Incorporating in Florida – Incorporate an S Corporation
An S corporation is a business ownership structure where a company is able to avoid dual taxation by not paying income tax on its profit. The tax burden on profits or loss derived by such a corporation is passed on to its shareholders. Shareholders are required to file individual tax returns that shall be computed on the basis of their ownership in the company.
One of the advantage of incorporating in Florida as an S corporation offers is minimal taxation that is similar to taxation of sole proprietors and partnerships. An S corporation gains legal and tax advantages usually limited to partnerships while following a corporate structure. This provision is usually done to promote small businesses and reduce the tax burden on them. To elect an S corporation structure, you will have to apply and file Form 2553 with the IRS. The form needs to be duly contested and signed by all of the shareholders. However, to be granted an S Corporation status, you will be required to meet certain criteria, such as:
- The number of shareholders in the business should not extend to more than 100.
- Each and every shareholder must be a citizen of United States.
- There should be anonymous agreement among shareholders regarding the election of S corporation as a business structure.
However, one of the disadvantages incorporating in Florida as an S corporation is that the number of shareholders is limited to 35 and this type of corporation restricts international business and is suitable for business in the local market only.
Incorporating an S corporation in Orlando Florida
Incorporating in Florida an S Corporation in Orlando, you will be required to adhere to the following procedure.
Phase 1: The first step involves attaining an article of incorporation form which can be obtained from the secretary of state.
Phase 2: Next phase usually involves verification of your company’s name and its availability.
Phase 3: Once you have decided the name of your company, you will be required to include the type of business and the area of business in which you will be operating.
Phase 4: Appoint a resident agent who will be responsible for your communications with the court and should have to accept any summon, petition or lawsuit on the corporation’s behalf.
Phase 5: Next step includes filing of articles of incorporation with the state secretary. You can file the articles of incorporation in person or online.
Phase 6: Once you have filed the articles of incorporation, you will be required to file Form 2553 with the IRS which grants you the status of S corporation.
Phase 7: Once the form has been filled, submit the form along with the signatures of shareholders. Submission of the form signifies completion of conversion to S corporation.
S corporation offers various advantages and can offer you greater competitive advantage while competing in a domestic market. Share your thoughts about the advantages of S corporation in the comments section below.
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