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General

Limited Liability Companies in Florida

For those intending to form a closely held operating business in Florida, the entity of choice, in most cases, will be a limited liability company (LLC) that elects to be taxed as a Subchapter S corporation.

Following the issuance of “check the box” regulations in 1997, eligible entities (including eligible LLCs) have been able to select their federal tax classification. Eligible entities, such as the LLC, may elect to be taxed as a C corporation, an S corporation, a partnership, or, in the case of single member LLCs, a disregarded entity. As a result, since 1997 practitioners have been able to select the best combination of state law attributes and federal tax treatment to achieve a legal structure suited to the particular needs of a business.

General

Protecting Your Purchase Money Lien Rights

Recently, our firm had the pleasure of handling a file which involved the potential creation of a purchase money lien on personal property. Our client sold a business and took back a lien on the personal property of the business. The lien was to secure the payment of a note. The new business owner was going to pay our client over time for purchasing the business. In addition to the lien by the seller on the buyer’s property, the buyer also obtained an Small Business Administration (SBA) loan to purchase the business. Our client originally thought that he held a first mortgage as a result of his purchase money lien on the sale. In fact, the statutory procedures for the creation of a purchase money security interest were not followed, and as a result, the client holds a second mortgage on the personal property second to the SBA.

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