Legal Question in Business Law in Florida

forming a corporate subsidiary

My husband and I own a small media productin company which we plan to incorporate as an LLC this year. We are also launching a major project this summer that provides downloadable material website members (which we also own and operate). The media production company ''technically'' only provides the film production and delivery for the downloadable content and that ''product'' is a substantive part of the website's but not all of the offerings. The website (lets call it girlsplace.com) has other offerings besides the films (girlsplace wear,girlsplace parties, contests, etc that have nothing to do with our media company. Right now, inquiries about girlsplace.com are directed through our media production company's phones or address. Would it be better to operate girlsplace as a wholly separate corporate entity or as a wholly owned subsidiary? Eventually we'll have a staff just to handle ''girlsplace.com'' but does that mean it has to be a separate enmtity?


Asked on 1/17/03, 7:07 pm

3 Answers from Attorneys
Alexander M. Rosenfeld Rosenfeld & Stein, P.A.

Re: forming a corporate subsidiary

I think it is best to separate the various enterprises in the manner described in the previous replies and after consultation with counsel and accountant. If I can be of aid, please call.

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Answered on 1/20/03, 7:32 pm
Randall A. Lenz Randall A. Lenz, Atty, CPA

Re: forming a corporate subsidiary

The proper choice of entity depends on many competing considerations. No one should operate a significant business without the liability protection you can achieve by incorporating or forming an LLC or Limted Partnership. For operating businesses, I usually recommend the S-Corporation.

Yes, it is wise to attempt to segregate your business operations in a way that reduces your overall financial risk - in your scenario, it would make sense to own the website service in an entity separate from the production company - thereby protecting your primary business should any adverse circumstances arise from the website service (and vice-versa).

I have a discussion of choice of entity on my website www.rlenz.com under incorporate/LLC that might be helpful to you.

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Answered on 1/17/03, 10:11 pm
Peter Gonzalez Sanchez-Medina, Gonzalez, Quesada, Lage, Crespo, Gomez & MachadoLLP

Re: forming a corporate subsidiary

Your production company and the website business should fall under two separate entities to further shield each of them from potential liability that might arise from the comingling of the two. Whether you select an S-Corporation, LLC or other business entity is a question that requires further discussion between you, your lawyer and your accountant. I agree with Mr. Lens in his assessments, and invite you to contact my office should you wish to discuss this matter in more detail.

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Answered on 1/20/03, 3:03 pm


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