Key Takeaways

  • Florida does not levy a state individual income tax, making S Corps more tax-efficient.
  • No state-level S Corp form is required—only IRS Form 2553 needs to be filed.
  • S Corps offer pass-through taxation, shielding shareholders from double taxation.
  • Annual report and franchise taxes are required; the report is due May 1 with a $150 fee.
  • Shareholders benefit from liability protection, continuity, and flexible stock transfer.
  • Maintaining compliance requires corporate records, meeting minutes, shareholder info, etc.
  • Strict eligibility rules apply, including a 100-shareholder limit and one class of stock.
  • Foreign corporations registering in Florida must designate a registered agent and file additional documentation.
  • Reasonable salaries for shareholder-employees are critical for IRS compliance.

What Are Florida S Corporation Filing Requirements?

The Florida S Corporation filing requirements make it easy for companies to be an S corporation because the state of Florida does not assess an individual income tax. For a company that elects to become an S corporation, it can help shareholders avoid double taxation, since shareholders of regular corporations pay income tax on their dividends that have already been subjected to corporate taxes. The state of Florida accepts the IRS' S corporation election, so you do not have to file a state-level form to be recognized as an S corporation.

Who Should Choose an S Corporation in Florida?

Choosing S corporation status is most beneficial for businesses that expect to earn profits and distribute them to shareholders. This is especially true for service-based businesses such as consultants, freelancers, real estate agents, and professional firms (e.g., law, design, and tech). These businesses can benefit from the pass-through taxation structure while reducing self-employment taxes through reasonable salary and dividend splits.

Additionally, S corp status is often ideal for small businesses with steady income and fewer than 100 shareholders. However, businesses that plan to attract venture capital or issue multiple stock classes may prefer to remain C corporations.

Advantages of Florida S Corporations

  • Unlike other business structures, such as sole proprietorships that end with the death of its owner, Florida S corporations can continue operation after the death of a stockholder.
  • It is easy to offer fractional ownership shares with S corporations.
  • Stock can be transferred without impacting business operations, through purchases, inheritances, and gifting.
  • S corporations benefit from being taxed as a pass-through entity.
  • S corporations provide additional liability protection for shareholders in the event that the company files for bankruptcy or is sued.

Tax Efficiency of S Corporations in Florida

The most significant advantage of S corporations in Florida is the ability to avoid both federal double taxation and state income tax. Here’s how it works:

  • No State Income Tax: Florida residents do not pay personal income tax, so income passed through from the S Corp is not subject to additional state taxation.
  • Avoiding Double Taxation: Unlike C Corporations, which are taxed at the corporate level and again at the shareholder level for dividends, S Corporations are only taxed at the shareholder level.
  • Self-Employment Tax Savings: S Corps can reduce self-employment tax by paying shareholder-employees a reasonable salary and distributing remaining profits as dividends, which are not subject to payroll taxes.

Disadvantages of Florida S Corporations

  • Some financial lenders require personal guarantees from business leaders, which limits the financial liability protection shareholders get from the S designation.
  • Having stockholders may lead to more conflict than businesses owned by a single person or small group.

Compliance and Administrative Burdens

While Florida S corporations offer tax advantages, they also come with greater administrative responsibilities:

  • Reasonable Salary Requirement: The IRS closely monitors S Corps to ensure that shareholder-employees are paid reasonable compensation. Failure to do so may result in penalties and reclassification of dividends as wages.
  • Increased Record-Keeping: S Corporations must maintain more thorough corporate records and documentation than sole proprietorships or LLCs.
  • Eligibility Restrictions: Nonresident aliens, partnerships, and corporations cannot be shareholders. Additionally, the company must maintain only one class of stock.
  • Ongoing Compliance Costs: From payroll services to bookkeeping and tax filing, maintaining S Corp status often requires professional assistance.

Florida S Corporation Filing Requirements

1. Become a corporation in the State of Florida.

2. File the Form 2553 with the IRS.

3. File an annual report due by May 1. There is a fee of $150 to file the report. 

4. Pay franchise taxes to the State of Florida by the last day of the 4th, 6th, 9th, and 12th months based on the company's annual net income. 

5. S corporation issues Schedule K-1 to shareholders.

Steps for Foreign Corporations to Register as Florida S Corps

Out-of-state corporations that wish to operate in Florida and elect S Corporation status must follow additional steps:

  1. Register as a Foreign Corporation: File an Application by Foreign Corporation for Authorization to Transact Business in Florida with the Florida Division of Corporations.
  2. Appoint a Florida Registered Agent: The business must designate a registered agent with a physical address in Florida.
  3. Obtain a Certificate of Existence: Submit a certificate from the corporation’s home state, usually dated within 90 days.
  4. Follow IRS Filing: As with Florida-based corporations, the foreign corporation must also file Form 2553 with the IRS to elect S Corp status.

How Do I Maintain My Florida S Corporation Status?

To maintain your S Corp status in Florida, ensure you:

  • File your annual report with the Florida Department of State before May 1.
  • Issue Schedule K-1s to each shareholder annually.
  • Maintain proper corporate records, including minutes of meetings and updated bylaws.
  • Ensure all shareholders remain eligible and that only one class of stock is issued.
  • Keep up with reasonable compensation standards for shareholder-employees to avoid IRS scrutiny.

Failure to comply with these requirements can result in the IRS revoking your S Corporation election or the state imposing penalties.

Frequently Asked Questions

1. Can a single-member LLC elect to be taxed as an S Corp in Florida?

Yes. A single-member LLC can file Form 2553 with the IRS to be taxed as an S Corp, provided it meets the eligibility requirements.

2. Do I need a lawyer to file for S Corp status in Florida?

While not legally required, a lawyer can help ensure compliance, assist with corporate governance, and prevent costly mistakes.

3. What happens if I miss the May 1 annual report deadline?

Failure to file your annual report on time may result in administrative dissolution and a $400 reinstatement fee in addition to the original $150.

4. Can I convert my Florida C Corp to an S Corp?

Yes. A Florida C Corporation can file Form 2553 to elect S Corp status if it meets all IRS eligibility requirements and adheres to Florida’s corporate compliance laws.

5. Are Florida S Corps subject to sales tax?

Yes, if your business sells taxable goods or services, it must register for a Florida sales tax permit and collect/remit sales tax accordingly.

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