S Corp Florida: Everything You Need to Know
When it comes to operating an S Corp Florida, you should know that Florida is one of the best states in the country to register your corporate entity.3 min read
2. S Corp Process
3. S Corp Basics
4. S Corp Restrictions
5. S Corp Benefits
6. Submission Deadline
Updated July 6, 2020:
When it comes to operating an S Corp Florida, you should know that Florida is one of the best states in the country in which to register your corporate entity.
An S Corp is a standard corporation that gains a special tax classification with the IRS. You need Form 2553 to turn your corporation into an S classification. Form 2553 requires basic information such as:
- Employer Identification Number
- Incorporation Date
- Corporate Fiscal Year
In addition, all shareholders must sign Form 2553, and shareholders must approve unanimously to make the S Corp process official.
S Corp in Florida
If you intend to create a business, you should contact the services of an attorney whose specialty lies in Florida incorporation. The S Corp option is ideal for small business owners who wish to utilize certain tax advantages and flexibilities. The best feature is that you would only be responsible for a tax balance on grandfathered gains and passive income in Florida. With that, a key obligation is that S Corp shareholders must also report losses and income on their personal tax returns and pay the necessary tax owed to the IRS.
Florida is known as a business-friendly state, and it is a prime choice among business owners who wish to create a corporation or LLC. In addition, Florida has some of the friendliest tax laws in the nation, joining Nevada and Delaware as one of the top states for creating a business entity.
S Corp Process
The fastest way to register in Florida is to do so online, making sure to fill in all required information.
When it comes to the content of an Articles of Incorporation, you should be aware of the following:
- Sub S election (optional choice)
- Bylaws, minutes, and corporate kit
- Corporate embosser
- Business name
- Registered agent
- Status certificate
When creating a name, remember that your business name must end with such designators as “Corp,” “Incorporated,” or “Inc.” In addition to your name, you may also enter other names, such as directors and officers of the business. You may also choose to mail the form with the appropriate fee to the Florida Department of State, or you can use a legal document service to assist you.
S Corp Basics
An S Corp allows the business to be taxed as a sole proprietorship or partnership, and business income is designated in the same manner as a sole proprietorship or general partnership. Instead of the business being taxed, income passes form the business to shareholders who are taxed on an individual basis.
Regardless of a corporation being an S or C classification, you would file the same Articles of Incorporation document with state authorities. An S or C Corporation protects owners from business debts and liabilities. Moreover, both corporations must conduct annual meetings with directors and shareholders, and your business must record certain minutes of the meetings.
S Corp Restrictions
When it comes to guidelines, you must adhere to the following:
- An S Corp can cannot have over 100 shareholders
- S Corps are permitted one stock class (no tiered stocks allowed)
- S Corp cannot be owned by other entities in the form of other corporations, LLCs, and partnerships
- Non-U.S. citizens and residents cannot own S Corp shares
S Corp Benefits
An S Corp comes with certain natural benefits. First, you gain higher credibility among the public and other businesses. Clients usually trust an S Corp over an LLC because an S Corp is harder to obtain, and an S Corp shows you are serious about your business practices.
Also, an S Corp provides an easier process when it comes to ownership transfers. For instance, your S Corp would not be dissolved if you transfer over 50 percent ownership to another party. On the other hand, an LLC would be dissolved if you sold over 50 percent of your interest to someone else.
Finally, you do not have to jump through bureaucratic hoops and worry about tax consequences if you choose to transfer ownership.
You may refer to instructions provided by the IRS when it comes to submission guidelines. For established corporations, Form 2553 must be submitted by March 15th if you want the S Corp status to take effect in the current year. If you miss the March 15th due date, your S Corp status will begin the following year. Newer corporations must submit Form 2553 within 75 days of the creation date to get an S status for that year.
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