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Form a Florida Corporation
CLICK HERE TO INCORPORATE
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, the purchase, sale
or management of its property, and enter into contracts and agreements on behalf of the corporation. By default,
all corporations are C corporations. The 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.
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 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. Incorporate Florida's personalized service makes this process easy and secure, ensuring
that your assets are protected.
Incorporate Florida, Inc. is qualified to properly form your corporation and prepare your corporate documents,
to protect you from 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, 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.
ADVANTAGES
Reduce your personal liability.
Shareholders have limited liability for the corporation's debts or judgments against the corporation. Generally,
shareholders can only be held accountable for their investment in stock of the company. (Note however, that officers
can be held personally liable for their actions, such as the failure to withhold and pay employment taxes.)
If you operate as a sole proprietorship or general partnership, you're personally responsible for any business claims,
debts or lawsuits against your business. As the owner of a corporation, your personal assets are protected from any
liability incurred by your business because incorporation enables you to maintain separate business and personal
identities. Incorporate FloridaŽ properly forms and assists you with maintaining your corporation to protect your
assets.
Save on taxes.
Corporations are taxed at a lower rate than individuals. In addition, a corporation may deduct the cost of benefits
it provides to officers and employees. This may include expenses like insurance, travel and entertainment, all of
which can be tax deductible as business expenses. Corporate profit may be split among owners and the corporation,
which may result in a lower overall tax rate.
In addition, your corporation may be eligible for Subchapter S status with the IRS, a tax election that enables
the shareholders to treat the earnings and profits as distributions and have them pass through directly to their
personal tax return. We can prepare and properly file your S corporation election with the IRS.
Improve your credibility and attract investors.
Your status as an official corporation implies a real legitimacy to your business that will impress potential
customers, vendors and lenders, making it easier to generate new business and form partnerships in the community.
Incorporating also makes it easier to raise capital due to the fact that corporations are allowed to attract
investors and raise additional funds through the sale of stock. There is no limit on the number of stockholders a
corporation may have, and you do not need to be a US Citizen to own or invest in a corporation.
We issue beautifully designed, personalized stock certificates for the life of your corporation.
Unlimited life and easy ownership transfer.
Corporations have perpetual life. This means that the life of your business extends beyond that of an owner,
principal or partner. In the event of long-term disability or death, the corporation still exists. Ownership
of the corporation can be easily transferred through simple sale of stock. This transferability of ownership
interest is a great benefit of the corporation.
DISADVANTAGES
While a corporation may be the most popular business entity, it is important that you are aware of some disadvantages
of this structure:
Subject to governmental regulations.
Corporations are monitored by federal, state and some local agencies, and must maintain certain formalities to comply
with the regulations. Due to the necessary paperwork, corporations require more time and money than some other forms
of business organization.
Double taxation.
Corporations may result in higher overall taxes. Dividends paid to shareholders are not deductible from business income,
and are taxable by the shareholders. Income is first taxed at the corporate level at corporate tax rates. Then when
the corporation issues dividends to its shareholders, the same money is taxed again at shareholder level. This can
be difficult for small business owners, but can be eliminated by making the Sub-Chapter S election.
"S" CORPORATIONS
The Sub-Chapter S election is made by the shareholders of the corporation, and requires an additional filing with the
IRS. Unlike the traditional C corporation, the S corporation pays no 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.
S Corporations are subject to certain restrictions and must adhere to associated guidelines. The maximum number of
stockholders for an S Corporation is 100, and all stockholders must be citizens or permanent residents of the
United States.
S Corporations may only issue one class of stock, which may effect the corporations ability to raise capital.
No more than 25 percent of the gross corporate income may be derived from passive income and an S Corporation
must adopt a calendar year, rather than a fiscal year.
For more detailed information regarding S Corporation status, contact your accountant or local IRS office, or
contact us.
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