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Choosing a business entity in Florida

If you are starting a business or buying investment property in Florida, it's important to protect yourself from personal liability. One way to do that is by choosing a properly constituted business entity.

No one should own a business or investment property under their personal name. Otherwise, you will put your personal assets at risk for anything that happens to the business or investment property.

Here are two examples of how a business entity can shield you from personal liability.

A new business leases office space

Suppose you lease office space under your personal name to start a new business. The landlord asks you to sign a three-year lease. You sign the lease, locking up a prime location at a competitive price.

After one year, the business doesn't work out as expected. You decide to close it and start a new enterprise somewhere else. You explain to the landlord that you are shutting down the business. However, because you signed the lease using your personal name, the landlord expects you to keep making rent payments.

If you had used a business entity to sign the lease, only the business entity is responsible for the rent payments. If you close the business, you would not be personally liable for that liability.

A landlord faces disaster

Suppose you purchase a townhome with plans to stay on one side while renting the other. You find a suitable renter, and for the next twelve months rent payments flow in, helping you make your mortgage payments. Then a wiring defect on the property causes a devastating fire, severely burning your renter. As a result, you face more than the loss of your rental property. You face a personal injury lawsuit.

If you had the good sense to own the property as a business entity such as a limited liability company, the business entity would be liable for negligence. Your personal assets would be shielded by the business entity.

Protecting you from liability

An experienced lawyer can help you maximize the benefits of your business entity and ensure you the fullest possible protection. An attorney can also advise you about insurance policies you should have in place to protect yourself from damage claims.

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