Single Member LLCs versus Sole Proprietorships in Florida
When you’re starting a new business in Florida you may be caught between deciding to launch as a sole proprietor or as a single member LLC. Launching a sole proprietorship is not as complicated as an LLC and there is less paperwork required. But, it doesn’t offer the same protections as an LLC and there are other significant disadvantages. Meeting with a South Florida business formation attorney briefly to learn about the differences between the two entities is a wise decision, and some of the most important benefits and disadvantages are described below.
A Florida LLC limits your personal liability
A Florida LLC limits your personal liability substantially, and that is one of the main reasons why you may consider using this entity over a sole proprietorship. As a sole proprietor you and your business are viewed as one and the same. That means that you can be sued for your business’s liabilities and your personal assets such as your home or your checking account may be at risk for unpaid debts related to your business. However, a Florida LLC separates many of those liabilities from you as the owner and protects your personal assets from many risks.
Sole proprietorships can be easier to launch
A main reason why some entrepreneurs prefer a sole proprietorship is because of the fact that it’s a lot easier to launch. There are lower startup costs because you won’t have to hire a South Florida business formation lawyer to create an operating agreement or draft articles of incorporation. You won’t need to file any legal documents with the Florida Department of State if you run the sole proprietorship under your legal name. However, if you plan on operating your business with a different name (DBA) you will need to register it.
Sole proprietorships are very limited
Although they are somewhat easier to start, a sole proprietorship exposes you to significant personal liability. A Florida LLC is not going to protect you from every liability, but it goes much further in terms of limiting your personal liability for the debts of your business in many circumstances. Many individual business owners are better off launching as a single member LLC.
Mark Schecter is a highly experienced South Florida business formation attorney who can outline some of the most important differences between the two entities in detail for you if you have any questions about them at all. Contact Mark Schecter at (954) 779-7009 for a consultation regarding your business today.