liability risks. Here, our Coral Gables business lawyer provides an overview of key strategies for protecting your personal and professional interests in Florida.
Every Company in Florida Requires the Proper Legal Structure
A company that lacks the proper legal foundation is vulnerable. It could run into a number of different problems—and the business owner(s) could face significant liability risks. Assets and investments may not be properly protected. When forming a business in Florida, ensure that it has the right structure. Here is an overview of some of your most notable options for structuring your business in South Florida:
- Partnership: A partnership is a pass-through business entity. It is a sound legal structure for many types of businesses. As explained by the Florida Division of Corporations, there are several options for forming a partnership in the state, including general partnerships (GPs), Limited partnerships (LPs), and Limited Liability partnerships (LLPs). While a GP offers no real liability protection, an LLP offers some significant liability protection.
- Limited Liability Company (LLC): An LLC is a flexible, cost-effective entity that offers a number of different advantages to business owners, including liability protection. The owners of an LLC in Florida are called “members.” It may be the right option to protect your assets and your investment.
- S Corporation (S Corp): The Internal Revenue Service (IRS) explains that an S Corporation is a specialized type of corporate entity that allows for pass-through. In Florida, corporations must meet certain legal requirements to opt to be taxed as an S-Corp. This business entity offers considerable liability protection.
- C Corporation (C Corp): A Corporation is a traditional corporation. C Corps are the most complex and expensive to set up—but they offer the greatest growth potential and the strongest liability protection. The owners of a C Corp (shareholders) are wholly separate from the business itself.
Many Florida Businesses Need an Operating, Shareholder, or Partnership Agreement
Depending on how your company is structured, you may need an operating agreement or a shareholder agreement. An operating agreement is crucial for LLCs in Florida with multiple members. A shareholder agreement is essential for S Corps and C Corps. A partnership agreement is for GPs, LPs, and LLPs. While there are some key differences between these types of contracts, the core goal is similar: Opearting, shareholder, and partnership agreements govern the internal operations of the business. Here are some notable advantages of a well-drafted operating agreement, shareholder agreement, or partnership agreement in Florida:
- Ensure that all owners know their rights and responsibilities;
- Avoid state-imposed default rules that may otherwise govern the company;
- Clearly define the financial interests—and duties—of all business owners;
- Allow you to maintain control over your business;
- Provide clear rules and regulations for business governance;
- Increase efficiency through clarity of internal operations;
- Reduce the risk of a dispute between business owners;
- Provide clear instructions for dispute resolution if a serious disagreement arises;
- Protect your assets and your investment should there be a major internal conflict; and
- Eliminate potential problems regarding the transfer of business ownership.
Your Commercial Lease Should Be Drafted and Reviewed By an Attorney
Is your business renting commercial space in South Florida? Whether it is for an office location, a retail location, industry use, or any other type of commercial purpose, it is imperative that you have a properly drafted lease agreement in place. Here is a key thing to know: Florida law provides far fewer legal protections to commercial tenants than to residential tenants. In effect, your rights and your responsibilities as a commercial tenant arise from the lease agreement itself. Here are some key things that may need to be addressed with a commercial lease in Florida:
- The total cost of the rent, including any revenue/profit-based payments;
- The duration of the commercial lease;
- Early termination rights or lease renewal rights;
- Common area maintenance (CAM) charges;
- Liability risks, including insurance coverage and indemnity provisions; and
- Whether or not the business owner must personally guarantee the lease.
A well-drafted commercial lease agreement can go a long way toward protecting your business investment. At the same time, a sloppy or disadvantageous league agreement could put your company in a financially challenging position. With commercial leases, it is best to be proactive. Florida’s commercial real estate market is competitive. An attorney can help to ensure that your lease agreement provides proper protection—both personally and professionally.
Major Commercial Transactions Require a Well-Prepared Contract
For businesses in Florida, most significant commercial transitions are executed via contract. If you are involved in an important commercial relationship with a vendor, a supplier, or any other type of business, it is imperative that you have a well-drafted contract in place that effectively protects your best interests. Ideally, the other party will abide by the terms and conditions of the agreement, and there will not be any issues. That being said, disputes can arise for a wide variety of different reasons. Protect your assets and your investments by working with a Florida business lawyer who has the professional skills and legal expertise to draft, negotiate, and review commercial contracts.
Contact Our South Florida Business Attorney for Help
At Jacqueline A. Salcines, PA, our Florida business lawyer is dedicated to providing reliable, solutions-focused guidance and support to clients. If you have any questions about protecting your business assets or business investments, we are here as a legal resource. Call us at 305-669-5280 or connect with us online to arrange your confidential, no-obligation initial strategy session. From our Coral Gables law office, we provide business law services throughout South Florida.