An LLC or limited liability company is one of the most common types of business entities especially for small businesses. This is the case because the business entity provides limited liability asset protection in addition to a number of other benefits which make it highly appealing to entrepreneurs. The US Census Bureau reported that in 2020 the state of Florida saw 495,251 business applications which was a 26.8% increase from the previous year. This makes Florida the state with the most business applications by a considerable margin. This article will explore five reasons as to why Florida is so appealing to business owners looking to establish their businesses.
1. Flexibility of Business Structure
Florida allows for a great deal of flexibility when forming an LLC and this is particularly true of the manner in which profits are distributed. A Florida LLC allows its owners to distribute profits in a manner which is not directly proportional to ownership of the LLC. An individual who owns only 10% of an LLC can be able to receive 50% of the profits of the LLC if this is included in the articles of incorporation of the LLC. This can have tax benefits for LLC operators and it can be a useful way of incentivising investment in the LLC.
2. Additional LLC Benefits
While an LLC provides a great deal of benefits on its own, Florida has adopted the Revised Uniform Limited Liability Company Act which conveys additional benefits upon LLCs. Due to the manner in which states function they are each responsible for drafting their own laws in relation to LLCs. This act was an attempt to standardize these laws and bring them under one similar banner. This statute takes the best elements of the first generation of LLC statutes and creates a superior second generation of LLCs which provides additional benefits to LLC owners.
3. Business Friendly Environment
The Florida state government has made an active attempt to attract business to the state through the creation of an environment which is friendly toward businesses. This is in part caused by Florida not taxing corporate income. However there are also additional factors which make Florida a business friendly state. This includes the relatively low living expenses when compared to other states, especially states such as California or New York. Additionally, the cost of labor in Florida is lower than it is in other states which makes it more affordable for a business owner.
4. Taxation Benefits
As previously mentioned Florida does not impose a tax on businesses income at a state level. There are also additional tax benefits which an LLC owner can enjoy if they are also a resident of Florida. The lack of taxation on corporate income can be a tremendous cost saving measure to entrepreneurs and allows businesses to increase their cash flow. This means that business owners will have a greater amount of capital to invest back in their business to allow their business to continue to grow and generate more profit. It will also save a business owner time as they will not need to file a tax return for their business at a state level.
5. Greater Degree of Protection
LLCs provide limited liability asset protection. This means that the owner or owners of the LLC cannot be held liable, in a personal capacity, for any debts which the business incurs. Similarly, the business will not be liable for any debts or other liabilities which the owner incurs in a personal capacity. This creates protection for both the business and business owner as they can effectively separate their personal assets from their business assets. This can greatly reduce the degree of risk involved in starting a business. Florida state law is very rigid when it comes to these protections and will ensure that a business owner will not be liable for any form of liability which the business incurs.
The Really Useful Information Company (TRUiC) has a wealth of resources available for LLC formation in Florida.
The state of Florida offers a great deal of benefits for entrepreneurs who are looking for a business friendly state in which to incorporate their LLCs. The state allows for a high degree of flexibility in the structure of the LLC and the manner in which profits are distributed. The adoption of the Revised Uniform Limited Liability Company Act provides additional LLC benefits to LLC owners. The state offers a very business friendly environment which is greatly assisted by the lack of state taxation on corporate income. The LLC also offers a tremendous amount of asset protection and this is ensured through Florida’s strict LLC laws.