Small Business Owner? Pick The Right Florida Business Structure For Tax Planning Purposes
You may have long dreamed of starting a small business, but it takes more than just an entrepreneurial spirit. To be a successful Florida small business owner, you need an eye for detail and solid instincts to protect your profits. Picking the right business structure is the first step.
As the end of the year and another tax season approaches, our Florida tax attorney explains the different types of business structures and how they impact tax planning.
How Choosing The Right Florida Business Structure Benefits You
According to U.S. Census Bureau figures, a record-breaking 5.5 million people started new businesses in 2023. An equal or greater number is expected for 2024.
Increasing consumer demand for products and services and the ease of promoting and selling online means launching a successful small business in Florida is achievable. However, whether you are a manufacturer, distributor, direct provider, or consultant, picking the right business structure is essential to its success.
The Small Business Administration states that choosing a business structure is required when registering a business through the state. The benefits it can provide, depending on the type selected, include:
- Allows you to raise money and capital for your small business;
- Can limit your personal liability against lawsuits and creditor claims;
- Depending on the structure, offers potential tax benefits;
- Provides credibility for your customers and others you contract with.
Reviewing Common Types of Business Structures In Florida
As a savvy business owner, take time and carefully review all the different business structures before you register with the Department of State. Options include:
- A Sole Proprietorship: Hands down the simplest and most common structure. It enables you to claim income, deduct expenses, and pay business taxes directly through your individual return. However, it leaves you personally liable and can prevent you from taking advantage of certain tax benefits.
- A Partnership: Two options are available if you start a business with a partner. A general partnership means all rights and responsibilities are divided evenly. A limited partnership, as the name implies, allows each partner to determine their investment, responsibilities, and say in the company while limiting personal and tax liability.
- A Corporation: This is an independent legal entity separate from you and any partners you have. It provides limited liability, requires more structure, and may provide more tax cuts, but it could cause you to get taxed twice, once when the company makes a profit and again when dividends are passed to shareholders.
- A Limited Liability Company (LLC): An LLC functions similarly to a corporation in terms of liability but with fewer formalities and more potential tax benefits.
To Discuss Your Options, Contact Our Experienced Florida Business Tax Attorney
As a Florida business tax attorney, CPA, and former FBI special agent, Ronald Cutler has over 50 years of experience dealing with government agencies and the IRS. As the end of the year approaches, he can advise you on the best options for structuring your small business and reducing potential tax liability. Call or contact us online today to schedule a consultation.
Sources:
census.gov/econ/currentdata/?programCode=BFS&startYear=2023&endYear=2024&categories[]=TOTAL&dataType=BA_BA&geoLevel=US&adjusted=1¬Adjusted=0&errorData=0
sba.gov/business-guide/launch-your-business/choose-business-structure
dos.fl.gov/sunbiz/start-business/corporate-structure/
