An important decision to make when operating an equine venture is which business structure to use. There are several things to consider when choosing a business structure for your equine venture, including number of owners, control, liability, and other factors. In this article, we discuss how to choose the right business structure for your equine venture.
Sole Proprietorship
Sole proprietorship is the most common business entity in the United States. With this type of business structure, the owner is the sole owner of the business and is responsible for all liability, profits, and losses. In addition, profits of the business are accrued to the owner and are taxable at the individual level. One benefit of a sole proprietorship is that there is no legal filing required to form this type of entity. However, the owner of a sole proprietorship is personally liable for the business, thereby placing his or her personal assets at risk.
General Partnership
A general partnership is a business arrangement between two or more persons. The partners in a general partnership share equal responsibility for the business’s taxes, debts, profits, decisions, and liability. As opposed to a sole proprietorship, the partnership files a separate tax form. In addition, each partner in a general partnership is personally responsible for the actions of the other partners. In other words, each partner’s personal assets are at risk for the other partner’s actions.
Corporation
There are three primary types of equine business corporations. These are the C corporation, the S corporation, and the limited liability corporation.
C Corporation: The C corporation, sometimes called a general corporation, is a common corporate business structure. This structure permits an unlimited number of shareholders and is governed by a board of directors. Under this business structure, all business income is reported on a corporate income tax return. The owners of this type of business are the holders of the corporation’s common stock, and they do not face personal liability for the actions of the corporation.
S Corporation: An S corporation is very similar to a C corporation. However, an S corporation’s earnings are taxed at the individual level. An S corporation is formed by filing articles of incorporation and by adopting bylaws.
Limited Liability Corporation (LLC): Perhaps the most popular corporate entity, an LLC offers the option to report taxes as either a corporation or partnership. An LLC is formed by filing articles of organization with the state. This type of entity provides increased liability protection as long as the business operates pursuant to the rules and bylaws of the LLC. LLCs also offer flexible options for business ownership shares.
Contact a Wellington Equine Law Lawyer
Ultimately, the business structure you choose for your equine venture will depend on your unique situation. Therefore, for assistance selecting a business structure for your Florida equine business, you should seek the guidance of an experienced Florida equine law lawyer. At Gueronniere, P.A., our talented and experienced equine law lawyer will explain your options and help you choose the right business structure for your equine business. Please contact us today to schedule a meeting with our talented Florida equine law lawyer.