Procedures for forming a business

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By Philip N. Kabler, Esq.

Bogin, Munns & Munns, P.A.

Gainesville office

In the last article I outlined the factors a business person typically considers when selecting a form of doing business, namely liability, taxes, and privacy. Here I will outline the outline the details of entrepreneurship – how one starts a business and what one has to do to accomplish the formation.

But, first a very short list of the basic business entities from which one can select: general partnerships, limited partnerships, corporations, and limited liability companies. Please note there are variants of these basic types of entities, often related to tax planning or professional businesses. These artificial business entities are “creatures of statute”, in our Florida Statutes Title XXXVI (Business Organizations).

There is one other common way of doing business, sole proprietorships. A sole proprietorship is not a business entity at all. It is what occurs when a person just starts doing business. There is nothing particular to do to form a sole proprietorship other than just opening the door. There are, however, certain regulations and licenses that must be adhered to and obtained.

In Florida the state agency which administers the formation of business entities is the Florida Department of State – Division of Corporations. The website is www.sunbiz.org.

There are two categories of documents needed to form a business entity:

  1. A constituting document: These are used to create an entity and are filed with the state administrative agency. In Florida, this can be done online or by a standard or customized paper form, and are accompanied with a filing fee. The forms for corporations are called articles of incorporation, for general partnerships and limited partnerships it’s a partnership agreement, and for limited liability companies it’s called articles of organization. General partnerships do not necessarily need to be formed through the state.
  2. The rules of the game. These establish the internal relationships among the entities’ owners, managers, and officers, all dependent upon the nature of the entity itself, and are not customarily filed with a state agency, but, rather, are kept with the entities’ permanent records. The forms for corporations are bylaws, for general partnerships and limited partnerships the forms are also partnership agreements, and forms for limited liability companies are operating agreements.

There can be other documents used in the formation of business entities such as shareholder agreements and voting proxies, but the two categories above are the basics.

Running alongside the constituting documents and rules of the game for all businesses, including sole proprietorships, are start-up and ongoing compliance activities attended to by documents, such as local occupation licenses, profession-based licenses, annual reports, insurance policies, bank accounts, and local/state/federal tax returns and other filings.

There are also other arrangements for doing business in addition to sole proprietorships and artificial business entities. Examples are joint ventures, franchises, non-profit corporations, and professional entities.

The next time, we will cover financing a business.

For more information, call Philip N. Kabler, Esq. of the Gainesville, FL office of Bogin, Munns & Munns, and P.A. at (352) 332-7688, www.boginmunns.com/gainesvillelawoffice, where he practices in the areas of business, real estate, banking, and equine law.

NOTICE: The article above is not intended to serve as legal advice, and readers should not rely on it as such. It is offered only as general information. Readers should consult with an attorney regarding their legal matters, as every situation is unique.

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