Starting a business is an exciting venture, but it also requires careful planning and understanding of the legal processes involved. Knowing the steps and legalities of forming a business is critical to long-term success. Contact our reputable business law attorney today to learn how we can help you put your best foot forward.
Step 1: Choose Your Business Structure
One of the first decisions you’ll make is selecting a business structure. This choice will impact everything from your personal liability to your tax obligations and how your business operates on a day-to-day basis. The most common business structures are:
Sole Proprietorship
A sole proprietorship is the simplest business form and is owned by one person. This option is ideal for small businesses, freelancers, and individual entrepreneurs who want a straightforward setup. However, sole proprietorships offer no legal separation between the owner and the business, meaning the owner is personally liable for any debts or legal actions.
Partnership
If you plan to start your business with one or more partners, a partnership might be the right option. There are two types of partnerships: general and limited. In a general partnership, all partners share liability and management responsibilities, while in a limited partnership, some partners have limited liability but no management authority.
Limited Liability Company (LLC)
An LLC is one of the most popular choices for small and medium-sized businesses in Florida. It offers liability protection, meaning the owners (called members) aren't personally responsible for business debts or lawsuits. Additionally, LLCs provide flexibility in how the business is taxed—either as a sole proprietorship, partnership, or corporation.
Corporation
Corporations offer the highest level of personal liability protection but come with more regulatory requirements. There are two main types of corporations: C corporations and S corporations. A C corporation is a separate legal entity that pays its own taxes, while an S corporation allows profits and losses to pass through to the owners’ personal tax returns.
Choosing the right business structure is essential because it affects your legal responsibilities, taxes, and how much paperwork you’ll need to file. Consulting with a business law attorney in Orlando or surrounding counties can help to make sure you choose the structure that best suits your needs.
Step 2: Register Your Business
Once you’ve chosen your business structure, the next step is to register your business with the appropriate government agencies.
Registering with the State of Florida
If you’re forming an LLC or corporation, you’ll need to file the appropriate documents with the Florida Division of Corporations. For an LLC, you’ll file Articles of Organization, while corporations must file Articles of Incorporation. Both types of businesses must also choose a registered agent—a person or company that will receive legal documents on behalf of the business.
Local Business Licenses
Depending on where your business will operate, you may also need to obtain local business licenses. This is especially important if you’re operating in multiple locations, such as throughout Orange County, Osceola County, Hillsboro County, or Pinellas County. Each county may have different requirements, so check with local authorities to make sure you have all necessary permits.
Register for Taxes
In Florida, most businesses need to register with the Florida Department of Revenue to collect sales tax or other applicable taxes. You’ll also need to apply for an Employer Identification Number (EIN) from the IRS if your business has employees or operates as a corporation or partnership. Even if you’re operating as a sole proprietorship, obtaining an EIN is a good idea to help separate your business finances from your personal finances.
Step 3: Draft an Operating Agreement or Bylaws
An operating agreement or set of bylaws is crucial for LLCs and corporations. This document outlines the management structure of the business, including the roles and responsibilities of the owners or shareholders. While Florida doesn’t require LLCs to have an operating agreement, it’s highly recommended to prevent disputes down the line.
What to Include in an Operating Agreement
Ownership structure: Who owns what percentage of the business?
Management roles: Who will be responsible for day-to-day operations?
Voting rights: How will decisions be made, and who gets to vote?
Profit distribution: How will profits be divided among owners?
Dispute resolution: What happens if there’s a disagreement between members?
For corporations, bylaws serve a similar purpose and outline how the company will be governed, including the election of directors, shareholder meetings, and procedures for handling conflicts of interest.
Having these documents in place confirms that all business partners are on the same page and reduces the likelihood of future conflicts. A business law attorney can help draft a comprehensive operating agreement or bylaws that protect your interests.
Step 4: Open a Business Bank Account
Once your business is registered and you have your EIN, you’ll need to open a business bank account. Keeping your business and personal finances separate is essential for legal and tax reasons. It also helps you maintain clear financial records, which are important if you ever face an audit or legal dispute.
In Florida, most banks will require the following documents to open a business bank account:
Your EIN or Social Security Number (for sole proprietors)
Articles of Organization or Incorporation
Operating Agreement (for LLCs) or Corporate Bylaws (for corporations)
Opening a business bank account early on also allows you to establish a financial history for your business, which can be helpful if you apply for loans or credit in the future.
Step 5: Obtain Necessary Insurance
Depending on your business type and location, you may need to obtain various forms of insurance. Some common types of insurance include:
General Liability Insurance: Protects your business from lawsuits related to accidents, injuries, or property damage.
Workers’ Compensation Insurance: Required if you have employees, this insurance covers medical expenses and lost wages if an employee is injured on the job.
Professional Liability Insurance: Also known as errors and omissions insurance, this coverage protects businesses that provide professional services from claims of negligence.
Business owners in Orlando, Florida, and the surrounding counties should consult with an insurance professional to determine the specific coverage their business requires.
Step 6: Comply with Ongoing Legal Requirements
Once your business is up and running, you’ll need to comply with ongoing legal and tax obligations. These include:
Annual Reports: Florida requires LLCs and corporations to file an annual report with the Division of Corporations to keep their business in good standing.
Tax Filings: confirm that you’re paying the correct amount of federal and state taxes. This may include income tax, payroll tax, and sales tax.
Licenses and Permits: Renew any necessary business licenses or permits to comply with local regulations.
Failure to meet these requirements can result in fines, penalties, or even the dissolution of your business. Working with a business law attorney can help you stay on top of these obligations and avoid costly mistakes.
Step 7: Protect Your Intellectual Property
As your business grows, it’s important to protect your brand, products, and ideas. Intellectual property (IP) refers to creations of the mind, such as inventions, logos, designs, and trademarks. Securing your intellectual property assures that others can't use or profit from your ideas without permission.
Some common types of intellectual property protection include:
Trademarks: Protect your business name, logo, and other branding elements.
Patents: Safeguard your inventions or unique business processes.
Copyrights: Protect original works, such as written content, music, or designs.
If you’re operating in Orlando or the surrounding counties, an attorney who is experienced in business law can guide you through the process of registering and protecting your intellectual property.
Step 8: Plan for Growth and Succession
As your business begins to grow, it’s important to think about the future. Developing a business growth strategy can help to secure long-term success and sustainability. Additionally, succession planning allows you to plan for the future leadership of your business, whether you plan to pass it down to family members or sell it to a new owner.
Having a well-thought-out plan in place will make sure that your business continues to thrive even after you step away.
Get Professional Guidance for a Successful Business Launch
Forming a business is an exciting but intricate process. Whether you're starting a small local business in Orlando, Florida, or expanding into areas like Orange County, Osceola County, Hillsboro County, or Pinellas County, understanding business law and the legal steps involved in launching your business is essential to your long-term success.
At Keough Law, PLLC, we're passionate about guiding entrepreneurs through the business formation process, from choosing the right structure to ensuring legal compliance every step of the way. Contact our Florida business formation lawyer today to schedule a consultation and take the first step toward your goals.
