Florida offers many advantages for those who want to start a corporation.
The state provides several perks that make Florida the premiere location to incorporate your business.
It is very easy and quick to incorporate in Florida.
All you need to do is go online, fill out a simple form, pay the filing fee of $60, and you are done.
Types of Florida Corporations
There are essentially two types of corporations you can form in Florida:
This is the most common business type of corporation.
Investors provide capital to a “C” corporation and receive stock certificates in return.
A “C” corporation must pay corporate income taxes on its profits.
If your business will be operating out of another state, this is the corporation to choose.
There are a few restrictions that come with an “S” corporation.
For one, you cannot have any non-resident members in your business.
An S Corp is taxed like a partnership or sole proprietorship and not as an entity on its own.
There will also be limitations on what type of businesses can be formed as an S Corp.
Forming a Corporation in Florida is Easy
By starting your business in Florida, you will have the benefit of a favorable corporate climate.
The process is simple, and you can do it all online.
You may even be able to incorporate and form an LLC or “S” corporation for free!
Step 1: Name Your Florida Corporation
It is easiest to name your business the same thing as your trade name.
You can do this by registering a name with the Florida Department of State Division of Corporations. Still, if another business has already taken that particular name, you will have to use another option for the official state filing.
Florida naming guidelines:
I. The business’ name cannot be a generic word, like “dealer” or “supplier.”
II. The name must start with an English letter between the first and fourth place of publication.
III. The name must not be a name of a limited liability company or entity already registered with Florida’s Division of Corporations.
IV. The name cannot include the terms “bank,” “trust,” or “brother,” nor can it include any term that indicates a profession regulated by an agency of state government.
V. The name must be distinctive and one that is not being used in Florida by another similar business entity.
Step 2: Choose a Florida Registered Agent
A strong and effective registered agent has a lot to offer.
A good Florida registered agent will take care of all your state business filings, send out notices when necessary, and receive important legal documents on your behalf.
This is very helpful if you are operating out of state or even from another country.
It’s best to choose a Florida professional that specializes in business services.
- The registered agent is an individual who receives legal documents on behalf of your business.
- This person or entity must be located in the state of Florida, so you should check to see if yours is eligible before filing any paperwork with the Division of Corporations.
- You can also choose a Florida professional service that specializes in providing registered agents for numerous businesses throughout the state.
Try asking other business owners for recommendations or search online to find a reputable company to help you with this task.
Step 3: Hold an Organizational Meeting
The next step is to involve yourself in a formal organizational meeting.
This will need to be done before you file any business documents with the Florida Division of Corporations.
The people who decide to incorporate as a Business Corporation or LLC must meet at an organizational meeting held in person in Florida, and it cannot be a teleconference.
After all, you will need to see each other face-to-face in order to elect a board of directors and officers.
The information included in your meeting minutes:
- A statement that the organization is forming a corporation, LLC or both
- The name of the corporation and its trade name, along with the state it’s registered in
- The number of shares the corporation or LLC is authorized to issue
- The name and address of each person who will be serving as a director, officer, employee, and agent
- A statement that the shareholders present have no objection to following the state’s business code and want to form a corporation.
After you have completed your meeting and each owner signs the minutes, you should send a copy of those documents to the Division of Corporations.
This will currently cost $25, but it could be more in future years.
Create and Approve Corporate Bylaws
Once the corporate shareholders have elected a board of directors and officers, they can also create corporate bylaws. These are rules that will outline how the company should be run.
Tips on Creating Corporate Bylaws:
1) It’s important to take your time when creating these materials because you want to ensure all aspects of your business are covered no matter what happens in the future.
2) The corporation or LLC will need to hold another official meeting within 90 days of the original one if you want to include any additional bylaws.
3) As more owners and shareholders enter the picture, it’s very easy for a company to lose track of what is going on.
4) The Bylaws are extremely important in tracking each and every person who has a stake in the business and making sure they are doing what’s required of them.
5) It is also a good idea to hold annual shareholder meetings, so everyone stays updated on the company’s current state.
Appoint Initial Directors
Once you have created your bylaws, the next step is to appoint directors and officers for your corporation or LLC.
You should all agree on what each person’s rights, duties, and responsibilities will be during these meetings. Hence, no one feels slighted later when they get sued or investigated by authorities.
The Division of Corporations requires that you include the following information for each person who will be serving as a director, officer, or agent:
- Their name and street address
- The title they will hold in your company
- Their social security number (SSN) allows Florida to keep track of their taxes separately from yours. This is especially important if you have multiple persons named on the certificate of incorporation.
You are not required to include the names or addresses of employees in this listing. Still, if you would like to have future liability protection from possible employee lawsuits, it is a very good idea to do so.
Choose a Share Business Structure and Strategy
Major factors that you should consider:
a) What percentage of the company each owner will receive when it’s time to sell or distribute stock
b) How many shares of stock will need to be outstanding for a quorum to be valid and make other corporate decisions. This is also known as the par value of your shares.
c) If you are creating an LLC, it is good to include the participant’s name on each certificate of membership.
The voting rights that shareholders will have within the business. This is usually based on the percentage of ownership they have in a corporation.
However, it can also be done on a flat vote basis if you’d like to give each shareholder an equal say in how the company should run, no matter what their stake is.
Create and Execute an Incorporator’s Statement
Before the Division of Corporations actually files your certificate of incorporation, you must create an Incorporator’s Statement.
- This is basically a form that explains why each shareholder and director chose to start this company, what it plans on doing in the future and how it was formed by those who are named on the certificate.
- It may also include any other requirements that this business will have to continue forward in the future.
- This Incorporator’s Statement will also need to be notarized and signed by all companies involved, so it is extremely important that you are very careful when creating this document.
After completing one of these forms, you can take your certificate of incorporation and register it with the Division of Corporations.
You may also need to register your assumed business names if you have not done so already or if it is different from your registered agent’s name.
Step 4: File the Florida Articles of Incorporation
The Division of Corporations will require that you file your articles of incorporation within sixty days of creating them.
If you need to make any changes to these documents, there is a ten-day window where you can submit the revised information as well.
Once this state agency accepts your forms, they will create an Employer Identification Number (EIN) for your company.
This is very important for an LLC or corporation because it will make sure that you are not taxed twice on the same income by two different agencies.
Step 5: Get an EIN for Your Florida Corporation
If your corporation is classified as a C-Corp, S-Corp, or LLC, you will need to apply for an EIN while you file your articles of incorporation.
You will also need to do this if you are taking in any investors who will be sharing stock but not actually sitting on the board of directors.
An EIN is a tax identification number that your corporation will need in order to remain compliant with state laws.
Anytime you take on an investor or employee, they are going to need this number, so there is no reason not to get it immediately.
Advantages and Disadvantages of Incorporating in Florida
- Florida corporations have a renewable sixty-year life span before the need to renew their status is required, and that date can only happen once every ten years.
- Another interesting thing about Florida corporations is that they are not required to hold annual meetings or even keep minutes of these proceedings if there’s nothing of importance discussed.
- There are no limits on how many shareholders or directors a Florida corporation can have.
- The process to create an LLC in the state of Florida is quite simple and extremely cheap compared to other types of corporations, particularly S-Corporations.
- Florida charges no state taxes for an LLC or a corporation on its profits, and it also does not require any other fees that are used to keep these businesses up and to run, except in the case of appointed directors who will need to pay $25 a year.
- Unlike most corporations, an S-Corporation does not need to pay Social Security taxes or any minimum amount of money for its officers and directors.
- Florida law is very lenient when it comes to corporations that are not based in the state; they only require that you have an agent here who can receive all legal and tax documents sent to your business address. As a result, there is no need to have a physical location in Florida.
- You can form an LLC or S-Corporation in the state of Florida and still take part in any federal tax breaks as well, regardless if you are based in another state or not.
The Secretary of State will accept your articles for incorporation within ten days from your initial submission, after which you will have five days to submit the changes that were made.
Any stockholders or directors of an LLC who are not residents of Florida can be appointed as agents to receive any legal documents and powers of attorney on behalf of your company.
- Corporations based in another state and have chosen to be taxed as S-Corporations will need to pay a franchise tax fee based on how big your business actually is.
- If you are planning on applying for an EIN number using the automated service mentioned earlier, there can sometimes be delays in issuing this number due to the high volume of requests that come in.
- If you are looking to form an S-Corporation and are doing so from outside of Florida, you will need to have a physical presence here, which includes having an office or another place that is used for the company’s business operations. Otherwise, it will be impossible for you to apply for your EIN number.
The state of Florida does not have certain fees that may be involved when you are incorporating in other states like the one-time process state fee or annual report filing fees; this can sometimes lead to unexpected expenses if those costs weren’t considered beforehand.
How Much Does It Cost to Incorporate?
There are no costs involved in filing the paperwork to register your corporation here in Florida; it actually is a free service that you can take advantage of.
If you need an EIN number and decide to apply for this online via the IRS website or if you would prefer to use a third-party company, there will be fees associated with this depending on how quickly you would like to have your number.
On average, the cost of having your corporation incorporated here in Florida is only going to be around $100.
Open a Business Bank Account
Business bank accounts are a very important part of any business, and it’s ones that can be opened without any difficulty, especially if you already have an EIN number.
One good thing about Florida is that it does not require your business to open up a physical location here in order to register a corporation or even an LLC, so this will save you a lot of time and effort in the long run.
You can generally have your account established and set up within 24 hours after applying for it.
The small business owners who are just starting out will want to ensure that they have insurance coverage in place, even if it is only for its liability portion.
There are a lot of different options available for anyone who does not yet have an agent who can help you acquire some, but one thing that you need to remember before getting your coverage is that it may be based on you and your company’s size.
If you do not have any employees, there is no need to have a million-dollar policy. Still, if you want to be sure that your business will be protected in the event of an accident or mishap, then it can be worth considering. have a small business insurance policy.
Florida State Corporation Tax Requirements
When you initially begin to register a corporation in Florida, the state will require you to pay your estimated corporate income tax for that year.
1.The amount of money that needs to be paid at this time actually relies on the creation date and not the anniversary date of when the paperwork was filed.
2.The due date will be on or before the fifteenth day of the third month after your registry is established; this does not include any extensions that you may have.
3.The tax codes for the state of Florida can be found in Section 220.08 (1)(a), and it states that corporations will be required to pay their taxes if they create their entity within the registry on or after January 1st of any given year.
4.The rule for LLCs is Section 220.08 (3)(b), and it states that if the company was formed on or after July 1st each year, they would only be required to pay taxes based upon their estimated income from that point forward.
Florida Sales Tax
Selling items that you make or products that you create maybe a big part of your business, but there is no need to register with the state for sales tax exemption.
This will automatically take place when you register a corporation in Florida; it will not matter if it’s an LLC or not.
You are required to have a sales tax certificate if you are going to sell taxable items, and this is something that you can easily get by applying for it here.
Florida Employer Taxes
The payers of taxes will be the ones who are doing all of the hirings, so as long as they have employees who make over a thousand dollars, these entities will need to file with the state.
The employment tax forms that need to be filed each year include:
- W2’s -This form is used for reporting income for wage or salary earnings.
- 1099-MISC’s -This form is used for reporting income for non-wage or salary payments such as independent contractors, rent, royalties, and other things of this nature
- 1096’s -These are reports that need to be filed with the IRS if taxable forms have been sent out during the course of a certain year.
- 941’s -These are quarterly payments that go out on or before the fifteenth day of the third month after your first quarter.
Florida Corporation Licenses and Permits
Anyone who is going to be creating a company in Florida will need to make sure that they have the appropriate license for their business.
Licenses and permits you may need:
- Sales tax certificate -This is used for issuing a permit from the state to engage in any sales activities.
- Certificate of Authority -This will be needed if you have employees and are required to file federal payroll taxes.
- Business tax registration (if applicable) -You may need to register with it if your company is making a certain amount of money in sales or has employees.
Incorporate -If you want to set up a corporation, you will need to have a certificate from the
Starting a corporation in Florida can seem somewhat difficult when you do not know where to begin. Still, once you have made sure that your business is protected with the right insurance coverage, it will be much easier.
Those who are just getting started may want to look at what type of startup funding they are going to need as well; this will help you make sure that you will be able to get your company up and running properly.