How to Invest In Florida

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How to Invest In Florida. Besides that, with the valorization of the Real and the consequent devaluation of the dollar, incentives for investments have become even more attractive. Let us agree that, today for the price of a sandwich and soft drink in São Paulo or Rio, you can have a decent lunch in any reasonable restaurant in Florida. As well, while you pay a toll of R$ 15 to R$ 20 on a badly maintained highway in Brazil, you will pay uS$ 1.25 to uS$ 2.00 on a wonderful Florida road. So, as an initial observation, this is the best moment for Brazilians to invest here.

Florida has never been so interesting for Brazilian investors as at the present moment. With the unfortunate 2008 mortgage crisis, real estate prices have depreciated very much. How to Invest In Florida

This article is basically meant to examine the best way to legally invest in Florida. The environment for investment in Florida is excellent but the Brazilian investor must understand that is a legalist environment nothing here is done nor should be done without legal counsel, other wise, the consequences may be disastrous.

The first observation that must be made is that choosing the right type of incorporation will determine the success or not of your business in Florida, besides, of course, business opportunity chosen. So, the choice of the type of incorporation will determine the degree and extent of responsibility of the partners with their creditors. in the same measure, in certain cases, it will determine the fiscal exposure that the business will have and shall indicate how much net profit will result.

The Brazilian investor will be surprised with the ease with which one can open a business in Florida (as in the USA in general). While in Brazil is seems that the State does not want one to be an entrepreneur (creating all sort of obstacles), in Florida it is just the opposite. Within 24 hours, a company can be legally formed and registered, be it under a sole proprietorship, be it under a partnership, whichever the type of your business incorporation.

In summary, and without wishing to exhaust the subject, there are three paths for the investor to do business in Florida; individual entrepreneur, a partnership and the figure of the commercial entity (A corporation and an llC). let us look into the advantages and disadvantages of each one.

The figure of the natural person (sole proprietorship) may be interesting for minimalist, small businesses for its simple documentation and accounting processes. However, it presents enormous disadvantages for the business tends to confuse itself with the individual. So, all taxes due from the business will coincide with those due by the individual, and thus becoming much more vulnerable as a taxpayer. The same may be said for the creditors where the individual will need to protect himself against efforts to liquidate his personal property.

The second path would be the partnership. this brings together two or more persons who pool their capital investments and time to achieve a common goal, which in this case, would be the development of a business. This form of partnership which is represented by a contract, how ever, has one important characteristic. It is only a contract and does not constitute a commercial entity. the consequences of this are very important; under a fiscal point of view, the consequences of the business will be reflected directly on each individual partner. In the same manner, without the figure of the commercial entity, the creditors may seek to liquidate each partner’s assets.

The third path to be taken to do business in Florida would be the constitution of a juridical person. Without going into deeper details about corporations that strange to the Brazilian entrepreneur, such as an “S” corporation (which is a tributary aspect that typically exists in the uS but not in Brazil), there are basically two forms of corporate juridical persons to be considered: corporations (equivalent to a shareholder corporation instituted in Brazil by law 6404) and limited partnerships (nowadays regulated in Brazil by the new Civil Code) the so called llCs, or in other words, limited liability Companies.

Corporations are normally constituted to deal with large business ventures, especially when the investors is seeking resources in the market, because only commercial entities are able to offer shares in the stock market. Its constitution is more complex and its operations much more complicated and involved than the llCs.

So, in general terms the recommendation is for the llCs, exception made for the example in the above paragraph. It is the most interesting for the Brazilian investor, as well as investors in general, for the organization of their businesses in Florida. In the following paragraphs, we will outline some basic principles of the llCs.

In relation the organization, incorporation of an llC (contrary to the “limited society – ltd.” in Brazil) is much simpler in Florida than in Brazil. However, it does require some legal caution. For example, the liability of the partners is defined by state law and based on how each partner subscribes his/her shares and how much they pay into the company capital (it is interesting to note that contrary to Brazil, the state of Florida does not speak of shareholders, but of members). Thus, If there are no frauds of violations of the law (which are punished rigorously to the full extent of the law in the uS, with no tolerance) the responsibilities of the members of the llC are based on the number of shares each member subscribes and pays for. The same is said about the dividends that shall also be divided according to the proportion of shares of each member.

The company shall have at least one administrator or manager; but there is nothing to keep the articles of incorporation from appointing more than one. in the same manner, the articles of incorporation may detail the obligations, duties and rights of each business administrator.

Taxation is different from that in Brazil. Besides the tax code pertaining to the juridical person, which is quite complex in the US, there are also taxes on credit, payment or transfer of dividends to the persons members of the llC. In Brazil, once the juridical person is taxed, the distribution of dividends to the partners is tax exempt, which is decidedly an advantage in favor of the Brazilian tax code. So, as we have discussed before and reinforce now, the rules are different and the Brazilian investor must keep that in mind and be cautious when programing his investments and business in Florida.

People have asked me what the best options for investment are presently. Without a doubt the real estate market is still the best option, where prices are quite low, as compared to those in Brazil. It is still ideal to buy property in foreclosure (mortgage execution) because prices are surprisingly low and investors can pick up excellent deals. For the Brazilian investor, the great deal is still to buy these properties in foreclosure, remodel them and sell at a profit.

Another interesting option is the time share, where the Brazilian tourist can “buy” his vacation time for a determined period per year cheaper because he does not have to purchase an apartment or house, and will guarantee only the right to use the property for a certain time during the year.

In our practice, there are numerous business opportunities that we come across from people wishing to sell their businesses or to associate themselves with Brazilians with capital. Those really interested may, opportunely, contact us.

How to Invest In Florida

Prof. dr. attila andrade Jr.

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