Business & Corporate Law

Most business law pages are written for any business. This one is not. Prell Spearing Law Firm advises the companies whose work is property and building — contractors, developers, investors, landlords, brokerages and the family LLCs that hold Southwest Florida real estate.

That focus exists for a practical reason. Irina Prell is a licensed Florida attorney, a licensed Florida general contractor (CGC1514602) and a licensed Florida real estate broker (BK3199448). When a business question turns on a construction licence, a lien deadline or what a transfer does to a homestead exemption, that is not a matter of reading around the subject.

Choosing the right entity

Entity choice is usually the first decision and the one clients most often get wrong — typically by copying whatever a friend in another state used, or by filing online in ten minutes without asking what happens when there is a second owner, a lender, or a dispute.

Florida entities are governed principally by Chapter 605 (limited liability companies), Chapter 607 (corporations) and Chapter 620 (partnerships) of the Florida Statutes.

The S-corporation confusion

An S-corporation is not an entity type. It is a federal tax election that an LLC or a corporation can make. You do not “form an S-corp” in Florida — you form an LLC or a corporation and then elect S treatment with the IRS if it suits you. Getting this wrong is common and it produces filings that do not match the tax return.

One entity per property, or one for everything?

Investors are often told to put every property in its own LLC. Sometimes that is right. It also multiplies annual reports, registered agent duties, bank accounts and bookkeeping, and lenders may balk. The answer depends on the number of properties, the equity in each, whether there are mortgages, and how much administration you will realistically keep up with. An entity you stop maintaining protects nobody.

What Florida actually requires after you file

Formation is the easy part. The obligations that follow it are where protection is quietly lost.

• Annual report. Every Florida LLC, corporation and limited partnership must file one with the Division of Corporations between January 1 and May 1. Miss it and a substantial late fee applies — and continued failure leads to administrative dissolution later in the year.
• Registered agent. You must maintain one with a physical Florida street address. A post office box will not do, and an agent who has moved on is a service-of-process problem waiting to happen.
• Fictitious name. Trading under a name other than the registered one generally requires registration under section 865.09.
• Separation. Separate bank accounts, no personal expenses through the company, contracts signed in the entity’s name in a representative capacity. Florida courts do not disregard the corporate form lightly — improper conduct must be shown — but commingling is exactly the evidence that gets used.

Contractors: the licence sits with a person, not the company

This is the single most misunderstood point among Southwest Florida construction businesses, and it is expensive.

Under Chapter 489, a construction business does not hold a licence in its own right. A licensed individual — the qualifying agent — qualifies the business entity, and the entity may only contract within the scope of that qualification. Form a new LLC for a new venture and it is not covered by the licence attached to your existing company until it is properly qualified.

The stakes are set by section 489.128: a contract entered into by an unlicensed contractor is unenforceable by that contractor. You can perform the work, be owed the money, and have no ability to enforce the contract or the lien.

Issues that come up repeatedly:

• Restructuring into a new entity without re-qualifying it
• A qualifying agent leaving, and nobody noticing what happens to the entity’s ability to contract
• One person qualifying several businesses without following the requirements
• Work that strays outside the licence category held

The firm also handles the disputes that follow: construction disputes and litigation and billing disputes with contractors.

Moving property into an entity

Transferring real estate you already own into an LLC is not a paperwork exercise. Three things need checking before the deed is signed, not after:

• Documentary stamp tax. The balance of any mortgage is treated as consideration, so a transfer with no money changing hands can still generate a tax bill.
• Homestead. A transfer to an entity generally ends homestead status, which can mean losing both the exemption and the accumulated Save Our Homes cap.
• The mortgage. Due-on-sale clauses let the lender call the loan when title transfers.

The mechanics are covered in more depth on the deed preparation page.

The agreements that decide what happens when owners fall out

Almost every serious business dispute this firm sees traces back to a document that was never written, or one downloaded from a template site that does not match how the business actually operates.

An LLC operating agreement is not filed with the state and is not required to exist — which is why so many Florida LLCs do not have one. Without it, Chapter 605’s default rules govern, and those defaults are rarely what the owners would have chosen.

The provisions that matter most are the ones nobody wants to discuss at the start:

• Who decides what, and at what threshold
• How profits and losses are allocated, and when distributions are made
• What happens on death, divorce, bankruptcy or incapacity of an owner
• Whether an owner can sell to an outsider, and who gets first refusal
• How the price is set when someone leaves — a formula agreed in advance is worth more than any other clause in the document
• How deadlock is broken between two equal owners

Related pages: shareholder agreements, partnership agreements, business formation.

Buying or selling the business

Whether a deal is structured as a sale of assets or a sale of the entity changes what the buyer inherits — including liabilities, contracts and, in construction, whether the licence position survives at all. Real property in the deal brings its own title, survey and transfer-tax questions alongside the business terms.

See business sale and business negotiation.

Frequently Asked Questions

Do I need a lawyer to form an LLC in Florida?

No. Filing articles of organization is straightforward and inexpensive. The value of advice is in the questions the filing does not ask: who owns what, what happens when an owner leaves, whether this entity can legally hold your contractor licence, and whether moving property into it triggers tax or costs you homestead. Those are the decisions that are expensive to reverse.

How much does it cost to keep a Florida LLC in good standing?

Beyond the state’s annual report fee, the real costs are a registered agent, a separate bank account and bookkeeping. Owners who set up several entities and then let the administration slide often end up with less protection than a single well-maintained company.

What happens if I miss the May 1 annual report deadline?

A late fee is added, and it is significant. If the report is still unfiled by the statutory cut-off later in the year, the entity is administratively dissolved. Reinstatement is possible but costs more and can create awkward gaps in contracts signed while dissolved.

Does an LLC protect me from being sued personally?

It limits the exposure of your personal assets to the business’s debts. It does not protect you from liability for your own conduct — a professional who is negligent, or a contractor who performs work badly, remains personally answerable. And protection depends on the entity being run as a genuine separate business.

Is a single-member LLC as protective as one with partners?

Not entirely. For a multi-member LLC, a creditor of an individual member is generally limited to a charging order against distributions. Florida law treats single-member LLCs differently, and a court may order the sale of the membership interest itself. If asset protection is a genuine aim, the number of members matters.

I am a contractor forming a new company. What do I need to know?

That the new entity is not automatically covered by your existing licence. It must be properly qualified before it contracts for work. Contracting through an unqualified entity can leave you unable to enforce your own contract or lien, which is a far worse outcome than the delay of doing it correctly.

Should I put my rental property into an LLC?

Often sensible, but check the mortgage’s due-on-sale clause, the documentary stamp tax on the outstanding balance, and the homestead position if you ever lived there. The protection is real; so are the costs, and they should be weighed against the equity actually at risk.

Can you review an agreement someone else drafted?

Yes, and it is usually money well spent. Template operating and shareholder agreements are frequently drafted for other states, or contain buy-out mechanics that cannot work in practice. Finding that out now is far cheaper than finding it out during a dispute.

Talk to a Southwest Florida business attorney

Prell Spearing Law Firm advises business owners across Lee, Collier, Charlotte and Sarasota Counties, with offices in Cape Coral and Naples, in English and Russian.

If you are forming a company, restructuring one, bringing in a partner, putting property into an entity or buying or selling a business, contact the firm to discuss it.

This page provides general information about Florida law as of the date of publication. It is not legal advice and is not a substitute for advice from counsel about your specific circumstances.