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5 Advantages of the Florida Corporation

Advantages of the Florida CorporationThere are several advantages of the Florida corporation, such as the limited liability, the centralized management structure, and the transferability of ownership. However, other areas, such as taxation of a corporation, have advantages as well as disadvantages.

A corporation is a business organization that consists of an independent entity created by the state according to Florida corporation law. Thus, a corporation is a separate legal entity, distinct from its shareholders (aka owners) and generally has the same rights and privileges as a person.

1. Limited liability. In general, the shareholders of a corporation are not personally liable for the debs and obligations of the corporation. The liability of shareholders for corporate losses is usually limited to the amount of their investment. This is one of the biggest advantages to the corporate structure. However, many creditors nullify this advantage by requiring a personal guaranty or a co-signature.

2. Centralized management. The management of a corporation is centralized in the board of directors. This is very important to large businesses with widely scattered public ownership.

3. Continuity of existence. The corporate entity generally has perpetual existence and continues to exist regardless of any changes in ownership or management.

4. Transferability of ownership. Shares of stock in a corporation represent ownership in the business. Corporate shares are freely transferable by the shareholders (owners). This allows for the “liquidity” that is essential to a public market for shares, but the transferability is frequently restricted by agreements in closely held businesses. Watch out for those restrictions.

5. Access to capital markets. Corporate shares may be bought relatively easily compared to shares in other entities. This has enhanced the ability of corporations to raise venture capital in relatively small lots (frequently 100 shares at a time) directly through public markets. Note, the process of “going public” to sell shares on a public platform is now highly regulated by both state and federal laws.

If you have any questions about the corporate structure or would like to discuss your business with an experienced Florida business law attorney, call today to schedule a free consultation!

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