Type: General Florida Profit Corporation
This is the most common corporate structure. The corporation is a separate
legal entity that is owned by stockholders. A general corporation may have
an unlimited number of stockholders that, due to the separate legal nature
of the corporation, are protected from the creditors of the business. A
stockholder's personal liability is usually limited to the amount of investment
in the corporation and no more.
ADVANTAGES of Florida Profit Corps:
Owners' personal assets are protected from business debt and liability
Florida Corporations have unlimited life extending beyond the illness or death of the owners
Tax free benefits such as insurance, travel, and retirement plan deductions
Transfer of ownership facilitated by sale of stock
Change of ownership need not affect management
Easier to raise capital through sale of stocks and bonds
DISADVANTAGES of Florida Profit Corps:
I want to incorporate now as a Florida Profit Corporation
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Type: Close Florida Corporation
There are a few minor, but significant, differences between general corporations and close corporations in
Florida. In most states where they are recognized, close corporations are limited to 30 to 50 stockholders. In addition,
many close corporation statutes require that the directors
of a close corporation must first offer the shares
to existing stockholders before selling to new shareholders.
This Florida corporation type is particularly well suited for a group of individuals who will own the corporation with some members actively involved in the management and other members only involved on a limited or indirect level.
I want to incorporate now as a Close Florida corporation >
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Type: Florida S Corporation (Subchapter S)
With the Tax Reform Act of 1986, the S Corporation
became a highly desirable entity for corporate tax
purposes. An S Corporation is not really a different
type of corporation. It is a special tax designation
applied for and granted by the IRS to corporations
that have already been formed. Many entrepreneurs and
small business owners are partial to the Florida S Corporation
because it combines many of the advantages of a sole
proprietorship, partnership and the corporate forms
of business structure.
S Corporations have the same basic advantages and
disadvantages of general or close corporation with
the added benefit of the S Corporation special tax
provisions. When a standard corporation (general, close
or professional) makes a profit, it pays a federal
corporate income tax on the profit. If the company
declares a dividend, the shareholders must report the
dividend as personal income and pay more taxes.
S Corporations avoid this "double taxation" (once
at the corporate level and again at the personal level)
because all income or loss is reported only once on
the personal tax returns of the shareholders. However,
like standard corporations (and unlike some partnerships),
the S Corporation shareholders are exempt from personal
liability for business debt.
FLORIDA S CORPORATION RESTRICTIONS
To elect S Corporation status, your corporation must
meet specific guidelines. As a result of the 1996 Tax
Law, which became effective January 1, 1997, many of
these qualifying guidelines have been changed. A few
of these changes are noted below:
The maximum number of shareholders for an S Corporation
has been increased to 75.
Previously, S Corporation ownership was limited to
individuals, estates, and certain trusts. Under the
new law, stock of an S Corporation may be held by a
new "electing small business trust." All
beneficiaries of the trust must be individuals or estates,
except that charitable organizations may hold limited
interests. Interests in the trust must be acquired
by gift or bequest -- not by purchase. Each potential
current beneficiary of the trust is counted towards
the 75 shareholder limit on S Corporation shareholders.
Florida S Corporations are now allowed to own 80 percent or
more of the stock of a regular C corporation, which
may elect to file a consolidated return with other
affiliated regular C corporations. The S Corporation
itself may not join in that election. In addition,
an S Corporation is now allowed to own a "qualified
subchapter S subsidiary." The parent S Corporation
must own 100 percent of the stock of the subsidiary.
Qualified retirement plans or Section 501(c)(3) charitable
organizations may now be shareholders in S Corporations.
All S Corporations must have shareholders who are
citizens or residents of the United States. Nonresident
aliens cannot be shareholders.
S Corporations may only issue one class of stock.
No more than 25 percent of the gross corporate income
may be derived from passive income.
An S Corporation can generally provide employee benefits
and deferred compensation plans.
S Corporations eliminate the problems faced by standard
corporations whose shareholder-employees might be subject
to IRS claims of excessive compensation.
Not all domestic general business corporations are
eligible for S Corporation status. The exclusions include:
A financial institution that is a bank;
An insurance company taxed under Subchapter L;
A Domestic International Sales Corporation (DISC);
Certain affiliated groups of corporations.
Keep in mind, these lists of qualifying S Corporation
aspects are not all-inclusive. In addition, there are
specific circumstances in which a Florida S Corporation may
owe income tax. For more detailed information about
these changes and other aspects regarding S Corporation
status, contact your accountant, attorney or local
HOW TO FILE AN S CORPORATION
To become active as a
Florida S Corporation, you must know the process
of filing for this special tax status. Your first step
is to form a general, close or professional corporation
in the state of your choice. Second, you must obtain
the formal consent of the corporation's shareholders.
This consent should be noted in the corporation's minutes.
Once the filing is approved, your company must complete "Election
by a Small Business Corporation". This form must
be filed with the appropriate IRS office for your region.
We can fill out the proper forms for you -
choose the link below.
I want to file a
Subchapter S Florida
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Type: Florida Limited Liability Company
LLC's have long been a traditional form of business
structure in Europe and Latin America. With the recent
inclusion of Hawaii, all 50 states and Washington,
D.C. have now adopted some form of LLC legislation
for both domestic and foreign (out of state) limited
liability companies. Florida adopted such legislation
Many business professionals believe LLC's present
a superior alternative to corporations and partnerships
because LLC's combine many of the advantages of both.
With a Florida LLC, the owners can have the corporate liability
protection for their personal assets from business
debt as well as the tax advantages of partnerships
or Florida S Corporations. It is similar to an S Corporation
without the IRS' restrictions.
ADVANTAGES of Florida LLC's
Protection of personal assets from business debt
Profits/losses pass through to personal income
tax returns of the owners
Great flexibility in management and organization
of the business
LLC's do not have the ownership restrictions
of S Corporations making them ideal business structures
for foreign investors
DISADVANTAGES of Florida LLC's
These lists are not inclusive. For more detailed information,
please be sure to speak with a qualified legal and/or
Florida LLC Overview
IMPORTANT NOTE REGARDING THE
FEDERAL TAXATION OF LLC'S
Before January 1, 1997, the Internal Revenue Service
determined whether a limited liability company would
be taxed "like a partnership" or "like
a corporation" by analyzing its legal structure
or by requiring the members to elect the tax status
on a special form. Effective January 1, 1997, the IRS
has simplified this process.
Pursuant to these new IRS regulations, if a limited
liability company has satisfied IRS requirements, it
can be treated as a partnership for federal tax purposes.
As such, LLCs are required to file the same federal
tax forms as partnerships and take advantage of the
same benefits. However, this is still a highly technical
area, and if you require further information, it is
recommended that you communicate with the Internal
Revenue Service or consult a competent professional
such as a qualified tax accountant or attorney.
Every month we reimburse one company for the cost of their basic
incorporation fees! Use our online llc form
to register and be eligible without doing anything more!
I want to incorporate
as a Florida LLC >
See more information about
Florida LLC's at:
Florida LLC Overview
Forms Library (free downloads)
or, these links for further
How to start business
incorporation in Florida
incorporation, start here