When forming a Florida business it's important to determine if you should incorporate, and the type of corporation that meets your needs. Corporation types include the S corporation and C corporation. Another option is to create an LLC or Limited Liability Company. LLC is a Hybrid form of business that combines elements of both partnerships and corporations.
If you're ready to incorporate in Florida here are links to a State Approved provider.
This section will explain the differences between the C corp and S corp and the benefits and drawbacks of each. Disclaimer: Note that information presented here is not legal advice and should not be interrupted to be legal advice.
Corporations are separate legal entities. The two types of corporations are the traditional C corporation and the S corporation.
With a C corporation, the corporation rather than individuals pays taxes and assumes liabilities. Florida has a 5.5% corporate tax.
An S corporation, allows up to 75 shareholders to share income and expenses and to report them on their individual income tax returns. The advantage of an S corporation means they do not have to pay the 5.5% corporate tax.
If you have any questions, you should check with an attorney or accountant before deciding on a legal structure.
Limited liability companies, or LLCs as they are known, are a hybrid form of business that combines elements of partnerships and corporations. In Florida, LLCs may elect whether to be taxed as partnerships or corporations.
Sole proprietorships are easy to set up and easy to dissolve. Profits are taxed at the owner's individual federal tax rate, with the amount reported on Schedule C or Schedule CZ. Sole proprietorships do not file Florida corporate income tax returns, but owners can have unlimited personal liability for any debts or other obligations the business incurs. In Florida, that liability is limited by the state's homestead rights laws, which prevents creditors from taking an owner's home.
Partnerships, which can be formed as easily as sole proprietorships, are unincorporated businesses that allow two or more people to share liability and provide capital. Business income is reported on partners' individual tax returns.
A partnership can't be dissolved as easily as a sole proprietorship. A partnership is terminated only when all of the business' operations are discontinued or at least 50% of the partnership's capital and profits are sold to another partner or another person. It is important to get a written partnership agreement to ensure partners have the same expectations for the business.
An attorney is not legally required to incorporate. You can prepare and file the articles of incorporation online yourself. However, if you have any questions that may legally impact your business you should consult an attorney.
