Types of Florida Business Entities
Florida lets you pick from a handful of setups when you’re starting or running a business, and honestly each one fits different situations.
Corporations – Your personal bank account and house usually stay safe if the business gets sued or goes broke. You run them as C corps (company pays tax, then you pay tax again on dividends) or S corps (profits skip the company tax and hit your personal return directly, which smaller groups often prefer).
LLCs – Hands down the most popular choice for regular folks and small teams. Same liability shield as a corporation but without all the meetings, minutes, and formalities. Plus you can choose your tax treatment—like a sole prop if it’s just you, partnership if multiple owners.
Partnerships – When a couple of people (or more) team up. General partnership means everybody’s personally on the hook; limited partnership lets some investors stay out of daily decisions so their risk is capped. LLP offers some protection from your partner’s mistakes. Choose carefully because liability can bite hard.
Key Characteristics and Legal Structures
Liability Protections – Corporations and LLCs generally protect personal assets from business creditors or lawsuits. Partnerships vary: general partnerships expose owners fully, while limited partnerships offer some protection if rules are followed.
Tax Implications – C corps face double taxation unless very large. S corps, LLCs, and partnerships usually pass profits and losses directly to owners’ personal tax returns. LLCs offer flexibility—you decide how the IRS should tax you.
Recognizing When Dissolution is Necessary
Business Goals and Objectives
Ask honestly: Is the business still heading where you wanted? If the original reason for starting it is gone—market died, partners bailed, or burnout—you may need to shut it down rather than keep losing money.
Statutory Reasons for Dissolution
Voluntary Dissolution – Owners decide it’s over, maybe to retire, pivot, sell, or due to disagreements. File the paperwork to close it properly.
Involuntary Dissolution – The state dissolves the business if you fail to file annual reports, pay taxes, or follow laws. Financial distress can also trigger this process.
Reviewing Entity Formation Documents
Articles of Incorporation / Articles of Organization – Shows your original setup, purpose, and dissolution rules. Follow them closely.
Operating Agreement (LLCs) – Defines voting rules for dissolution, asset distribution, and winding up. Legally helpful and sometimes required.
Notifying Stakeholders
Shareholders or Members – Inform them of plans, votes, and asset distribution. Get documentation as needed.
Creditors – Notify banks, vendors, landlords, and credit cards. Provide final payment instructions to avoid personal liability.
Asset Assessment and Valuation
Assess what remains:
- Assets: office gear, trucks, inventory, domain names, customer data, patents, logos.
- Value them realistically—current market value, not purchase price.
- Debts: loans, unpaid invoices, taxes, leases, payroll.
- Calculate assets minus debts = remaining value or deficit.
Voluntary Dissolution Process
Board or Member Approval – Corporations need board and shareholder approval; LLCs need member agreement as specified in the operating agreement.
Filing Dissolution Documents – File online at Sunbiz.org: provide entity info, reason, effective date, and authorized signer. Pay the fee (around $35). Approval is usually quick if everything is correct.
Involuntary Dissolution Proceedings
Grounds – Missed annual reports, unpaid fees, fraud, or legal orders.
Defense – Respond quickly: file missing reports, pay owed fees, or engage a lawyer for court actions.
Settling Debts and Liabilities
Paying Creditors – Pay what you can, document all transactions.
Distributing Assets – Allocate remaining funds or property to owners per ownership percentages or operating agreement.
Tax Implications and Compliance
Final Tax Returns – File federal, state, and local final returns. Mark as final to avoid future liability.
IRS Notification – Corporations file Form 966; LLCs/partnerships wrap up with final 1065 or Schedule C. Consult a CPA for guidance.
Handling Legal Documentation
Filing Articles of Dissolution
Steps in Florida:
- Log into Sunbiz.org (create account if needed).
- Locate your entity by name or document number.
- Click “File Dissolution” and complete the form: entity info, reason, effective date, authorized signer.
- Pay the fee (~$35) and submit.
- Receive email confirmation; official status updates within days if no issues arise.
Financial distress can be a compelling reason to consider dissolution. Signs of financial distress may include:
Canceling Business Licenses and Permits
Identify all licenses/permits: sales tax certificate, county/city business tax, professional licenses, DBA, health permits, etc. Contact each agency with proof of dissolution and any final payments. Keep all documentation.
Proper closure is essential to avoid future tax, collection, or legal issues. If complex, consider hiring a local attorney or accountant.