Miami C Corporation Lawyers
The U.S Small Business Administration “SBA” states that “a corporation (sometimes referred to as a C corporation) is an independent legal entity owned by shareholders. This means that the corporation itself, not the shareholders that own it, is held legally liable for the actions and debts that the business incurs.”
The SBA further states “corporations are more complex than other business structures because they tend to have costly administrative fees and complex tax and legal requirements. Because of these issues, corporations are generally suggested for established, larger companies with multiple employees.”
Businesses that are able to pay higher administrative fees and that can follow complex tax and legal requirements have the benefit of being able to sell ownership shares in the business through stock offerings. “Going public” through an initial public offering (IPO) is a major selling point in attracting investment capital and high quality employees to a business.
Forming a Florida Corporation
A Florida corporation must be registered under the laws of the State of Florida. To form a corporation in Florida you will need to establish your business name and register your legal name with your state government. Prior to registering your name, you should ensure that the name you choose is not being used by another or that it will infringe another’s trademark or trade name, or you shall run the risk of being sued by another. If you choose to operate under a name different than the officially registered name, you’ll most likely have to file a fictitious name. In Florida your corporation must include a corporate designation (Corporation, Incorporated, Limited) at the end of its business name.
To register your business as a corporation in Florida, you will need to file certain documents, typically articles of incorporation, with the Florida Department of State Division of Corporations. In Florida you will not be required to establish directors and issue stock certificates in the initial registration process.
To conduct business in Florida, after your business is registered, you will need to obtain the Federal, State and Local business licenses and permits that pertain to your business. Regulations may vary by industry, state and locality.
Corporation Taxes
In Florida, corporations are required to pay and/or file federal, state, and in some cases, local taxes. In Florida, your business must register with the IRS and state and local revenue agencies, and receive a tax ID number or permit when it registers as a corporation.
A Florida corporation is a separate tax-paying entity. Regular corporations are called “C corporations” because Subchapter C of Chapter 1 of the Internal Revenue Code. Chapter 1 of the Code is where you will find general tax rules affecting corporations and their shareholders.
Florida corporations pay income tax on their profits. In some cases, Florida corporations are taxed twice – first, when the company makes a profit, and again when dividends are paid to shareholders on their personal tax returns.
Shareholders of the Florida corporations whom are also employees of the corporations pay income tax on their wages. The corporation and the employee each shall pay one half of the Social Security and Medicare taxes. The employment taxes paid by the corporation are normally a tax deductible business expense.
Advantages of a Florida Corporation
The SBA states that the following are the advantages of forming a C-Corporation:
- Limited Liability of the Shareholders/Owners. When it comes to taking responsibility for business debts and actions of a corporation, shareholders’ personal assets are protected. Shareholders can generally only be held accountable for their investment in stock of the company.
- Ability to Generate Capital of the Corporation. Corporations have an advantage when it comes to raising capital for their business – the ability to raise funds through the sale of stock.
- Corporate Tax Treatment. Corporations file taxes separately from their owners. Owners of a corporation only pay taxes on corporate profits paid to them in the form of salaries, bonuses, and dividends, while any additional profits are awarded a corporate tax rate, which is usually lower than a personal income tax rate.
- Attractive to Potential Employees. Corporations are generally able to attract and hire high-quality and motivated employees because they offer competitive benefits and the potential for partial ownership through stock options.
Disadvantages of a Florida Corporation
The SBA states that the following are the disadvantages of forming a C-Corporation:
- Time and Money. Corporations are costly and time-consuming business ventures to start and operate. Incorporating requires start-up, operating and tax costs that most other forms of business structures do not require.
- Double Taxing. In some cases, corporations are taxed twice – first, when the company makes a profit, and again when dividends are paid to shareholders.
- Additional Paperwork. Because corporations are highly regulated by federal, state, and in some cases local agencies, there are increased paperwork and recordkeeping burdens associated with this entity.