By Cathleen Ward, Esq.
I have found that asking a client or potential client who is starting a business of their own for the first time what type of entity they would like formed is like asking a not-so-frequent visitor to Starbucks what kind of coffee they want; certain words sound nice, others sound familiar, and more often than not you end up getting what your friend is having.
The current popular trend in entity formation is forming a limited liability company (it is the Caramel Macchiato for us Starbucks frequenters). The LLC provides the flexibility of a partnership, as well as the potential tax benefits, with the liability protection of a corporation.
Most non-attorneys I speak to about entity formations get the general concept of a corporation; it creates a separation between the business and the person running it, and it is meant to limit the owner’s potential liability. The actual term “limited liability company” seems to confuse the novice, because it is a relatively new entity formation, and the law is continuously being developed. Florida just recently revised the Florida Limited Liability Company Act in 2013, creating the Florida Revised Limited Liability Company Act (“Revised LLC Act”) in Chapter 605 of the Florida Statutes. (For more information on the Revised LLC Act, click here: http://bit.ly/1SWcyW8.) The basic concepts however, can be quite similar. For instance, instead of shareholders, you have members, and instead of shares, you have membership interests. Continue reading
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