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Q:
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What is a corporation?
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A:
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A corporation is a distinct legal entity formed for the express purpose of conducting business activities,
while protecting its shareholders from personal liability. A corporation is authorized by state statute and created
under individual state laws, and may engage in business activities such as the opening of bank accounts (once it
obtains an FEIN), the purchase, sale or management of its property, and enter into contracts and agreements
on behalf of the corporation.
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Q:
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Why should I incorporate?
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A:
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The main reason to form a legal business entity is to safeguard personal assets. By incorporating, you're free to
conduct your business without worrying that you might lose your home, car, or any of your personal savings or
investments because of a business liability. This is one of the best moves you can make to protect your personal
property when you own your own business. Our personalized service makes this process easy and secure, ensuring that
your assets are protected.
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Q:
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What are some advantages of incorporation?
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A:
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Advantages of incorporation include:
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Reduce your personal liability.
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Save on taxes.
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Improve your credibility and attract investors.
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Unlimited life and easy ownership transfer.
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Q:
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Am I protected from personal liability for the corporations obligations?
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A:
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In order to get the full benefits of liability protection, it is important that the corporation properly created and
maintained. A properly formed corporation exists separate from its shareholders, which is beneficial to the
shareholders in many ways, including offering limited personal liability for any claims against or debts incurred
by the corporation, asset protection, tax benefits, and unlimited life of the corporate entity. As such, the
risk to the owner or shareholder is limited to the initial investment in the corporation, and the other personal
property of the owner or shareholder is protected.
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Q:
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When can I be held liable for corporate debts?
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A:
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Incorporate Florida, Inc. is qualified to properly form your corporation and prepare your corporate documents, to
protect you
from personal liability. If properly formed and maintained, the personal assets of a shareholder cannot be reached
by corporate creditors, due to the veil of protection afforded by the limited liability of the corporation.
However, should you fail to comply with the required formalities and regulations, such as holding annual meetings,
recording minutes, paying annual fees and filing proper documents, fail to pay certain taxes, sign personal guarantees
or authorize improper transfer of assets, your corporate veil may be pierced. This happens when a lawsuit is filed
against the corporation, and a court determines that the corporation has not complied with proper procedures.
If your corporate veil is pierced, the shareholders become open to liability for the claims, debts, and obligations
of the corporation.
To stay out of trouble, make sure that you properly maintain your corporate status and structure by filing all
necessary forms and MEET ALL FILING DEADLINES. When documents are filed late, most states charge significant
late fees and penalties. In addition, clearly separate the assets of your business from your personal assets,
and, of course, be sure to follow all government regulations.
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Q:
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Who runs my corporation?
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A:
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The owners of a corporation are its shareholders. The shareholders elect a board of directors to oversee the major
policies and decisions. Officers are selected by the directors and run the day-to-day operations of the corporation.
All three positions can be filled by any person, and it's possible for one person to be the only shareholder, the only director, and the only officer. The corporation has a life of its own and does not dissolve when ownership changes.
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Q:
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What types of corporation can I choose from?
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A:
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Types of corporations include:
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C corporation
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S corporation
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Q:
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What are some restrictions of any corporation?
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A:
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The sale of stocks and shares are subject to securities laws. Consult with an attorney if you are planning to sell
your corporation, as there may be exceptions.
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Q:
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What is a C corporation?
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A:
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By default, all corporations are C corporations. A corporation is a distinct legal entity formed for the express
purpose of conducting business activities, while protecting its shareholders from personal liability. A corporation
is authorized by state statute and created under individual state laws, and may engage in business activities such
as the opening of bank accounts (once it obtains an FEIN), the purchase, sale or management of its property, and enter
into contracts and agreements on behalf of the corporation.
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Q:
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What are some advantages of a C corporation?
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A:
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Advantages of a C Corporation include:
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Reduce your personal liability.
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Save on taxes.
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Improve your credibility and attract investors.
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Unlimited life and easy ownership transfer.
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Q:
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What are some disadvantages of a C corporation?
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A:
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Disadvantages of a C corporation include:
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Subject to governmental regulations.
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Double taxation.
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Annual filing and documentation expenses.
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Q:
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What is an S corporation?
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A:
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The Sub-Chapter S distinction is an election made by the shareholders of the corporation to be taxed like a partnership,
and requires an additional filing (Form 2553) with the IRS. Unlike the traditional C corporation, the S corporation
pays no United States corporate tax. This designation is often ideal for small businesses and individuals since
it prevents double taxation (once to the corporation and again to the shareholders) while providing both limited
liability and an enduring structure. Generally, an S corporation is exempt from federal income tax other than tax
on certain capital gains and passive income. Owners of an S Corporation can also save on employment taxes by taking
distributions instead of salary, if there are no employees.
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Q:
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What are some advantages of an S corporation?
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A:
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Advantages of an S Corporation include:
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Reduce your personal liability.
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No double taxation.
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Improve your credibility and attract investors.
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Unlimited life and easy ownership transfer.
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Special status providing a tax advantage
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Q:
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What are some disadvantages of an S corporation?
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A:
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Employees who own more than 2% of an S corporation who receive fringe benefits, including group medical insurance and
parking, may be required to report these benefits as taxable income.
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Q:
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What are some restrictions of S corporations?
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A:
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Restrictions on S Corporations include:
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The maximum number of stockholders for an S Corporation is 100.
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All stockholders must be citizens or permanent residents of the United States.
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S Corporations may only issue one class of stock.
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No more than 25 percent of the gross corporate income may be derived from passive income.
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An S Corporation must adopt a calendar year, rather than a fiscal year.
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Limited ownership (individual, estates and certain trusts).
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Q:
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What are some main distinctions between a C corporation and an S corporation?
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A:
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C corporations are named after Subchapter C of the tax code, while S corporations are named after Subchapter S of the
tax code. A Subchapter S Corporation is similar to the C Corporation and operates in the same manner. The main advantage
associated with the S Corporation is that the income passes through the shareholders, thus avoiding the double
taxation of a C Corporation. However, the corporation must meet certain requirements to qualify for the "S"
status under the current IRS rules. It also may lose some of the tax deductions allowed to C Corporations.
C Corporations give shareholders greater protection from direct tax liability and may offer more tax planning
flexibility.
For more detailed information regarding S Corporation status, contact your accountant or local IRS office,
or contact us.
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Q:
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How do I file my annual reports?
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A:
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Incorporate Florida offers annual filing services to help you maintain the
status of your entity, and stay up-to-date with Florida State annual filing
requirements. We offer annual services, where we file your Annual Report
and send you customized Annual Minutes, so you don't have to worry.
Additional service fees apply.
Contact us for pricing and
more information.
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Q:
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What if I want to choose a different State for my business?
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A:
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Incorporate Florida can form your entity in any state you choose!
Contact us for pricing and
more information.
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Q:
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How does Incorporate Florida process my documents?
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A:
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All information that you provide is transmitted to the Florida Department of
State electronically, and upon State approval, your Certified Articles and
Certificate of Status are electronically returned to Incorporate Florida.
Once all active documents are received, we customize your individual
documents, including initial minutes, by-laws, and personalized stock
certificates, and prepare your Corporate Kit. All documents and Kits are
sent via U. S. Priority Mail. The State of Florida requires a typical
processing time of 2 to 4 weeks. Your complete incorporation package should
be IN YOUR HANDS within weeks!
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Q:
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How do I receive my documents?
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A:
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All documents and Corporate Kits are sent via U. S. Priority mail within 2
to 4 weeks, unless you choose rush filing in which case you will receive
certified electronic documents within 5 to 7 business days, then hard copies
and Corporate Kit, if applicable, by U. S. Priority mail. Fed-Ex service is
available for an additional charge.
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