Why an LLC — Not a Sole Proprietorship

A sole proprietorship is the default — if you start doing business without filing anything, that’s what you are. The problem: there is no legal separation between you and your business. A judgment against your business is a judgment against you personally. Your home, savings, and personal assets are all exposed.

A Florida LLC §605.0101, Fla. Stat. creates a separate legal entity. Properly maintained, it shields your personal assets from business debts and lawsuits. “Properly maintained” matters — commingling personal and business funds can pierce the liability shield.

LLC vs. Corporation in Florida — Which Is Right for You?

Forming a Florida LLC — Step by Step

• 1

  Choose and verify your LLC name

  Your name must include “Limited Liability Company”, “LLC”, or “L.L.C.” It must be distinguishable from any other entity registered with the Florida Division of Corporations. Search the Sunbiz name database before filing.

• 2

  Designate a Florida Registered Agent

  Every Florida LLC must have a registered agent — a person or company with a Florida street address (P.O. boxes are not permitted) who is available during business hours to accept legal documents. §605.0113

  You can serve as your own registered agent if you have a Florida address. Commercial registered agent services typically cost $50–$150/year.

• 3

  File Articles of Organization with the Florida Division of Corporations

  File online at dos.fl.gov/sunbiz. The Articles require the LLC name, principal address, registered agent, and whether the company is member-managed or manager-managed.

  Filing fee: $125 (online) + $25 registered agent designation fee

• 4

  Create an Operating Agreement

  Florida law does not require an Operating Agreement to be filed or even to exist — but you absolutely need one. It defines ownership percentages, how profits are distributed, who can make decisions, and what happens if a member wants to leave. Without one, Florida’s default LLC rules §605.0105 govern your company in ways that may not match what you intended.

  Get an Operating Agreement →

• 5

  Obtain an EIN and open a business bank account

  Apply for an Employer Identification Number (EIN) free at IRS.gov. Open a dedicated business bank account immediately — commingling personal and business funds is the most common way courts pierce the LLC liability shield.

• 6

  File the Annual Report

  Florida requires all LLCs to file an Annual Report with the Division of Corporations between January 1 and May 1 each year. Fee: $138.75. Late filing incurs a $400 penalty. Failure to file results in administrative dissolution.

  ⚠️ Set a calendar reminder for January 1 every year

What the Operating Agreement Must Cover

A minimal Florida Operating Agreement should address:

• Ownership structure — each member’s percentage interest and capital contribution
• Profit and loss allocation — how distributions are made and when
• Management structure — member-managed (all members vote on decisions) vs. manager-managed (a designated manager runs operations)
• Voting rights — what decisions require unanimous consent vs. majority vote
• Transfer restrictions — under what conditions a member can sell or transfer their interest
• Buyout provisions — what happens if a member dies, becomes incapacitated, or wants to exit
• Dissolution — how and when the company can be wound up

The Default Rules You Should Know About

The Four Required Elements

A contract in Florida requires: (1) an offer; (2) acceptance of that offer; (3) consideration — something of value exchanged by both parties; and (4) mutual assent — both parties understand and agree to the same terms. A contract missing any element is not enforceable.

Does It Have to Be in Writing?

Most contracts in Florida can be oral and still be enforceable — but proving what was agreed becomes extremely difficult without a written record. Florida’s Statute of Frauds §725.01, Fla. Stat. requires certain contracts to be in writing to be enforceable, including:

• Contracts for the sale of real property
• Contracts that cannot be performed within one year
• Contracts for the sale of goods over $500 (UCC)
• Guaranty agreements (promising to pay another’s debt)

For business purposes, always use a written contract. Period.

Florida’s Specific Rules on Contract Interpretation

Florida follows the “plain meaning” rule — courts interpret contract language according to its ordinary meaning. Courts will not look at prior negotiations or oral discussions if the written contract appears complete (the “parol evidence rule”). The practical implication: everything you negotiated must be in the written contract. If it’s not in writing, it may not be enforceable.

Why Classification Matters

The stakes are high: misclassified workers can file claims for back wages, overtime, unemployment benefits, and workers’ compensation. The IRS can assess employment taxes, interest, and penalties. The Florida Department of Revenue and Department of Economic Opportunity actively audit misclassification.

Florida’s Independent Contractor Test

Florida uses an “economic reality” test that looks at the totality of the relationship. No single factor is determinative, but courts and agencies look at the degree of control the business exercises over the worker.

The Independent Contractor Agreement

A well-drafted Independent Contractor Agreement should establish the contractor’s control over their work method, specify that they supply their own tools, confirm they work for multiple clients, set project-based (not hourly) compensation, and explicitly state they are responsible for their own taxes and insurance. The agreement alone won’t save a misclassified relationship — but it’s an important piece of documentation of the parties’ intent.

Florida’s Noncompete Statute

Florida Statutes §542.335 governs noncompete agreements and sets Florida apart from almost every other state. In most states, courts balance the harm to the employee against the employer’s need. In Florida, the court must enforce a reasonable noncompete if it protects a legitimate business interest — and the statute explicitly prohibits courts from considering the hardship to the former employee.

What Counts as a “Legitimate Business Interest”

Florida law §542.335(1)(b) lists specific protectable interests including:

• Trade secrets as defined by Florida’s Uniform Trade Secrets Act
• Valuable confidential business information that doesn’t rise to trade secret status
• Substantial relationships with specific existing or prospective customers
• Extraordinary or specialized training provided to the employee

What Makes a Florida Noncompete Reasonable

As an Employee — Your Rights

If you signed a noncompete and want to take a new job, your options in Florida are limited compared to California or other states. You can argue there is no legitimate business interest, the scope is unreasonable, or you were terminated without cause (which Florida courts have recognized as a potential defense in some circumstances). Consult a Florida employment attorney before violating a signed noncompete agreement — employers can and do seek injunctions quickly in Florida courts.

What At-Will Means — and Doesn’t Mean

At-will employment means either the employer or employee can end the employment relationship at any time, for any reason or no reason, with or without notice — unless a contract or law says otherwise. Florida recognizes at-will employment as the default under common law.

What it doesn’t mean: employers can fire for any reason. Several significant exceptions apply in Florida.

Key Exceptions to At-Will in Florida

• Federal and state anti-discrimination laws — termination based on race, sex, national origin, religion, age (40+), disability, or pregnancy is prohibited under Title VII, the ADA, ADEA, and Florida’s Civil Rights Act §760.01.
• Retaliation protections — Florida’s Private Sector Whistleblower Act §448.102 prohibits termination for reporting illegal employer activity.
• Workers’ compensation retaliation — terminating an employee for filing a workers’ compensation claim is prohibited under §440.205.
• FMLA — employees at companies with 50+ employees who qualify for Family and Medical Leave Act protection cannot be terminated for taking qualifying leave.
• Written employment contracts — if you have a written agreement specifying termination grounds or procedures, at-will does not apply to that relationship.