Florida Incorporation: Everything You Need to Know
Florida incorporation involves filing an articles of incorporation document with the Florida Secretary of State office.3 min read
Florida incorporation involves filing an articles of incorporation document with the Florida Secretary of State office. A corporation is considered a distinct legal entity that’s independent of its owners. This legal entity not only requires an articles of incorporation document, but it also comes with maintenance procedures mandated by state officials. Any business that operates in Florida must file an articles of incorporation and pay the filing fee if they wish to function as a corporation.
It is more complicated than a partnership or sole proprietorship, but it also has certain advantages over other legal entities. For instance, corporations protect owners from business liabilities while safeguarding their personal assets. This also means that creditors cannot go after the personal assets of owners to satisfy business debts.
- Note: A corporate officer can be held liable for other actions, such as not withholding or paying employment taxes.
A corporation is also an entity within itself and will continue to exist regardless of any changes in ownership.
In addition, one person can own a corporation, or it can have as many owners as needed. While corporations come with several advantages, owners must be careful in certain respects. For instance, it’s still possible that creditors can use the court system to pierce the corporate veil.
This means that creditors could petition a judge to discard liability protections in certain cases, allowing the seizure of personal assets. However, a piercing of the corporate veil usually involves some sort of negligence or unethical practice on the part of owners. For example, mixing personal and business assets could lead to personal asset seizures.
Also, personal guarantees, which play an important role in getting a bank loan, could end up as a personal liability for individuals offering the personal guarantee. A key component of maintaining the corporate veil is to keep accurate records of transactions and keep all company assets and money separate from personal funds.
- Note: Corporations must conduct shareholder meetings and keep certain minutes of the meetings.
A customized corporation kit from the Florida Incorporation Service would be an adequate template to keep organized records.
A prime benefit of incorporating your business would be the limited liability protections afforded to you. If you properly maintain a corporate legal status and avoid personal guarantees of business debts, you would not be responsible for any obligations from the business. The most important reason that individuals cite in creating a corporation is to protect personal assets, and such benefits are not afforded to partnerships or sole proprietorships. Such entities hold members responsible for all obligations and debts of a business, and their assets would be open to seizure if any business dispute ended up in court.
General partnerships and sole proprietorships would be responsible for the following obligations:
- Defective products
- Accounts payable
Stockholders usually are not held to account over any obligations and debts that a corporation holds.
On the other hand, a corporation can yield the following benefits:
- Lower risk of personal liability
- Raise capital through the selling of stock
- Ownership flexibility
- Choosing an “S” corporation status if the business meets various requirements, allowing it to be taxed in the same manner as a partnership while avoiding double taxation.
Although a corporation can have many members, you only need one person to create the entity. Once the business is properly registered and the fees are paid, you may then offer retirement plans and health benefits to employees that would be deducted from the business.
It’s worth noting that Florida is one of the most popular destinations when it comes to LLC or corporate registration. In fact, large U.S. businesses such as Tech Data and Publix have headquarters in Florida. Florida has a stable business climate, and the state gives new business owners certain flexibilities and allows them to conduct business in an easier fashion. To register a business in Florida, you must:
- Reserve a business name
- Incorporate the business entity
- File the necessary documents
- Pay online taxes
You may also ask professionals over the phone if you have any questions. A primary advantage of doing business in Florida is that you do not have to pay personal income taxes. If you register in Florida, you can also choose the “S” status and not have to pay corporate tax rates, which is 5.5 percent.
If you need help with Florida incorporation, 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, Stripe, and Twilio.