Page 5 - Polk County BoCC CSBA Small Business Guide
P. 5


                                                              Starting Your Business

     Determining your legal structure should be decided by taking the following
     factors into consideration.
     •   What taxes are paid?
     •   Who is liable for the company/how much risk are you willing to take?

     •   Who shares in the profit and losses of the company?
     Sole Proprietorship
     A sole proprietorship is not a separate legal entity from the owner. Many
     sole proprietors will do business under their own name rather than create a
     separate business name. If a sole proprietor operates under their own name
     they do not have to take any action to form the business. As a sole proprietor all
     profits go directly to the business owner and the business owner is responsible
     for all profits and losses.

     A partnership is a business that is owned by two or more individuals. A
     partnership must be registered with the Florida Division of Corporations at Profits and losses for a partnership are split between the owners
     based on how the business is divided. A 50/50 partnership would mean that
     the expenses for the business, the profits from the business and the losses for
     the business are divided equally between partners.

     Limited Liability Company (LLC)

     A limited liability company is made up of one or more owners. There is no limit
     on the number of owners under an LLC. Owners under an LLC must divide
     profit and losses similar to a partnership. This type of company allows owners
     to lessen risk by not being personally liable for the legal liabilities associated
     with the business. An LLC also allows the owners to separate themselves from
     the business by not being personally responsible for the debts of the company.

            An LLC must register with the state of Florida and use
            LLC at the end of the business name, e.g. ABC Carpet
            Cleaning LLC.

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