Business entity type overview

The state of Florida provides new businesses with four classification options: Sole Proprietorship, Partnership, Corporation, or Limited Liability Company.


Sole Proprietorships can be initiated without having to file any documents with state or federal authorities.

  • A sole proprietor may choose to file a DBA (Doing Business as) to reserve the name they intend to use, and obtain an Employer Identification Number with the IRS.
  • Fewer deductions may be taken on losses and business expenses than other business classifications.
  • This type of business comes with a large exposure risk, as it does not limit personal liability.


Partnerships consist of two or more individuals engaging in a trade or business.

  • All partnerships must be registered in the state of Florida, but simple partnerships do not limit personal liability for partners.
  • Complex partnership structures are available when appropriate, such as limited partnerships or limited liability limited partnerships, which provide more liability protection for partners.


Corporations are highly organized, with executive officers, a board of directors, and shareholders.

  • Executive officers are appointed by the board of directors, who in turn are appointed by shareholders, who own the company.
  • Corporations limit the liability of both the executives and shareholders.
  • Corporations are required to keep certain records and hold annual meetings, and the numerous formalities required of corporations make them a substandard choice in many cases.


Limited liability companies provide limited liability coverage to owners and executives, and are more flexible than corporations.

  • LLCs are governed by an operating agreement, similar in utility to a partnership agreement.
  • LLCs are managed by either the manager or owner of the LLC, but can feature other executive positions as well.
  • LLCs provide the structural benefits of corporations, without the formalities and rigidity.
Michael Faehner

Michael J. Faehner

Michael J. Faehner is the founder of Faehner PLLC in Oldsmar, Florida. Michael focuses his practice on estate planning, corporate,…

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