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Business Lawyer Tampa, FL

Business Lawyer Tampa, FL - Woman types on a computer keyboard in a sunny office, close upOur Tampa, FL business lawyer knows that of all the decisions you will make during the life of your business, one of the most important is choosing your company’s organization type. This single decision will determine everything from how you will file your taxes and how your company borrows money to how long your business can operate and who will assume liability in the face of a loss or lawsuit.

The truth is that no two companies are the same, and no one decision is right for every business. This brief overview of the types of organizations should at least get you thinking about what might work best for your company so that you can be better informed while discussing your options with your business lawyer.

Sole Proprietorships

Sole proprietorships are the simplest of all businesses, and the most common. There are no employees, there are no partners; this is just a single owner who works on their own. All financial obligations from the company are the responsibility of the individual, and taxes for the company are included in personal tax returns. To comply with federal regulations, a sole proprietorship must keep sufficient income records, and they must pay self-employment and income taxes.

Partnerships (General, Limited, Limited Liability)

Partnerships are businesses in which there are two or more owners. Each partner contributes their own skills, money, property, or labor, and all parties assume responsibility for any profits or losses. To fulfill its obligation to the Internal Revenue Service, the partnership files Form 1065, U.S. Return of Partnership Income, which highlights the company’s income and expenses. Taxes are paid by each partner through a Form 1040 tax return (also known as pass-through taxation). The amount of income tax depends on the type of partnership.

Corporation

A Tampa business attorney knows that out of all the business structures, corporations are the most complex. There are more regulations and tax requirements to follow, and more tax preparation and record keeping than in sole proprietorships and partnerships. However, there can be some benefits to starting up a corporation instead of a partnership or sole proprietorship. For example, corporations are, at their core, entities that handle the responsibilities of the business. Owners are not generally held personally liable for debts or losses of the company, and taxes are filed under the corporation. It is important to note, however, that corporations do have a different tax obligation than other business structures.

Limited Liability Company (LLC)

The Limited Liability Company (LLC) structure has become a popular choice for new companies. This is due, in part, to the flexibility offered to owners in regard to management. However, there are other benefits, such as pass-through taxation and limited personal liability on business losses and/or debts. There are still drawbacks, however, including the fact that certain types of companies are not able to operate as LLCs.

Before You Choose an Entity, Speak with a Business Lawyer

While no one entity is better than another, it is important to choose the one that best suits your company’s goals, limitations, and needs. But you should not go at it alone; a qualified Tampa business attorney can help to ensure you understand all the pros and cons of each entity while helping you decide which option is best for your business. Call Hoyer Law Group, PLLC to learn more.

What is a Nonprofit Corporation?

As your Tampa, FL business lawyer from Hoyer Law Group, PLLC can review with you, a nonprofit corporation (also often called a not-for-profit corporation), is a corporation that has no shareholders and consequently pays no dividends. Instead, nonprofits plow their profits back into the business, which usually is some form of charity or charitable organization. You may think that the terms “nonprofit corporation” and “501(c)3 corporation” are synonymous, but such is not the case. While both are legal entities, separate and apart from the people who own them, they differ in one very important respect: their tax status.

Nonprofit Corporations

You establish a nonprofit corporation in much the same way as you establish a regular corporation, i.e., file the necessary paperwork to register the corporation as a nonprofit and the necessary paperwork, including Articles of Incorporation, to then set up your nonprofit. Establishing nonprofit status usually allows your corporation to receive benefits from your state, such as not having to pay sales tax. It also gives you the opportunity to apply for many types of grants.

501(c)3 Corporations

A 501(c)3 corporation is a nonprofit corporation that goes one step further and applies to the IRS for tax-exempt status at the federal level under Section 501(c) of the Internal Revenue Code. This section authorizes upwards of 30 types of 501(c) organizations depending on the focus of their businesses. A 501(c)3 corporation is one that pays no income or sales taxes at the federal level, and whose donors get to take their donations as income tax deductions. Filing for 501(c)3 status requires, among other things, that the corporation first obtain an Employer Identification Number (EIN) from the IRS.

Keep in mind that whether or not your nonprofit files with the IRS for 501(c)3 status is completely up to you. As your Tampa business lawyer may advise, if you are a small organization that doesn’t anticipate bringing in a lot of funding or seeking donations, you may wish to forego the expense and paperwork involved in achieving and maintaining 501(c)3 status. Your sponsors won’t need a charitable deduction because their sponsorship constitutes a qualified marketing expense that entitles them to a business tax deduction.

Obtaining Legal Advice

As with all business decisions, especially those regarding what type of business entity to form, your wisest strategy consists of engaging the services of an experienced Tampa business lawyer who can advise you of your business entity options, including the tax consequences of each. In addition, we can advise you of your state’s requirements for becoming a corporation, nonprofit or otherwise, and help you prepare your paperwork.

We know how exciting, albeit stressful, it can be to have your own business, which comes along with risks too. Having a legal team that you can turn to regarding business disputes or other issues can make all the difference in its success and future. For more information about business law, or to have specific questions answered, contact us at Hoyer Law Group, PLLC at your next convenience.