C Corporation Florida: Everything You Need to Know
C corporation Florida organizations are very different from a S corporation in Florida.3 min read
2. Who Benefits from a C Corporation?
3. Advantages of a C Corporation
4. Disadvantages of a C Corporation
6. Forming a C Corporation
7. Advantages of Creating a C Corporation in Florida
Updated November 16, 2020:
C Corporation Florida
C corporation Florida organizations are very different from an S corporation in Florida.
C corporations are often referred to as standard corporations because they are the most common type of corporations. In contrast to S corporations that have a “pass-through” tax structure, C corporations are subject to two layers of tax: when the profits are initially earned and when shareholder dividends are distributed.
C corporations allow for more than one class of stock, and they also have a very specific structure of individuals that all have a stake in the company. C corporation includes directors, officers and shareholders.
Who Benefits from a C Corporation?
In general, C corporations are more beneficial for larger companies, whereas small businesses generally find that the S corporation structure is more beneficial.
Advantages of a C Corporation
• A C corporation business expenses are tax-deductible because C corporations are already subject to double-taxation, so they enjoy other tax advantages such as being able to deduct business expenses that other types of corporations and businesses may not be able to deduct.
• A C corporation allows for significant growth potential because stock associated with C corporations can be sold freely, with unlimited potential growth for these types of corporations.
• C corporations can have multiple stock types and an unlimited amount of shareholders, whereas an S corporation only allows for one class of stock and a cap of 100 shareholders.
• C corporations protect from various liability issues because C corporations provide very limited liability for directors, shareholders, employees, and officers.
Disadvantages of a C Corporation
• A C corporation is subject to double taxation, usually the largest drawback.
• No deduction of corporate losses is another disadvantage, in that shareholders are not able to deduct corporate losses on their taxes, whereas S corporation shareholders can deduct such losses.
When starting a C corporation, the following are the primary requirements:
• The board of directors and shareholders must hold meetings regularly.
• Initial shareholders are to receive a formal issue of their stocks.
• There must be sufficient capital, via investors, that demonstrates how the corporation has adequate funding.
• The corporation must meticulously keep business records; such business records are kept separate from the individual records of the owners.
Forming a C Corporation
Step 1: Contact the Comptroller Public Accounts' office in Tallahassee and request that it provide you with the proper forms needed to start a C corporation.
Step 2: Determine the filing fees in Florida, including the fee for filing the Articles of Incorporation.
Step 3: Start considering the logistics and strategies of your business. What will you call your corporation? If that name is taken, what else will you call it? If you are absent, who will run the company and make decisions in your absence? Are there plans to publicly trade stock? Keep these and similar questions in mind and think them through. You want to get as many of them answered and in place before starting the incorporation process.
Step 4: Develop a system of taking board meeting minutes and a recordation process. These records must be filed and available onsite as part of the official records of the corporation.
Step 5: Make sure to create and draft very clear and comprehensive bylaws for the corporation. In addition, you may be required to fill out additional forms and file those forms with the secretary of state. For instance, you may be required, under certain circumstances, to complete and file a financial report.
Advantages of Creating a C Corporation in Florida
• While Florida C corporations file tax returns and pay income taxes, C corporation tax rates are lower. As a result, owners can, by dividing profits, accumulate more wealth in the corporation than is possible with pass-through S corporation taxation.
• Florida C corporations can reduce owners' self-employment tax liability.
• Advantageous for public relations because people generally believe that a corporation is more substantial than sole proprietorships or partnerships.
If you need help with establishing a Florida C corporation, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.