Choosing the Right Type of Florida Corporation

Florida is a great place to start a business. The combination of a rich culture, beautiful cities (like Miami, Orlando or Tampa Bay) and access to the world’s transport networks makes the state home to some of the biggest businesses in the U.S. Headquarters of companies like Publix, Tupperware, Burger King and more are all proud to call Florida home. One of the world’s largest entertainment companies, Disney, is famous for its Disney World theme park in Orlando.

What Type of Florida Business Entity Should You Choose?

When it comes to starting a business in Florida, you have a few options for the type of business you want to create. This is known as your “legal business entity,” and it defines how your business will be treated by the state, the law, the IRS and other official bodies.

Most new entrepreneurs have a choice of several business types — sole proprietorship, partnership, Limited Liability Company (LLC), S Corporation or C Corporation.

Here’s a quick overview of each.

• Sole proprietorships and partnerships are the simplest types of business. They do not provide any special protections or benefits to entrepreneurs and can make your personal assets vulnerable. We do not recommend them.
• Limited Liability Companies (LLCs) are a great option for smaller businesses. They are quick and easy to create, inexpensive to administer, light on regulation and have simple taxation and rules. You can learn how to create an LLC in Florida here.
• S Corporations are the simplest type of corporation an entrepreneur can create and are good for many types of businesses. The regulations, taxation, compliance and legalities are more complex than for an LLC, but they do provide tax advantages for their owners. You can find more information on S Corporations here.
• C Corporations are the most complex type of corporation. They are best for large businesses and are a necessity if the business will be traded on public stock markets. C Corporations have much more significant regulation, compliance and legalities; they are not as tax efficient as S Corporations or LLCs. You can find more information on C Corporations here.
• Other business entity structures include nonprofits, Limited Liability Partnerships (LLPs) and B Corporations, but they will not be relevant for the majority of entrepreneurs.

Advantages of a Corporation Over an LLC

There are several reasons an entrepreneur might choose to form a corporation instead of an LLC in Florida.

• If you want to pay lower self-employment taxes than an LLC, you will need an S Corporation.
• If you want to easily transfer ownership through buying and selling stock, you will need a C Corporation or an S Corporation.
• If you want up to 100 shareholders who are U.S. citizens or residents and want to issue one type of stock, you will need an S Corporation.
• If you want more than 100 shareholders, want to issue more than one type of stock or have international shareholders, you will need a C Corporation.
• If you want to allow the public to buy and sell shares in your company after an Initial Public Offering (IPO), you will need a C Corporation.

Here’s a side-by-side comparison between the various business types. This table focuses on the areas apart from company stock and shareholders.

This table shows the differences between Florida business entities when it comes to issuing, buying and selling stock.

A Quick Note on the Differences Between Florida S Corporations and C Corporations

When a corporation is initially created, it is automatically assumed to be a C Corporation and only becomes an S Corporation (and will be taxed as such) if you file the IRS Small Business Tax Election form 2553.

In most cases when we discuss “corporations” in this guide, we’re talking about both C Corporations and S Corporations. If anything is relevant to just one or the other, we’ll declare that.

Advantages of Forming a Corporation in Florida

Florida corporations have several benefits for business owners.

• Corporations provide the strongest form of liability protection possible. They insulate your personal assets and finances from those of your business.
• This means that any liabilities created by your corporation (debts, obligations, damages, bankruptcy or other liabilities) should not impact your personal money, property or assets — they are considered to be completely separate from a legal perspective.

Advantages of Forming an S Corporation in Florida

In addition to the general benefits above, Florida S Corporations provide several other advantages.

• S Corporations can have up to 100 shareholders.
• Running an S Corporation in Florida is simpler than running a C Corporation.
• It is easy to transfer ownership in an S Corporation by selling your stock.
• In some cases, part of the income from an S Corporation can be paid as a “distribution” rather than “salary,” so it would not be subject to self-employment tax. Find out how this can save you money using our S Corporation tax calculator.
• LLCs can choose to be taxed as S Corporations to take advantage of this.
• You can find more advantages of forming an S Corporation in Florida.

Advantages of Forming a C Corporation in Florida

In addition to the general benefits above, Florida C Corporations provide several other advantages.

• Ownership in a C Corporation is very fluid and determined by who owns stock in the business.
• C Corporations can list their shares on a public stock exchange. This stock can be bought and sold by anyone.
• C Corporations can sell stock to investors inside and outside the U.S.
• C Corporations can issue more than one type of stock.
• C Corporations can raise more funds by issuing more stock.

Points About Forming a Corporation in Florida

Here are some areas to be aware of when you’re creating a corporation in Florida.

• Corporations are formed on the state level. You will need to form a new corporation for any state where you want to have an office or do business.
• All Florida corporations must issue stock to shareholders.
• All Florida corporations must hold Annual General Meetings (AGMs).
• All Florida corporations must have an elected Board of Directors.
• All Florida corporations must appoint officers.
• Money earned by Florida C Corporations will be subject to “double taxation” through tax paid on both company profits and dividends paid to shareholders.
• Only U.S. citizens and residents can own stock in Florida S Corporations.
• S Corporations are limited to 100 shareholders and one class of stock.
• All Florida corporations must follow stringent compliance, rules and regulations. This includes financial reports, adopting bylaws, corporate formalities and the like.

Are you ready to start your Florida corporation? If so, we can help. We provide comprehensive corporation formation services for both S Corporations and C Corporations in Florida.

Start Your Florida Corporation in Six Steps

Now that you’ve decided a corporation is right for you, here’s how to form one. At Incfile, we make the corporation formation process easy and with prices starting at just $49 plus the Florida filing fee, you get excellent value too.

• Start your Florida S Corporation now
• Start your Florida C Corporation now

Step One — Name Your Florida Corporation

• Choose a unique, distinct, original name for your Florida corporation
• This name cannot be used by another business in Florida
• This name cannot be confused with the name of another business in Florida
• See if the name is available by searching for it on the Florida Secretary of State website
• The name of your business must contain the word “corporation,” “company” or “incorporated” or the abbreviation “Corp.,” “Inc.” or “Co.,” or the designation “Corp,” “Inc” or “Co”
• For example: “Florida Coastal Survey Reports Corporation” or “Jackson and Sons, Inc.”

Step Two — Establish Street and Mailing Addresses for Your Florida Corporation

A Florida corporation must have a designated address. That could be your home address (if you’re running the company from your residence), where your office is located or any physical address of your preference — even outside of Florida. It cannot be a P.O. Box.

Step Three — Appoint a Registered Agent for Your Florida Corporation

Every Florida corporation must have a “Registered Agent” who receives official legal and tax correspondence and has responsibility for filing reports with the Florida Secretary of State. Your registered agent must have a physical street address in Florida.

A Registered Agent could be you, a director or an officer of the corporation. Here at Incfile we always recommend using a proper Registered Agent service since they provide several benefits:

• Some people establish companies outside of the state they live in and will use a Registered Agent service to provide an address for receiving legal documentation in the state.
• The Registered Agent address is listed on public records on the Secretary of State's website. If you do not want your own name and address to be registered, you should use a Registered Agent service.
• The Registered Agent must be present or available during normal business hours (9 a.m. to 5 p.m. Monday to Friday) to receive any legal correspondence delivered, since the type of documents delivered to the registered agent require a signature on delivery.
• Some people travel or are not always at their business location to receive these documents.

At Incfile, all of our packages include a Registered Agent service that is free for the first year and $119 per year thereafter. We also have a dashboard where you can log in and easily view any document your Registered Agent has received on your behalf.

Step Four — Draft Your Articles of Incorporation

• The legal document required to create your new corporation is called the Articles of Incorporation. You will need to gather various details for your Florida filing including:
  • The corporation’s name
  • The corporation’s purpose
  • The corporation’s mailing address and street address
  • The corporation's Registered Agent and their address
  • The effective date for the corporation
  • The corporation’s capital structure (number of shares to be issued, who owns them, pricing, etc.)
  • The name and address of the incorporator

Step Five — File Your Articles of Incorporation with the Florida Secretary of State

Once your articles are drafted, you can file them with the Florida Secretary of State. Filing your Articles of Incorporation creates your Florida corporation. You can do this online, mail in a form or have Incfile do it on your behalf.

Step Six — Complete the Legal and Compliance Requirements for Your Florida Corporation

Once your corporation has been created, you will need to get certain legal requirements in place. These include:

• File IRS Small Business Tax Election form 2553 if you want to be treated as an S Corporation
• Any S Corporations that are formed through Incfile will also include a prepared Form 2553 that will be delivered with the state formation documents
• Create and issue stock certificates to your shareholders
• Apply for business licenses and permits. You may require licenses from your state, county, township and various industry or federal bodies
• Get an Employer Identification Number (EIN)
• File for taxes with Florida Department of Revenue
• Get all formalities in place for employees, including unemployment, disability, payroll, insurance and taxes
• Appoint a board of directors for the corporation
• Appoint officers to the corporation
• Get a corporate records book to capture all your important corporate information

Starting Your Florida Corporation — Useful Resources

• Florida Secretary of State website
• General information from the Florida Secretary of State
• Checking name availability for your Florida corporation

Form a Florida Corporation Without Breaking the Bank

Incfile provides a cost-effective service to help you create your corporation. We guide you through the process and handle most of the administrative steps on your behalf, such as filing the Articles of Incorporation or Certificate of Formation. Our basic package also provides a free Registered Agent service for the first year. If you're looking for help to start a corporation, our comprehensive services provide outstanding value.