Archive: December 2019

As noted recently by the president of the Florida Association of Public Insurance Adjusters in the Sun Sentinel, the level of frustration currently felt by Florida policyholders is greater today than ever due to the number of hurricane insurance claims that are either egregiously delayed or denied. Indeed, this is frequently found to be in violation of the insurance company’s contract with its client, who is essentially paying for a ‘promise’ each month—a promise that the company will pay out, timely, for a loss in exchange for the client paying their insurance premium each month.

However, insurance companies have been doing such a poor job when it comes to their basic responsibilities that a recent statement made by the state’s top insurance regulator regarding insurance companies paying claims within 90 days, as required by law, has a number of parties concerned, especially the Florida Association of Public Insurance Adjusters. In reality, according to data provided by the actual insurers, more than 100,000 Floridians are still waiting for claims from Hurricane Irma, Matthew, and Michael to be paid.

Most business owners choose to initially choose to form as a sole proprietorship because it costs less and there is less bureaucracy. However, many also switch to either a C corporation or a limited liability company (LLC) at some point in order to benefit from additional protections.

While we have previously discussed the advantages of having an S corporation, we have not specifically discussed why small businesses may want to initially form as an S corporation, which provides a number of unique benefits, especially to startup companies. Below we discuss the characteristics and benefits of each classification:

C corporations provide the most protection from liability for both shareholders and business owners because they allow the businesses to exist as separate entities. Because the C corporation is a legally separate entity, any legal repercussions have no bearing on the individual owner(s)’ personal assets. It also offers a significant amount of flexibility when it comes to buying and selling stock shares, offering employees stock options, and allowing for an unlimited number of shareholders; amongst other benefits. While dividends are taxable as income, business expenses, employee benefits, and retirement plan expenses are tax deductible to the company. C corporations can be costly due to a number of filing fees that must be paid, and the steps to form a C corporation can also be elaborate. Specifically, the following is required: