Sole-Proprietorship-in-Florida-Pros-and-Cons

There are many options bachelor if you want to first a business organization.

The most common way is to set up a sole proprietorship.

Florida business organization owners can outset a sole proprietorship very easily.

Keep in mind, nonetheless, that at that place are important pros and cons to consider.

Depending on the blazon of concern, a sole proprietorship in Florida may not be the best option.

"It is very tempting for a person starting out in business to avoid the hassle and price of forming a company and instead operating as a sole proprietorship. That may work fine for some businesses, but in that location are some of import risks to consider."

Florida Business Attorney Trevor Brewer

What Is a Florida Sole Proprietorship?

A sole proprietorship is the simplest and most common business concern structure people use.

Sole proprietorships are unincorporated, significant they are owned and operated past a single private.

From a legal perspective, sole proprietorships are much different than other kinds of concern structures; there is no separation between the owner and the business.

Starting a Sole Proprietorship In Florida

Unlike with other business organisation types similar LLCs or corporations, you do not need to register a sole proprietorship in Florida.

In fact, many freelance workers are likely operating as a sole proprietorship without knowing it. Every bit a event, starting a business as a sole proprietorship is incredibly easy.

However, if you plan to use a name other than your legal proper name, you will have to register information technology every bit a fictitious name. In Florida, a fictitious proper name is what you might know as a "doing business equally" or "DBA" name.

You can submit fictitious proper noun registrations to the Florida Division of Corporations either online or by mail. Non including a certified copy, it costs $l to register a fictitious proper noun.

Before you register a fictitious name for your sole proprietorship, Florida law requires that you lot advertise that fictitious proper noun in at least one newspaper in the county where the business is located.

5 Pros of a Sole Proprietorship in Florida

By forming a sole proprietorship, Florida concern owners can take advantage of several benefits they might not get with other business structures.

1. Sole Proprietorships Are Like shooting fish in a barrel to Form

As mentioned above, sole proprietorships practice non crave any special registration.

Equally a outcome, they are fast and easy to grade if you lot want to go your business up and running quickly.

2. Less Paperwork

In addition to the lack of registration paperwork, sole proprietorships require less paperwork to operate in general. Unlike LLCs, corporations, and even partnerships, a sole proprietorship does non crave any sort of formation certificate.

This means no demand to worry virtually drafting and maintaining an operating agreement, bylaws, or another kind of governing document.

three. Cheap to Form and Operate

Sole proprietor Florida businesses don't have to pay anything unless they volition operate under a fictitious proper name.

Consequently, sole proprietorships are one of the cheapest concern types to get-go. By contrast, other business organisation types may price hundreds of dollars in fees afterward all is said and done.

four. Sole Proprietors Have Complete Control

Because the sole proprietorship belongs to a single owner and operator, a sole proprietor has complete control over their business.

They can make decisions and changes much more rapidly than in other business types.

5. Simplified Taxes

Tax laws care for a sole proprietorship as one and the same with its possessor. Accordingly, the concern itself is not taxed separately, and all business income is the same as the owner'south.

Thus, sole proprietors just demand to report their income from the sole proprietorship on their personal income taxation return later on calculating losses and expenses.

5 Cons of a Sole Proprietorship Florida

Unfortunately, the flexibility of a sole proprietorship also comes with several downsides.

As a result, it is very important to consult with an attorney to decide whether a sole proprietorship is right for you.

Peculiarly when it comes to personal liability, information technology may be worth information technology in the long run to spend the fourth dimension setting upward an LLC or corporation instead.

1. Y'all Take Personal Liability for Debts and Obligations

Ane of the biggest reasons people choose to form LLCs and corporations is the limited liability they provide. Because the law views LLCs and corporations equally split entities from their owners, those businesses can have on debts past themselves.

With a sole proprietorship, Florida business owners subject themselves to personal liability for whatever debts or obligations incurred by the business organisation. This is true even if you operate under a fictitious name.

As your business organization grows, this tin can pose a meaning risk; your assets and personal finances are exposed and may exist taken to pay off debts or judgments incurred by you lot, your business concern, or your employees.

ii. More Difficulty Securing Funding

If you plan to rely on investments to help abound your business organisation, a sole proprietorship may not be the best choice.

Because in that location are no stocks or other ownership interests to sell, sole proprietors must rely on personal loans rather than traditional "investments." Investors may be less willing to provide funds under this arrangement.

3. Simpler Taxes Mean Fewer Deductions

Although tax rates may be higher amongst LLCs and corporations, they are permitted to make sure deductions for business expenses.

Sole proprietors do non have this luxury and depending on the cost of doing business, y'all may end up paying more in taxes as a sole proprietor.

To avoid these issues, it is important to speak with a Florida business law attorney or tax professional person nearly your situation. They can aid you lot decide what kind of business structure volition benefit your business organisation the most.

4. Other Businesses May Be Hesitant to Piece of work With You

Whether it is truthful or not, many businesses are nether the impression that an unincorporated business organisation is less stable or professional than an incorporated one.

Therefore, some businesses may be less willing to appoint with your concern if it is a sole proprietorship.

v. Selling Your Business Is More Difficult

When y'all're ready to sell your concern, having a sole proprietorship tin can make this process more than difficult.

In addition to problem finding interested buyers, you will likely accept more than trouble properly valuing your business. If a merger or auction is in your long-term business concern program, this is a risk you should continue in heed.

Demand Help Deciding If a Florida Sole Proprietorship Is Right for You lot?

The concern constabulary attorneys at BrewerLong are here to help. We provide each one of our clients with personal attention and our years of experience, and we're proud to say nosotros've helped hundreds of Florida businesses with their legal problems.

Contact BrewerLong today online.

Author Photo

Primarily working with business organisation owners and their families, Trevor advises clients on business structuring and sale transactions, regulatory compliance, 3rd-party contracts, liability protection and general matters facing small business organisation owners. His focus extends beyond legal advice and includes business organisation strategy and wealth preservation. Trevor too works with families regarding their estate planning needs, including probate, trust assistants, and wills.