If Regina’s business is a sole proprietorship or partnership the customer can go after Regina’s orange business for $50,000 and after Regina’s personal asset (her home) to get the remaining balance of her lawsuit winnings. Regina’s home is worth $250,000 and her orange business is worth $50,000. The customer sues Regina for $175,000 and wins in court. One day, after buying an orange from Regina, a customer bites into the orange, becomes immediately sick and is hospitalized for several days. She sells them at a local farmer’s market in downtown Tampa. Liability Explained: Regina runs a business selling oranges. Created as a middle ground between a proprietorship, partnership and corporation, an LLC combines the liability protection of a corporation with the income taxation structure of a proprietorship and partnership. Income is double-taxed, once at the corporate level and once upon being dispersed to shareholders.
The entity itself, which is separate from the owners (shareholders), assumes all liability of the business. Structure that can only be formed by filing documentation and incorporating (“inc.”) with the Secretary of State. Income of the business is claimed as the owner’s personal income.Ĭorporations. In these structures, the owners of the business take all the liability of the business and all the income of the business passes through to the owners. However, you may still need to acquire permits or business licensure to conduct certain business activities. Two types of business associations that don’t require official registration with the state. Sole proprietorships and general partnerships. Whether you are already operating a sole proprietorship, or this is the first step in your entrepreneurial journey, knowing the most popular business structures available to you can help you make the best choice. Before jumping into how to start an LLC in Florida, you should make sure that an LLC is the best entity for your business.
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