If you and someone else are already doing business together in Florida without filing anything, you’re a general partnership, and each of you is personally on the hook for everything the business owes. That’s the core of the Florida LLC vs partnership question. An LLC costs $125 to form and puts a legal wall between the business’s debts and your house.
For almost any business you plan to run longer than a few months, we’d form the LLC.
Florida LLC vs partnership at a glance
| Factor | General Partnership | Florida LLC |
|---|---|---|
| Formation cost | $0 | $125 |
| Formation paperwork | None required | Articles of Organization |
| Personal liability protection | None | Yes |
| Default taxation | Pass-through | Pass-through |
| Management flexibility | Flexible | Flexible |
| Annual state filing | None | Annual report, $138.75, due May 1 |
| Best for | Temporary collaborations | Ongoing businesses |
How do you end up in a partnership by accident?
A general partnership needs no filing at all. It exists the moment two or more people conduct business together, share profits and losses, or present themselves as partners. No paperwork, no state registration.
That sounds convenient. It’s actually the problem. Plenty of friends and family members start working together informally and never realize they’ve created a legal entity that makes each of them liable for what the other does.
Florida also has two partnership forms that do require a filing:
- Limited partnership (LP). Filed with the Florida Division of Corporations ($1,000 filing fee). General partners manage and carry full liability. Limited partners invest and have limited liability, but lose it if they take part in management. LPs suit real estate deals with passive investors and family investment structures.
- Limited liability partnership (LLP). Filed with Florida ($25 annual registration). It’s used mainly by professional firms such as lawyers, accountants and architects, and protects partners from each other’s malpractice.
What’s the real difference in liability?
In a general partnership, every partner is personally liable for all partnership debts and obligations, including debts another partner created.
Picture a two-person consulting partnership. Your partner signs a $100,000 contract without telling you, and the business can’t pay. You’re personally liable for the full $100,000, and creditors can go after your home, car and savings. The same goes if your partner negligently injures a client, and if your partner commits fraud, you may be liable for that too.
Run the same facts through an LLC. Your fellow member signs the $100,000 contract and the business can’t pay. Only the LLC’s assets are at risk. Your home, car and savings stay protected.
A partnership agreement doesn’t change this. It sets out how partners work together. It doesn’t shield anyone’s personal assets from business debts. And trusting your partner isn’t a substitute either: an honest partner can still make a mistake, get sued or watch the business fail.
Are they taxed differently?
Not by default. A general partnership and a multi-member LLC are taxed the same way. The business doesn’t pay income tax itself. Profits and losses pass through to the owners, who report their share on their personal returns and pay 15.3% self-employment tax on it.
The paperwork matches too: Form 1065 (the informational return), a Schedule K-1 for each owner, and Schedule SE for self-employment tax.
The LLC gives you more room later. It can keep partnership taxation, elect S corporation status to cut self-employment taxes, or elect C corporation taxation (available, but rarely a good idea).
How are decisions and profits handled?
Without an agreement, a Florida partnership follows the Florida Revised Uniform Partnership Act. All partners have equal management rights, ordinary decisions take a majority vote, extraordinary ones need everyone, and any partner can bind the partnership in a business deal. Profits and losses are split equally regardless of who put in what. If Partner A contributes $90,000 and Partner B contributes $10,000, the default split is still 50/50. A partnership agreement can change all of this.
An LLC runs on its operating agreement. In a member-managed LLC, every member takes part and any member can typically bind the LLC. In a manager-managed LLC, members appoint managers to run things, and members who don’t manage can’t bind the company. The agreement sets voting rights, decision authority, member duties and how profits are divided: by capital contributed, by participation, or by a custom formula. A member with 40% ownership can receive 50% of profits, and that special allocation is valid if it has economic substance.
What does each cost to run?
| Cost | Partnership | LLC |
|---|---|---|
| Formation | $0 | $125 |
| Annual report | $0 | $138.75 |
| Registered agent | Not required | Required |
| 5-year total (minimum) | $0 | $680 |
A partnership has no annual reports and no state fees, unless it uses a fictitious name. It should still have a partnership agreement, a separate business bank account and clean records.
An LLC files its annual report ($138.75, due May 1), keeps a registered agent, and keeps its Articles of Organization current. It needs an operating agreement, a separate bank account and clean records too.
Is skipping about $140 a year worth it? We don’t think so. The $680 five-year cost of an LLC is cheap insurance against losing your home.
When does a partnership still make sense?
Rarely, but sometimes. A general partnership can be reasonable for a one-time project with a clear end date (say, under a year), for testing an idea before you formalize it, or for a very small operation with close to zero liability exposure. Even then, you have to genuinely accept unlimited personal liability. Most of the time an LLC is still worth the cost.
Choose an LLC if the business will run longer than a few months, you’ll have customers, clients or contracts, there’s any chance of debt or a lawsuit, or you might add or remove members later.
How do you convert a partnership to an LLC?
- File Articles of Organization ($125).
- Create an operating agreement.
- Transfer the partnership’s assets to the LLC.
- Update contracts and accounts to the new entity.
- Notify clients and vendors.
Contributing the partnership’s assets to the new LLC is generally tax-free, but have a tax professional look at your specific situation first.
Frequently asked questions
Can two people form a single-member LLC?
No. With two members, it’s a multi-member LLC. Even if one person owns 99% and the other 1%, it’s still multi-member.
Is a partnership cheaper long-term?
Partnerships skip state fees, which saves about $140 a year. But one lawsuit can cost you everything you own, so the LLC’s cost is small by comparison.
Do partnerships have to file taxes?
Yes. Partnerships with two or more partners file Form 1065 and issue K-1s to partners, the same as multi-member LLCs.
Can a partnership convert to an LLC?
Yes. File Articles of Organization and transfer the assets to the new LLC. Done properly, it’s generally tax-free.
What if my partner and I disagree?
Without an agreement, Florida’s default partnership law governs the dispute. In an LLC, your operating agreement does. Either way, put your agreement in writing.
Start your Florida LLC
If you’re already working with a partner, the cheapest fix is to form the LLC now, before the first big contract. IncCraft handles your complete Florida LLC formation for $0 + the $125 state filing fee, including registered agent service and operating agreement.
Form your Florida LLC with IncCraft today.