If you’re a Florida entrepreneur looking to level up your business structure and potentially save on taxes, then forming an S corporation can be the perfect choice. This guide is your one-stop shop for exploring the process, from brainstorming a unique business name and filing incorporation documents with the state, to acquiring an EIN and officially electing S corp status with the IRS.
Whether you’re a seasoned professional or a first-time business owner, get ready to learn each step in manageable pieces in order to have a smooth and successful S corp formation in Florida.
How to Start an S Corp in Florida
1. Know What S Corporation Is
2. Understand the Benefits of S Corporation
3. Choose a Unique and Memorable Business Name for Your S Corporation.
4. File Your Articles of Incorporation with the Florida Department of State.
5. Apply for a Business License Specific to Your Industry and Location.
6. Obtain an Employer Identification Number (EIN) from the IRS.
7. Elect S Corporation Status with the IRS by Filing Form 2553.
1. Know What S Corporation Is
To start an S Corp in Florida, know what it is. An S Corporation (S Corp) is a specific type of corporation in the United States that allows you to pass through income, losses, deductions, and credits to shareholders for federal tax purposes.
This means that the IRS doesn’t tax the business itself; instead, you report the income on the individual tax returns of the shareholders, avoiding double taxation.
To qualify for S Corp status, the corporation must meet specific IRS requirements, including having no more than 100 shareholders, all of whom must be U.S. citizens or residents, and issuing only one class of stock.
>>>MORE: How to Start an S Corp in Nebraska
2. Understand the Benefits of S Corporation
To launch an S Corp in Florida, understand its benefits. The benefits of an S Corporation (S Corp) primarily revolve around its favorable tax treatment. By passing income directly to shareholders and avoiding corporate income tax, you can prevent the double taxation that occurs with traditional corporations.
Additionally, S Corp shareholders can potentially reduce self-employment taxes, as only salaries (and not distributions) are subject to these taxes. This structure also allows for easier transfer of ownership and can provide limited liability protection. So it shields your personal assets from business liabilities. If your business is eligible, you enjoy significant tax savings and operational flexibility with an S Corp.
3. Choose a Unique and Memorable Business Name for Your S Corporation
To begin an S Corp in Florida, choose a unique and memorable business name. Your business name must be distinct from any existing entities registered with the Florida Department of State, so it’s essential to conduct a thorough name search to avoid conflicts.
Consider a name that reflects your business values and services while being easy to remember and spell. Ensure the name adheres to Florida’s naming requirements, which include the inclusion of a corporate designator like “Inc.,” “Corp.,” or “Incorporated.” A unique and memorable name helps you stand out in the market and also sets the foundation for building a strong brand presence.
>>>PRO TIPS: How to Start an S Corporation in Iowa
4. File Your Articles of Incorporation with the Florida Department of State
To commence an S Corp in Florida, file your Articles of Incorporation. This document formally establishes your corporation and includes essential details such as your corporate name, principal office address, the names and addresses of the incorporators, the number of authorized shares, and the name and address of your registered agent.
You can do the filing online or by mail, and you need to pay the filing fee of $35 plus another $35 registered agent designation fee, making $70.
Once your Articles of Incorporation receives an approval, the state officially recognizes your corporation and you can proceed with other steps such as obtaining an Employer Identification Number (EIN) from the IRS and electing S Corporation status by filing Form 2553 with the IRS.
5. Apply for a Business License Specific to Your Industry and Location
To kickstart an S Corp in Florida, apply for a business license specific to your industry and location. Begin by researching the specific requirements for your industry, as different businesses need various permits or licenses.
For instance, if you’re opening a restaurant, you need health permits and food handling certifications.
Visit the Florida Department of Business and Professional Regulation (DBPR) website to determine which licenses are necessary for your business. Additionally, check with your local city or county government to identify any additional permits or zoning requirements specific to your location.
Completing this step thoroughly ensures your S Corp operates legally and avoids potential fines or shutdowns.
6. Obtain an Employer Identification Number (EIN) from the IRS
To start operating an S Corp in Florida, obtain an Employer Identification Number (EIN) from the IRS. The EIN, also known as a Federal Tax Identification Number, is necessary for tax administration and is mandatory for opening a business bank account, hiring employees, and filing taxes.
To obtain an EIN, you can apply online through the IRS website, which is the fastest method. Alternatively, you can submit Form SS-4 via fax or mail. During the application, you need to provide specific information about your business, such as its legal name, address, and the Social Security Number (SSN) of the principal officer.
Once the application is complete and successful, you receive your EIN immediately if you apply online, or within four weeks if you apply by mail.
>>>GET SMARTER: How to Start a C Corp in Hawaii
7. Elect S Corporation Status with the IRS by Filing Form 2553
To begin an S Corp in Florida, elect S Corporation status with the IRS by filing Form 2553. Your business’s shareholders must complete and sign this form, titled “Election by a Small Business Corporation.” Ensure you file it no later than two months and 15 days after the beginning of the tax year in which you want the S Corp status to take effect.
On the form, you need to provide essential information about your corporation, including its name, address, and Employer Identification Number (EIN), as well as the names and signatures of all shareholders.
Additionally, make sure your business meets the IRS eligibility requirements, such as having 100 or fewer shareholders, all of whom must be U.S. citizens or residents, and having only one class of stock.
Recap
To start an S Corporation in Florida, begin by understanding what an S Corporation entails, including its benefits such as pass-through taxation and limited liability. Choose a distinctive business name that complies with Florida regulations, ensuring it’s memorable and aligns with your brand identity. File your Articles of Incorporation with the Florida Department of State, detailing essential information about your corporation. Obtain a business license tailored to your industry and location, ensuring compliance with local regulations.
Acquire an Employer Identification Number (EIN) from the IRS, crucial for tax purposes and hiring employees. Finally, elect S Corporation status with the IRS by submitting Form 2553, allowing your corporation to benefit from favorable tax treatment.
No Comment! Be the first one.