Corporations in Florida have many advantages over other entity forms. Because they acquire a life of their own, with rights and responsibilities, their owners generally are not liable for debts or lawsuits filed against them. Corporations can enter contracts, amass profits, and contribute substantially to America’s free-market system by creating wealth and jobs.
If you choose to charter a corporation, it will automatically be designated a C entity, as a knowledgeable attorney can explain. However, you can elect a Subchapter S designation, a particular tax classification with the IRS. Although S corporations and their shareholders do not pay Florida income taxes, the designation impacts federal taxes and how many owners your business can have. Contact a Florida C corporations lawyer at Sparks Law to learn how this entity might best serve your goals.
To trade on a U.S. stock exchange, a company must be a C corporation. Traders purchase shares of a company’s stock, making them owners. Many large companies are owned by hundreds of thousands of investors worldwide, which is not possible with an S corporation. This designation is only permitted to have 100 shareholders who are U.S. residents, although some exceptions for family members apply.
Even if a C corporation is not publicly trading, it can raise money through a private placement of its shares to accredited investors under Securities and Exchange Commission rules. Other advantages C corporations offer include:
How the corporation is taxed and how profits are allocated also differ between C and S corporations. An experienced Florida attorney can advise on whether a C corporation designation may fit with a company’s goals.
In Florida, entrepreneurs research the business name they have chosen to ensure no other entity is using it and file articles of incorporation with Florida’s Division of Corporations, Department of State, along with an initial filing fee. The articles include the business name, address, and purpose. At least one director is named, as well as a registered agent, who accepts official correspondence in the business’s name.
The incorporator can choose an S designation at the time of filing but must file a Form 2553 with the IRS, signed by all shareholders, within 75 days of beginning operations or acquiring the first shareholders or asset.
S corporations like limited liability companies avoid double taxation by passing profits and losses to shareholders, who declare them on personal income tax returns.
C corporations pay their own taxes, and although they can distribute profits to shareholders as taxable dividends, they treat profit and loss on the corporate level. A skilled lawyer at our firm can weigh C corporation benefits and drawbacks to advise entrepreneurs about the best vehicle for their venture.
If a C corporation does not have more than 100 shareholders, it can later elect to become a Subchapter S by filing the requisite Form 2553 with the IRS. An S corporation can convert to a C corporation by filing IRS forms and designating December 31 as the fiscal year-end. However, the new C corporation cannot convert back to an S corporation for at least five years. Consult a Florida corporations attorney to discuss if C or S status is best for a particular business.
Before you register your business with the Florida Division of Corporations, you will want to know whether a C corporation suits your needs. This depends on what your vision is for your venture. If you dream of taking the company public, a C corporation may be the best vehicle for you.
The attorneys at Sparks Law can discuss your business plans and explain why a C corporation may be ideal. Call a Florida C corporations lawyer today to learn how this critical decision impacts your company’s future.