Business Archives - Makris Legal

What is an Administratively Dissolved Entity and What Does it Mean?

Bill Makris — Fri, 25 Apr 2025 11:00:13 +0000

The time has come where you decided to make your dream a reality by hiring Makris Legal, P.A. to open your entity, to serve as your entity’s designated registered agent, and to help set up your business for success. Whether you have a for profit corporation, limited liability company, limited liability partnership, a limited liability limited partnership, or another entity structure, there are certain requirements that must be met in order to avoid your entity from being administratively dissolved.

To start, what exactly does it mean when an entity is administratively dissolved? An entity is administratively dissolved by the Florida Department of State Division of Corporations whenever the entity does not meet certain requirements. There are different requirements for each entity structure, but the common requirements that all for-profit entity structures share are:

1. If the entity does not deliver its annual report to the department by 5 p.m. Eastern time on the third Friday in September of each year;

2. Pay a fee or penalty due to the department;

3. Appoint and maintain a registered agent and registered office; and

4. Deliver for filing a statement of change within thirty (30) days after the change occurred for the registered agent.

Whenever an entity is administratively dissolved, the entity still continues in existence, but it may only participate in activities necessary to wind up its activities and affairs, liquidate and distribute assets, and notify claimants with claims against the administratively dissolved entity. If an entity does any other activities outside of these specific activities, then there could be consequences for the entity owners, officers, and managers. The biggest consequence of operating under an entity that has been administratively dissolved is that the officer, owner or manager who continues to operate under the administratively dissolved entity will incur personal liability and lose the benefit of the “limited liability” protection through the doctrine of “piercing the corporate veil.”

For example, Larry has a Limited Liability Company where he operates his bakery. Larry did not hire Makris Legal, P.A. to serve as his designated registered agent and decided to be his own. He forgot to file his annual report before the cut off dates and his Limited Liability Company is now administratively dissolved. Shortly after, Larry made a batch of his most popular and best selling cookies. Unknown to Larry, his supplier supplied him with bad eggs. Shortly after selling out of those cookies, multiple customers ended up getting sick and sued Larry and Larry’s company, and those customers won the lawsuit and were awarded damages against Larry personally. Since Larry’s company was administratively dissolved, Larry was not able to utilize the benefits of having an active limited liability company to absorb the liability for unknowingly using bad eggs and making his customers sick.

Another consequence of an administratively dissolved entity is that the entity cannot bring a lawsuit or proceeding against another party. For example, after Larry was found personally liable for getting his customers sick, he decided to go after the egg supplier. Unfortunately, since Larry never reinstated his entity, he is unable to bring a lawsuit against the egg supplier to recover damages.

In Florida, an entity’s annual report is due before May 1st. If the entity is reinstated after that date, the entity is required to pay a $400 late fee along with their annual report. Additionally, if an entity does not file their annual report before the third Friday in September, then the entity will be administratively dissolved. It is important to remember these dates in order to avoid more headaches. If you would like more information or would like to retain Makris Legal, P.A. to serve as your designated registered agent, click here.

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Tips For Naming Your Corporation

Bill Makris — Fri, 25 Oct 2024 11:00:14 +0000

Earlier you may have seen Makris Legal’s blog post regarding tips for naming your limited liability company, if not you can click here to check it out. When the time comes to forming a new corporation, many people first think about what they want to name the corporation. Like all entities, Florida sets out the minimum requirements for the name of a corporation pursuant to Florida law.

Pursuant to Florida Statute § 607.0401, Florida has requirements on what must be included and what cannot be included in the name of a corporation. The first and most common requirement, which is different from naming an LLC, is the entity must contain the word “corporation”, “company”, or the abbreviation “Corp.”, “Inc.”, or “Co.”. Additionally, the name can also include the designation “Corp”, “Inc”, or “Co” or indicate that it is a corporation instead of a natural person, partnership, LLC or some other entity. For example, Larry the Landlord one day decides that he wants to diversify his investments and decided to open Greek restaurant with a focus on desserts, and he names the corporation “Larry’s Loukoumathes, Inc.”. Since Larry’s corporation has the abbreviation “Inc.” it complies with the first naming requirement pursuant to Florida law. However, if Larry tried to form the corporation calling it “Larry’s Loukoumathes” the entity would most likely not form and instead he would need to use the original name and then file a fictious name/DBA.

When it comes to naming a corporation, the name cannot contain language that states or implies that the corporation is organized for a purpose other than that permitted by Florida law or the articles of incorporation. The corporation is also not allowed to state or imply that the corporation is connected with a state or federal agency or a corporation or other entity chartered under the laws of the United States.

Similar to the requirements for naming an LLC, a corporation name must be distinguishable from the names of other entities or filings that are on file with the department of state. Florida law sets out the ways that a name is not considered distinguishable from another entity:

1. If the name has a suffix.

2. If the name has a definite or indefinite article.

3. If the name contains the word “and” and the symbol “&”.

4. If the name is the singular, plural, or possessive from of a word.

5. If the name has a punctuation mark or a symbol.

After going through Florida’s minimum requirements for a corporation’s name, there are also practical tips that should be followed to get the most out of the name of the corporation. To start, it is wise to avoid names that are hard to spell and names that can limit the business as it grown. When it comes to getting potential customers, they may get confused when trying to search for the corporation. Additionally, when it comes to choosing a name for the corporation picking a narrow name can cause problems down the road when trying to expand. For example, Larry the Landlord opened his dessert-focused Greek restaurant, “Larry’s Loukoumathes, Inc.” and notices business is booming. Larry then decides he wants to expand his business to cater to the lunch and dinner crowd and starts offering lunch and dinner options. After a few weeks, Larry notices his restaurant is not attracting a lunch or a dinner crowd. One reason for this is because the name of Larry’s restaurant sounds like the name of a dessert-focused restaurant and not a restaurant that offers different kinds of foods. One way Larry can fix this is by renaming his restaurant to “Larry’s Greek Restaurant, Inc.” which would help clear up his customers’ confusion and attract new customers.

Another way to decide the name of a corporation is to create a few different names and get feedback on those names. When choosing a name, choose about 5 or 10 names and then run them by friends, family members, trusted colleagues, etc. One can also test the name with their target audience. By doing this, it gives the corporation owner the opportunity to see if the name they are choosing is good. For example, when General Motors unveiled the Chevy Nova, General Motors did not realize that “Nova” in Spanish translates to “not going” or “no go” which could have negatively impacted sales for the car. Additionally, it is best to do research on the name to make sure that the name of the corporation does not translate into anything negative in another language.

In essence, when choosing the name of a new corporation and after understanding Florida’s minimum requirements for corporation names, it is always best to conduct research on the name and test it out in order to choose the best name for the corporation. By doing this it will help a new corporation owner choose a name that is not confusing, translates to a negative meaning or phrase, and help customers choose a name that will help grow their corporation. For help choosing a name for your corporation and help set up the entity, click here to contact an attorney.

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Tips For Naming Your New Limited Liability Company

Bill Makris — Mon, 14 Oct 2024 11:00:14 +0000

One of the many decisions that people make when forming a new limited liability company (“LLC”) is the actual name of the entity itself. For some it is the very first thing they think of when forming a new business or opening an entity to buy real estate, and others have a harder time thinking of what they might want their entity to be called. Along with practical tips for choosing a name for an LLC there are also regulations pursuant to Florida law that must be followed when choosing a name for your LLC.

Pursuant to Florida statute § 605.0112, Florida has requirements on what must be included and what can and cannot be included in the name of the LLC. The most common requirement of forming an LLC is that the name must include the words “limited liability company” or the abbreviation “L.L.C.” or “LLC”. This will clearly indicate that the entity is a limited liability company and not a corporation, partnership, or other business entity. For example, Larry the landlord is looking to buy another investment property. He hires his attorney to open the LLC for him and Larry wants to name the entity Larry’s Investments, LLC”. In this example it complies with the naming requirement because it uses the abbreviation “LLC” in the name. However, if the entity “Larry’s Investments LLC” is already being used, then Larry may not be able to use “Larry’s Investments, LLC” as the name for his entity.

Another requirement is that the name must be distinguishable from the names of other entities or filings that are on file with the department of state. Florida law sets out the ways that a name is not considered distinguishable from another entity:

1. If the name has a suffix.

2. If the name has a definite or indefinite article.

3. If the name contains the word “and” and the symbol “&”.

4. If the name is the singular, plural, or possessive from of a word.

5. If the name has a punctuation mark or a symbol.

Additionally, the name is not allowed to contain language that states or implies that the LLC is organized for a purpose other than a purpose authorized by Florida law or in the articles of organization. Further, Florida law prohibits the name of an LLC to state or imply that the LLC is connected with a state or federal government agency or a corporation or other entity chartered under the laws of the United States.

In addition to conforming to Florida law, there are also practical aspects that can help one get the most out of their LLC name. Depending on what the purpose of the entity will be will help decide what to name the entity. For example, if someone is opening an LLC to start a business selling gyros, one may want to incorporate the word “Gyro” into the name or if it is a restaurant, one may want to pick something that the consumer will instantly know the purpose of the entity because it will be the first thing a consumer will see when they look up the business. Another option could be forming an LLC with a basic and generic name for the official business and then filing for a fictious name, or a DBA, which can then be used for promoting the business. For example, Larry the landlord wants to promote his business of buying investment properties and already has the entity “Larry’s Investments, LLC” but he wants to use a different name to promote his business and that sounds nicer to attract customers. Larry the landlord may want to file for a fictious name so that way he can promote his business under the fictious name while keeping the original entity name for official business.

If the purpose of the entity is not for promoting a business or yourself, such as buying real estate, asset protection, or anonymity, then one may want to choose something that does not stand out. Generic names are typically best for real estate and asset protection. For example, if someone is buying a property on 1234 Night Owl Court one might want to name the LLC something like “Night Owl LLC” or “Owl Night LLC” or even as generic as “Owl Night Group LLC”. This name can also be beneficial for one who may have multiple LLCs and other entities so they can distinguish it from the others more easily.

In the end there is a lot of creativity that can happen when choosing a name for your LLC while still complying with Florida law regardless of if the purpose is to promote yourself and/or your business, or if the purpose of your entity is for asset protection or anonymity. For help choosing a name for your LLC and to help set up an LLC, click here to contact an attorney at Makris Legal, P.A.

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Why You Should Own Your Real Estate In An LLC

Bill Makris — Sat, 31 Aug 2024 11:00:09 +0000

You may have reached the point in your life where you are ready to earn some passive income and become a landlord or you want to buy your first vacation condo to unwind on the weekends and to move into once you retire. One thing you should think carefully about is how you own the property. When it comes to owning real estate, there are multiple ways it can be owned, such as in your personal name, in a trust, or in a limited liability company (LLC). Each type of ownership has its benefits. Whether you own one property or one hundred properties, owning it an LLC is beneficial and to your advantage.

The main benefits of putting your real estate into an LLC or multiple LLCs is to reduce your personal liability and to keep your information private. The first reason to put your real estate into an LLC is to reduce your personal liability. In the eyes of the law, when a property is owned in an LLC, it is viewed as a separate legal entity. If the property creates liability, then an LLC would be best to protect you from lawsuits against the property. A rental property is a prime example of a property that can create a liability. For example, Patrick the property owner rents property to Terry the tenant. Carl the customer comes onto the property but falls down the steps leading into the building due to their age and deterioration. If Carl sues Patrick for his damages, Patrick could be personally liable for Carl’s damages and Carl could go after Patrick’s personal assets such as his wages, income, and other properties he may own personally. However, if Patrick put the property into an LLC, then the LLC would be responsible for Carl’s damages and Patrick’s personal assets would generally be protected.

Going off of the prior example, Patrick owns an art collection worth about $250,000. Carl sues Patrick for his medical bills and lost wages due to not being able to work and the Court renders a judgment against Patrick for $400,000. If Patrick does not have the money to pay the judgment, Carl can potentially go after the art collection and force it go to auction to pay off the judgment. However, if Patrick owns the property in an LLC, then Carl will generally not be allowed to go after Patrick’s art collection and force it to go to auction to pay off the judgment.

Another benefit to owning your property in an LLC is your assets will be more private. In modern times it is easy to look up information using the internet. When someone owns property in their personal name, their information is recorded with the property appraiser in the county where the property is located. Since property appraisers generally have an online search function, someone can go on any county’s property appraiser’s website, type your name in and a list of all the properties you own will come up. When a property is in an LLC, your personal name will not show up on the property appraiser’s website

Additionally, the privacy benefit ties into reducing the benefit of reducing your personal liability in the event of a lawsuit. One factor a Plaintiff may use in deciding to sue you for damages is what assets does the Defendant own. If a Plaintiff finds that the would-be Defendant owns multiple properties, cars and takes lavish trips then the Plaintiff will most likely sue them whereas if the property is owned under an LLC the Plaintiff will only be able to go after the LLC’s assets. For example, Patrick the property owner has five rental properties each titled in a separate LLC with separate bank accounts. Carl the customer comes to one of the properties and is injured and sues Patrick the property owner for his medical expenses. Assuming that Patrick has no other assets in each of the LLCs Carl is only allowed to go after the one LLC that the property is titled under and he cannot go after the other properties.

Although there are numerous benefits to owning your property under an LLC, the two main benefits are privacy and limiting your personal liability in the event of a lawsuit. When transferring your property into an LLC or multiple LLCs it helps avoid headaches down the road and can save your personal assets. To speak to an attorney about transferring your property into an LLC, click here to contact an attorney.

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What is a Registered Agent and Why Should I Hire One For My Entity?

Bill Makris — Sat, 24 Aug 2024 11:00:58 +0000

When it comes to forming an entity, one of the requirements in the state of Florida is to have a registered agent. A registered agent is an individual residing in Florida or a business entity that has an active Florida filing or registration. However, an entity cannot serve as its own registered agent. The registered agent agrees to accept legal notifications on behalf of the entity and they get the notification of the annual report, which is another requirement in order for an entity to maintain an active status in Florida. The registered agent will also receive all official documents and notices related to your entity. It is important that your entity has a registered agent prior to filing the articles for your business entity to ensure your entity is in compliance with the applicable rules and regulations.

When it comes to serving as a registered agent, you can do it yourself or you can retain a professional registered agent. There are many benefits to hiring a professional registered agent. One of the main benefits is privacy. If you serve as your own registered agent, your personal information can become public record. For example, if you are buying a property under an entity you will want to have a professional registered agent because it will keep the owner(s) information private for both the entity’s owner(s) and/or the property’s owner(s). If you serve as your entity’s registered agent, your personal address will be visible to anyone who looks up the entity. Additionally, a registered agent is not allowed to use a P.O. Box nor a virtual office as their address. The location has to be a physical address and can be a home, business, or office suite.

Another benefit to hiring a professional registered agent is that you will not have to worry about being interrupted with official notices and service of process. One of the requirements of a registered agent is that they need to be available during normal business hours. A professional registered agent will be available during normal business hours to accept official notices and service of process for your entity. For example, if someone goes to sue your entity, they will serve the registered agent at the registered agent’s address. If the registered agent is yourself, then they will serve you at your personal or business address whereas if you retain a professional registered agent, the registered agent will be served at their office. This can also prevent potential embarrassment because if an entity is served with notice of litigation, their customer’s reaction will not be favorable to the entity. It can also prevent exposure of private entity matters to other members or employees of the entity. For example, if an employee sees that an entity is being served with litigation, the employee may get scared and jump ship.

When it comes to entities that run on an online-only business, they can benefit from hiring a professional registered agent. When a business is online-only, they generally do not have a place of business that can accept service of process or official notices. Many business are starting to transition to an online-only business due to the COVID-19 pandemic. For example, Tracy decides to open an online flower shop, where she can display her flowers on her website and customers can pick and order the flowers. Tracy does not have a physical address because she is running an online-only business. If Tracy were to become the registered agent herself, she would be required to use her personal residence as her address and she would have to be present during normal business hours. However, if Tracy were to retain a professional registered agent, she would not have to worry about being available during normal business hours and she would not need to worry about taking time out of her busy day to receive official notices or service of process.

So, what happens if an entity does not have a designated registered agent? If you fail to list a registered agent when you file your articles for your entity, the State will reject the entity filing. If you have an entity set up already and for some reason you drop your registered agent, the Department of State Division of Corporations can administratively dissolve your entity. This means that the entity is temporarily not allowed to conduct business in Florida and they are only allowed to liquidate assets and notify creditors. This is typically the first step in terminating an entity’s right to do business in Florida. Another way an entity can be administratively dissolved is by failing to file the annual report in a timely manner.

At the end of the day the only thing an entity/business wants to do is succeed. By retaining a professional registered agent, such as Makris Legal, P.A., you will have peace of mind that you will not miss a crucial filing or endanger your business’ good standing and its right to defend itself in court. By retaining a professional registered agent, you can ensure your entity stays on top of its compliance obligations. To retain Makris Legal, P.A. as your registered agent, click here.

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A Basic Overview of Commonly Formed Entities

Bill Makris — Fri, 16 Aug 2024 11:00:33 +0000

Congratulations! You had an epiphany and finally decided to start the process of quitting your dead-end job and to fulfill your life-long dream of become an entrepreneur. As you work to turn your dream into a business, there are a few things you need to do in order to get set up. One of those things is to decide how you want to set up your entity. There are advantages and disadvantages when deciding which entity to form to start your new business. When picking what kind of entity to form for your startup business or if you are buying real estate, it is not the case of one-size-fits-all. Everyone has different needs which is why there are different forms of entities to choose from. Below is a general overview of the most common entities.

Sole Proprietorship

One of the common ways to set up an entity is by forming a sole proprietorship. This entity is generally known as the default entity formation. When forming a sole proprietorship, it usually requires less paperwork and legal filings. This entity is ideal for the person who does not plan on growing the business outside themselves and if the plan on self-financing the business. However, since sole proprietorships are legally indistinguishable from yourself you are liable for your business debts, liabilities, and losses. In the event something goes wrong, someone can sue the business and the business’s assets and your personal assets will be at risk.

Limited Liability Company

The most popular business entity people use when starting their business is forming a Limited Liability Company (“LLC”). This entity is more flexible compared to the others and allows for a flexible management structure. With an LLC, it provides a similar protection that a corporation has to its shareholders. It protects the owners from personal liability for business debts and claims, which means that if the business cannot pay a creditor, the creditor generally cannot come after an LLC member’s personal assets. However, there are exceptions to this where an LLC member can be personally liable to someone else.

Another common use for forming an LLC is for buying assets, such as real estate. Many people put their assets under entities in order to shield that asset from liability. For example, Terry decided to rent a property from Larry the Landlord. Terry falls behind on his rent because he has bought a few properties. Larry is trying to go after Terry and discovers the properties he purchased. However, Terry formed an LLC and titled the properties to the LLC. Generally, Larry would not be able to go after the properties Terry purchased because they are titled to the LLC.

Corporation

Another common entity is a corporation. A corporation shares some similarities with an LLC, such as certain limited liability and the ability to elect as an S Corp for tax purposes to avoid double taxation. However, Corporations have a lot less flexibility than an LLC. Corporations require a lot of administrative duties in order to retain corporate status, such as holding annual shareholder and director meetings, keeping minutes of shareholder and director meetings, maintaining separate bank accounts from their owners, and so on. Corporations also require articles of incorporation and corporate bylaws for formation.

A corporation could be more appealing due to the ability to raise capital. When banks look to give small businesses a loan, they typically want the busines to be incorporated. Additionally, a corporation has stock unlike an LLC. A corporation can sell its stock in order to raise capital for the business. A corporation also has unlimited life, meaning the life of the corporation is not contingent on its owner(s) staying alive. Should the corporation’s owner(s) die, or if they decide to sell their interest in the entity, the company will continue to exist and do business as usual.

In the end, there is not one right answer on how to form an entity to suit your needs. Whether you want to start up a new business or you want to protect your assets, forming an entity is the best way to go and there are different options to achieve your goals. To contact an attorney to discuss your options, click here to contact Makris Legal, P.A.

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