It’s exciting—and a little overwhelming–to start a business with a partner. Whether it’s your first-ever foray into business or something you’ve done dozens of times, attention to detail is critical. Your business will benefit from the steady counsel of a qualified business attorney, who will make sure that your liabilities are covered for the normal course of events.
In Florida, where over 525,000 domestic LLCs are created each year, the environment is pro-business and getting started appears simple. Yet it’s important to be aware of the necessary paperwork, filing deadlines, tax considerations, and more.
Checklist for Organization: Documents that are Critical to Your Business
Paperwork can feel like a hurdle that’s keeping you from the important parts of getting your business up and running, yet it is necessary to provide the structure and basic operating plans for your enterprise. Follow this checklist to make sure you have everything you need to be legal and protected from common issues in the future:
- Entity Formation. Choosing the right form of business organization will determine how you are taxed, your liability, the rules of business management, and what other forms to file. Most partnerships in Florida are either general partnerships (which offers no protection from personal liability) or limited liability (LLCs). An LLC is preferred by most small businesses for a flexible management structure and liability protection aspects. Other options include limited partnerships and corporations. In Florida, LLCs file Articles of Organization with the Division of Corporations, while corporations must file Articles of Incorporation and designate a registered agent. Your attorney can describe the pros and cons of each option as it relates to your business plans.
- Operating agreement. Florida’s laws allow oral and implied contracts in business litigation, which makes a concise, detailed operating agreement particularly crucial. It should cover ownership percentage, capital contributions, member/partner roles and decision rights, profit distributions, voting thresholds, management structure, restrictions on transfers, buy-sell mechanics, and dissolution rules.
- Finances. Recognize that financial management is the backbone of your business. Have your attorney draft detailed documentation and planning paperwork that covers contributing capital, salaries (if any), bookkeeping and accounting methods, and other financial management aspects of your partnership.
- Buy/sell agreements. Even when your business is new you should plan for the possibility of a partner exiting. Put buy/sell agreements in writing to detail the process that will ensue if one member needs to sell, dies, or seeks dissolution of the business. It should include valuation of the business, funding methods, and transfer restrictions. Many businesses fund these plans with life insurance.
- Partnership agreements. These documents further define the roles of each partner, describe who owns what, including copyrights or patents, and plan for the use or transfer of core assets like customer lists when there’s an ownership dispute or dissolution of the partnership.
- Dispute Resolution Clauses. Disputes among partners are not uncommon. What may feel like an unnecessary step now can be a lifesaver later: planning for mediation before arbitration.
- Due Diligence. You may think you know your partners well enough to enter into a business with them, but a thorough background check is highly recommended, including scrutinizing personal finances and behavior. This is a task your business attorney can accomplish impartially.
- Annual Report. Florida requires an annual report to the Division of Corporations to maintain your “active” status.
Partnering with the Right Business Attorney
Once your business entity is established it’s critical to respect boundaries and refrain from mixing personal accounts with corporate accounts. Courts are known to “pierce the corporate veil” when partners disregard their LLC guardrails, thus allowing cases for individual liability to proceed even if there is an LLC established.
You can trust your business attorney from WKFK Law to underscore the importance of specific aspects of incorporation, because a client is more than paperwork. WKFK has a solid track record of putting businesses like yours on the pathway to success. Call today for a consultation.
