Learn more about the difference between Delaware and Florida LLCs.
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Have you narrowed down your new limited liability company’s future location to be in either Delaware or Florida? If so, you’re probably looking at the many pros and cons of starting an LLC in each state. Fortunately, we’ve put together an article that collects this info and lays it out for you so you can make a clearer and more informed decision. Check it out below!
It’s always best to weigh the pros and cons of any decision, especially one that involves your future business. Here are some pros and cons of starting an LLC in Delaware.
Let’s begin by going over some pros of starting a Delaware LLC.
LLCs are known for their liability protection, and it’s no different for an LLC in Delaware. This means that the owner’s personal assets will be safe if the company is ever sued or investigated by creditors. However, there are some instances where this protection may not apply, so reach out to a business attorney or other professional for more information.
A Delaware LLC’s rules and structure can be organized and shaped in its Operating Agreement. This means that the owner(s) have the freedom to decide how the LLC will operate as long as it’s within the law.
An LLC in Delaware also grants privacy for its owners. The owners aren’t required to disclose specific information to the state. However, this doesn’t mean that the LLC can operate outside of the law.
LLCs are a very popular business type because they’re “pass-through” entities. This means that the company doesn’t pay federal or state income taxes and these obligations are passed down to the members instead.
Unless otherwise stated in the LLC’s agreement, if an owner dies, leaves, is expelled, etc., the company will not be dissolved and can continue operating under new management.
Consider these cons if you’re planning to start an LLC in Delaware.
Delaware incurs higher filing fees. This includes fees for drafting Articles of Organization and reserving a business name, for example. Although the former is required, the latter isn’t, so some fees may not apply to you.
Delaware requires LLCs to have a business license. Although this is a good thing and many LLC owners won’t be bothered by it, it will, however, incur fees. Additional licenses may also be required depending on which industry you’re in, what you sell/offer, and where the LLC is located in the state.
A Delaware LLC is required to draft an Operating Agreement. Although this is also a good thing, drafting this document will require some time and maybe even some outside help.
As we did with a Delaware LLC, we’ll be going over the pros and cons of creating an LLC in Florida below.
Let’s go over the pros of starting an LLC in Florida first. We’d like to point out that many of the pros of starting/owning a Delaware LLC also apply to Florida LLCs.
Like a Delaware LLC, a Florida LLC will also have the luxury of enjoying limited liability protection. Keep in mind that you should reach out to a business attorney nonetheless to learn exactly how liability protection for an LLC works in Florida.
An LLC in Florida can also enjoy pass-through taxation. This is a great benefit for first-time entrepreneurs who will undoubtedly worry about money during the first few years of their business’s existence.
An LLC is known for being a relatively credible business entity. This can be really beneficial since it’ll show customers and specific institutions (like banks) that you’re the real deal.
Florida offers LLC owners a high level of flexibility. You can structure the management and ownership of the LLC however you see fit as long as it’s within the law.
Unlike Delaware, Florida does not require LLCs to draft an Operating Agreement. However, this should be strongly considered since these agreements offer an extra level of protection to the company.
Now, let’s go over a few cons of starting/owning an LLC in Florida.
Florida does not issue a state-wide business license. Instead, they’re issued at the county level (and called a “business tax receipt”) for almost all businesses (including LLCs), which will incur a fee. Keep in mind, though, that not all counties require this, so check with yours. You may also need to apply for state licenses and/or permits depending on your industry, location, etc.
If an owner dies, leaves, is expelled, etc., then the LLC might be dissolved unless such an instance is specifically addressed in the operating agreement. Be sure and speak with a professional about this topic.
Tax benefits are one of the main reasons entrepreneurs choose the LLC structure. Let’s look at these benefits across both states.
As always, we encourage you to reach out to a tax professional if you require more information about taxes for LLCs, or in general, in Delaware and Florida.
Forming an LLC in Delaware and Florida will undoubtedly take some work, effort, time, and money. The great news is that you won’t have to do this alone. We offer many services to help you set up your LLC.
You should first get informed with each state’s LLC creation process. Here, you’ll find the article on starting an LLC in Delaware. And here, you’ll find an article about starting an LLC in Florida.
Additionally, we offer these how-to articles for all 50 states and Washington, D.C.
No matter if you need help starting a Delaware LLC or a Florida LLC, we can and want to help you. We offer countless services to make the LLC creation process as seamless as possible. And our services don’t end there. We can also help you run and grow your business while ensuring it’s compliant. Reach out to us today to find out how we can help you.
Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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