Business Law FAQs

Business law addresses how a business is formed, owned, managed and transferred. It includes the entity’s governing documents, agreements among owners, commercial contracts and the rules for a sale or winding up. In Spiro Verras’s practice, it connects the business an owner has built with that owner’s family and estate plan.

The work may include choosing an entity, preparing its governing documents, planning for changes in ownership, coordinating the business interest with a will or trust, and documenting a future sale or succession. Tax choices belong in that conversation too, with the legal structure and your CPA’s advice considered together. When another lawyer’s experience would help, Spiro can make a connection and remain involved to the extent you wish. See business formation.

Start with the people, the work and the future of the business. Who will own and manage it? How should decisions and profits be shared? What liabilities, financing needs, tax consequences and succession plans should the structure address?

An LLC can offer flexible management and ownership arrangements, within the limits of Florida law and tax requirements. A corporation may fit a business planning for outside investment or employee equity. A limited partnership can serve family or investment purposes as well as other business needs. The documents should reflect what this particular business is intended to do.

Federal tax classification has default rules as well as possible elections. A domestic LLC with one owner is generally disregarded for income-tax purposes, while one with two or more owners is generally treated as a partnership unless corporate treatment is elected. S corporation treatment has separate eligibility requirements. Spiro can coordinate the governing documents and proposed trust ownership with your CPA’s analysis, including transfer restrictions and S corporation shareholder rules. See limited liability companies.

The distinction is principally federal income-tax treatment. A C corporation generally pays tax on its income, and distributions treated as dividends may also be taxable to shareholders. An eligible corporation that elects S status generally passes income, losses, deductions and credits through to its shareholders. Certain entity-level taxes can still apply, so S status is not a promise that the company itself will never owe income tax.

S status has requirements, including limits on shareholder number and type and a single class of stock. Certain trusts qualify, while others do not. An eligible LLC can also elect S corporation tax treatment while remaining an LLC under state law.

The choice should be made with a clear view of compensation, distributions, administration and future ownership changes. Spiro can work with your CPA so that the entity documents and estate plan support the intended tax treatment. The IRS overview of S corporations explains the basic eligibility rules.

Piercing the corporate veil means a court disregards an entity’s separate existence to impose liability on an owner. Florida law requires more than ownership or informal management alone. In Dania Jai-Alai Palace, Inc. v. Sykes, 450 So. 2d 1114 (Fla. 1984), the Florida Supreme Court emphasized the need for improper conduct in using the corporate form.

Keeping business and personal finances separate, documenting transactions and honoring the entity’s agreements are useful practices. They support clear ownership and sound administration, but a missing meeting or imperfect record does not automatically establish personal liability. Florida’s LLC statute expressly says that failure to observe management formalities alone is not a basis for imposing liability on a member or manager.

Personal guarantees and an individual’s own wrongful conduct raise separate questions. Before signing a loan, lease or other commitment, understand whether you are signing only for the entity or also accepting personal responsibility.

A partnership usually involves people carrying on a business together as co-owners. A joint venture often concerns a particular project or undertaking. The label alone does not settle the legal result; the agreement and the parties’ conduct matter.

Under Florida’s partnership statute, people can form a general partnership without intending to use that name or signing a formal agreement. Simply owning property together, however, does not by itself create a partnership. General partners can have personal liability and authority to bind the business, so the arrangement deserves attention before commitments are made.

For a shared project, an LLC or another suitable structure may help define ownership and responsibilities. A written agreement can address contributions, decision-making, profits, liabilities and how the project ends. It should be matched with appropriate contracts and insurance. Forming an entity does not automatically erase obligations already undertaken.

A Florida nonprofit corporation is formed under chapter 617 to pursue a nonprofit purpose, which may be charitable, religious, educational, civic or another permitted purpose. A board governs the organization, and it may also have members with voting rights. Its earnings support its purposes rather than ordinary profit distributions to owners. Proper compensation and other payments permitted by law are separate questions.

State incorporation and tax-exempt status are different steps. A charitable organization seeking recognition under section 501(c)(3) generally applies to the IRS, with exceptions for certain organizations such as churches and qualifying small public charities. Other nonprofit purposes may fall under different tax provisions. Florida sales-tax exemption and charitable-solicitation requirements also need their own review.

What happens to assets on dissolution depends on the law, the governing documents and any restrictions attached to the assets. Charitable assets generally must continue to serve the required charitable purposes. Spiro can help prepare the organization and its governing documents while coordinating tax applications and filings with the appropriate advisers. See the IRS exemption application overview.

Review governance at least annually and document significant decisions as they occur. Florida corporations generally hold an annual shareholders’ meeting, although a permitted written-consent procedure can take its place. Board action and records should follow the statute, bylaws and the decision involved. An LLC’s operating agreement may set its own meeting requirements.

Minutes or written consents can record decisions about loans, leases, major purchases, ownership changes, compensation and distributions. Clear records help owners understand what was approved and make a future sale or succession easier to review. They should accurately describe actual decisions.

The state annual report is a separate filing. Corporations, LLCs and limited partnerships generally file through the Division of Corporations each year, beginning in the year after formation. The usual filing period is January 1 through May 1; consequences for late or missing reports depend on the entity and timing. Use the Division’s current annual-report instructions and keep its contact information up to date.

A buy-sell agreement can be especially valuable when a business has more than one owner, and it can also support a sole owner’s succession plan. It describes what happens to an ownership interest after agreed events such as death, incapacity, retirement or a proposed sale.

Three questions deserve careful attention: When does a purchase right or obligation arise? How will the price be determined? How will the purchase be funded? A regularly reviewed valuation method gives the owners and their families a clearer process. Funding may include insurance, reserves, installment payments or another arrangement suited to the business.

The agreement should work with the owners’ estate plans, financing arrangements and tax advice. If life insurance is involved, ownership, beneficiary designations and valuation treatment should be coordinated as well. See shareholder agreements and business succession planning.

A merger combines entities into a surviving entity, which may be an existing entity or a newly created one. Under the applicable merger statute, the survivor generally succeeds to the participating entities’ assets and liabilities. The process ordinarily involves a plan, the required approvals and state filings, with procedures and exceptions depending on the entities and transaction.

Contracts, financing, licenses, taxes, employees and owner rights should be reviewed before the structure is chosen. A merger differs from an asset sale or a sale of ownership interests, and each can produce different practical and tax results.

For a closely held business, Spiro can help connect the proposed transaction with the owner’s succession and estate plan. When a transaction calls for additional corporate, tax, securities or other experience, he can help assemble the appropriate advisers and stay involved as you wish. See purchase and sale of a business.

A properly maintained LLC or corporation can separate business obligations from an owner’s personal assets. Under Fla. Stat. 605.0304, an LLC member or manager is not personally liable for a company obligation solely because of that role. Corporate shareholders also generally have limited liability. The result still depends on the particular obligation and the owner’s actions.

Personal guarantees and a person’s own negligent or wrongful conduct can create personal liability. Other exceptions, including statutory liabilities and a properly established claim to pierce the corporate veil, also require review. Clear contracts, appropriate insurance and separation of personal and business finances help the legal structure work as intended.

A claim against you personally raises a different question: What rights can the creditor reach in your ownership interest? Florida’s LLC charging-order statute restricts those remedies, with an important distinction between single-member and multiple-member LLCs. It does not make every ownership interest immune from collection. See our asset protection guide for the broader planning context.