Common Corporation Questions
How long does it take to get a corporate entity set up in Florida?
Depending how quickly the state processes the filings, it will take between two and five business days to set up your corporate entity.
How do I begin the process of incorporating my business?
Articles of incorporation must be filed with the State of Florida along with the required fees (Florida Incorporation Service handles this step for you).
After the articles of incorporation are filed and accepted, your corporation must hold an organizational meeting at which acts taken and resolutions adopted by the incorporation director are approved and recorded, bylaws are adopted, shares of stock are distributed and officers are elected.
How do I go about naming the corporation?
The name of your corporation must comply with requirements of the Florida Department of State. Florida Incorporation Service will perform a preliminary name check for you at no additional charge. As a minimum, keep the following points in mind as you select your corporate name:
- The name cannot be the same as another corporation on file with the State of Florida.
- The name should not be confusingly similar to that of an existing corporation or LLC, i.e., the name should be distinguishable.
- The name must end with a corporate designator (Inc., Incorporated, Corp., Corporation, Co., or Company) unless this is a professional corporation (described below).
- Adding "The", "and". "&", or any punctuation or pluralization, will not make it unique according to the state. Adding
"of Florida"or a name of a city is also rejected by the State.
- Commonly used words such as Services, Group, Management, Enterprise, Associates, International, Property, Properties, Holdings, Marketing, Investments and the like put you at risk for reject.
- May not contain language implying that the Florida corporation is connected with a government agency or that the corporation is chartered under United States law.
- Professional Corporations: Under Florida law, a professional corporation is formed in order to render services within a single, state-licensed profession such as doctors, accountants, or lawyers. Professional corporations generally may not conduct any other business, must comply with particular conventions in its choice of corporate name (Example, Johnson & Apple, P.A.), and must comply with regulatory requirements of their respective regulating agency.
- You can look up your company name to see if it is available at the Florida Department of State website.
What Else Do I Need and Why?
What is a business license or occupational license and where do I get one?
- A business or occupational license is a local business tax receipt issued yearly by the county government. Most but not all counties in Florida require that you register your new business with them. Check with your local tax collector's office to see what the requirements are http://dor.myflorida.com/dor/property/taxcollectors.html or contact us and we will be happy to assist you.
- The costs depend on the county, the type of business and your company's impact on the county itself.
- You can also contact your local county once you have all your corporation documents to find out where you will need to go to get this license.
What is a fictitious name or DBA (Doing Business As) and why would I need one?
- A fictitious name, DBA (Doing Business As), or trade name, is a name you can register with the Florida Department of State so that you may transact business as another name besides your company name.
- You do not need to file for a fictitious name if you will be conducting business with your company name. You will only need to file for a fictitious name if you will be conducting business as a DIFFERENT name then your corporate name.
- For example, you can have a company name ABC, Inc then register a fictitious name Ray's Pizza and then do business as Ray's Pizza in advertising, letterhead, internet names and the like. So the company name remains the same and you will be able to transact business with this fictitious name.
- There are no holds on a fictitious name as it is a "nickname" or trade name of the company. So other companies can have the same fictitious name as other companies.
- Please review the DBA Common Questions for more information.
What is a Registered Agent and is one needed?
Florida requires that an individual, or service company, be responsible for receiving important legal and tax documents.
This service is provided by an "agent" of the corporation who is "registered" within Florida, thus the term "Registered Agent."
The registered agent for the corporation must have a valid street address within Florida and be available during normal business hours to receive documents. The services performed by a registered agent may include:
- Receiving and forwarding legal documents;
- Receiving and forwarding franchise tax and annual report forms; and,
- Accepting and forwarding service of process.
A Registered Agent must be an adult, residing within Florida and provide a physical address, (no P.O. boxes).
Florida Incorporation Service offers the Registered Agent Service as an additional item, Ã la carte, if you would like someone other than yourself to be your Registered Agent.
What is an EIN and why do I need one?
An Employer Identification Number (EIN), also known as a federal tax identification number or FEIN or FEI, is a nine-digit number that the IRS assigns to business entities.
- This number is used to identify a business entity and to identify taxpayers that are required to file various business tax returns.
- A business will need to apply for a new EIN if the business is sold or is otherwise transferred.
- You will need an EIN if you have employees in your new business.
- Banks will require an EIN to open an account for all corporations.
What are stock certificates and why would I need them for my corporation?
A stock certificate is a printed document used to indicate ownership of shares of the corporation.
Florida Incorporation Service offers stock certificates for purchase, a la carte. With your purchase, you will receive 10 custom-printed stock certificates with gold seals, which may be issued at the discretion of the corporation.
Please note: If you are applying for Workman's Compensation Exemption, you will need to supply a stock certificate to them with your application of exemption.
What is a certificate of status and why would I need one?
A Certificate of Status is issued by the Florida Department of State to show that your company is active and has paid the initial filing fees or annual report after the first year.
Some banks and governmental agencies require this certificate as verification that the company is an active Florida company.
If you choose this certificate as part of your package, it is issued electronically by the Florida Department of State and will be emailed to you with your articles.
How do I get a resale certificate or a Florida Tax ID number from the Florida Department of Revenue?
- Please visit the Florida Department of Revenue website or call them at 1-800-352-3671.
- Florida Department of Revenue: http://dor.myflorida.com/dor/taxes/annual_resale_certificate_sut.html
Types of Corporations
What is a Corporation?
A corporation is a separate legal entity that exists independently from its owners. A corporation comes into existence when articles of incorporation are properly created and maintained, filed with the prescribed fees, and accepted by the Florida Secretary of State.
Any entity that transacts business in Florida as a corporation is required by Florida Statutes to file documents of incorporation with the State of Florida and pay the filing fee.
Benefits of Corporations:
- Limited Liability - One primary benefit of incorporating your business is limited liability. If you maintain a corporation's legal status properly, and avoid personally guaranteeing the corporation's obligations, the corporation, and not you personally, would be solely responsible for its obligations.
- The single most important reason people cite for forming a corporation when they do business is to safeguard the personal assets of the owners — that is, the shareholders or stockholders of the corporation — against potential claims from creditors. Sole proprietors and general partners in a partnership are personally liable for all debts and obligations of their business, including loans, accounts payable, and liability from defective products. Stockholders typically are not liable for the ordinary debts and obligations of the corporation.
- Lower risk of personal liability by shareholders for the corporation's debts or judgments against the corporation
- Can raise additional capital through the sale of stock
- May deduct the cost of benefits it provides to officers and employees
- Flexibility in terms of ownership
- Can elect S corporation status if it meets certain requirements. This allows it to be taxed at rates similar to a partnership (avoids double taxation).
A corporation is more complex than a sole proprietorship or a partnership but also has certain advantages over other business structures. A corporation is regarded as a separate legal entity and, as such, will normally shield its owners from personal responsibility for the losses of the business. A corporation has a life of its own and does not dissolve when ownership changes. In addition, although a corporation may have multiple owners, this is not required and one person may individually establish and own a corporation.
One of the biggest advantages of incorporating a business is the broad protection that is afforded the principals of the corporation from being held personally responsible for the debts and liabilities of the corporation. As indicated above, a corporation is a separate legal entity. This separation of ownership is what limits the owners' (shareholders') personal liability. As a result, creditors can access the corporation's assets but cannot ordinarily reach the personal assets of the corporation's owners.
Note, however, that corporate officers can still be held personally liable for their actions, such as the failure to withhold and pay employment taxes. In addition, if a personal guarantee is made, such as is commonly required in a start-up situation to obtain a bank loan, this can result in personal liability for the individuals providing the personal guarantee.
Maintaining your limited liability
Finally, it's possible for those to whom a corporation is liable to try and
pierce the corporate veil, which essentially means to take action in order to set aside the corporation for the purpose of litigation such that the personal assets of the corporation's owners can be reached. One justification a court might use to pierce through the corporate veil of liability protection, as an example, is if it can be shown that the corporation is a sham set up by its owners to facilitate fraud against third parties.
A key to maintaining the corporate veil (and thereby preserving the limitation of personal liability) is to accurately manage the record-keeping for your corporation. Corporations are required to hold scheduled shareholder meetings and to keep minutes of these meetings. Customized corporation kits from Florida Incorporation Service serve as an excellent template for your corporate record-keeping.
For more complete information regarding protection against personal liability, Florida Incorporation Service recommends that you consult with your attorney.
What is an S corporation?
Most new corporations filed in the State of Florida elect S corporation status.
An S corporation is a corporation that has elected a special tax status.
This tax treatment permits the income of the corporation to be "passed through" to the shareholders. Thus, shareholders report the income or loss which is generated by an S corporation on their individual tax returns.
In order to be considered an S corporation, the stockholders of a properly filed corporation must elect such status within 75 days of formation for the current tax year, or at any time during the preceding tax year.
This election is made by filing Form 2553 with the Internal Revenue Service (IRS). Florida Incorporation Service can take care of this filing for you during your registration for $39.
To qualify for S corporation status, the corporation must be a domestic corporation; have only one class of stock; and, have not more than 100 stockholders, who must be individuals, estates or certain trusts.
If you have any questions regarding election of S corporation status, please consult your tax advisor prior to making this election.
Here is the web link to the IRS website for more information on different tax situations. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Business-Structures
What is a professional corporation (P.A.)?
Florida Incorporation Service can also complete the documents necessary to create your professional corporation.
A professional corporation/professional association is an individual or group of individuals, who are licensed in their profession as required by law, and have incorporated for the purpose of rendering the same professional service (doctors, dentists, architects, etc.).
Professional corporations generally may not conduct any other business, must comply with particular conventions in their choice of corporate name (Example, Johnson & Apple, P.A.), and must comply with regulatory requirements of their respective regulating agency.
A professional corporation may be taxed as either a traditional C corporation or as an S corporation.
All members must be licensed to provide a given professional service. See the specific regulating agency for additional state licensing requirements that may apply to your profession.
Professional Corporations (Tax Implications)
It is important to note that a professional corporation can receive many tax benefits over operating as a sole proprietorship or partnership, while at the same time avoiding filing as a C corporation with the IRS. While sole proprietorships and partnerships are currently able to deduct only a portion of health insurance costs from their taxes, a professional corporation is able to fully deduct the cost of accident and health insurance plans for its employees and their families. Additional medical expenses, as well as life and disability insurance, may also be deducted. If you are forming a professional corporation/professional association, we strongly recommend that you select to include filing for your S corporation election with the IRS. This is due to the above and additional tax ramifications of operating a professional corporation if you have not filed for your S corporation election.
For more complete information, please review Chapter 621, Florida Statutes (including but not limited to subchapter 621.12).
What is a nonprofit corporation?
If your business is involved in serving a public or community benefit, then you may be interested in incorporating as a nonprofit.
Unlike other types of business entities, nonprofit corporations do not attempt to generate a profit for private interests. The steps to incorporate your business as a nonprofit corporation are much like other corporation types.
As a nonprofit corporation, your business can take advantage of special benefits including 1) eligibility for tax-exempt status with the IRS, 2) liability protection, and 3) access to additional funding from federal, state, and local government grants.
For your nonprofit corporation to become a federal tax-exempt 501(c)(3) nonprofit organization, which pays no income or sales tax and allows for tax write-offs from charitable donors, you must also apply for exemption from federal taxes. You can find IRS instructions on this process at this link: http://www.irs.gov/Charities-&-Non-Profits/Applying-for-Tax-Exempt-Status
A nonprofit organization must be formed to perform or advance at least one of the following purposes to be eligible for tax-exempt status:
- Religious practice
- Testing for Public Safety
- Fostering National or International Amateur Sports Competitions
- Preventing Cruelty to Children or Animals
Things To Know About Corporations
What are bylaws?
Florida incorporation bylaws are generally written to manage the corporation's business and to conduct the corporation's affairs. The corporation's bylaws should not be in conflict with the articles of incorporation. A corporation maintains its own bylaws and is not required to file them with the State of Florida.
We offer the bylaws and minutes à la carte during registration.
What is the structure of a corporation?
- A corporation is owned by stockholders.
- A stockholder may serve on the Board of Directors and also be an officer of the corporation.
- In Florida, one person may form a corporation, and that person can be the sole officer, director and stockholder.
In larger corporations, while stockholders may not directly manage the affairs of the corporation, they are able to influence corporate decisions through indirect actions such as electing and removing directors, approving or disapproving amendments to the articles of incorporation and voting on important corporate decisions. The members of the Board of Directors are responsible for managing the affairs of the corporation. Usually, directors make only major business decisions; however, they supervise and appoint officers who make the day-to-day business decisions of the corporation. Officers are responsible for the everyday management of the corporation. Typically, officers are appointed directly by the Board of Directors.
Is the issuing of shares required?
By definition, a corporation is owned by its shareholders. Though not required, it is a good practice to issue stock as evidence of ownership.
Where no shares are issued, no individual owns the corporation.
Ownership must appear in the company's minutes and on its stock transfer records as may be applicable.
Do I need an attorney or CPA to form a corporation?
No. An attorney or CPA is not legally required to form a corporation.
How many Directors are necessary?
In Florida, a corporation is only required to have at least one director, however you are permitted to have more.
That same person may also be the only shareholder and officer.
Can one person be an officer and director?
Yes, one person may be President, Secretary, or Treasurer (or any combination of officers) of the corporation as well as the sole Director of a Florida corporation.
The corporation's bylaws may prescribe additional qualifications for directors so long as they are not in conflict with the articles of incorporation.
The bylaws may either list the officers or state that they will be appointed by the board of directors. The bylaws or the board may also delegate the responsibility of preparing minutes and maintaining corporation records to one of the officers. As stated previously, one person may hold one or more officer positions for the corporation at the same time.
What are the business activities I can choose for my corporation?
These are broad categories that the IRS provides to help you select what type of company you are creating. If your company does not fall into any of these categories choose "other" then tell us specifically what you will be doing in the blank next to "other."
Accommodation & food services – providing customers with lodging, meal preparation, snacks, or beverages for immediate consumption.
Construction – erecting buildings or other structures, (e.g., streets, highways, bridges, tunnels). The term "construction" also includes special trade contractors (e.g., plumbing, HVAC, electrical, carpentry, concrete, excavation, etc.)
Finance & insurance – in transactions involving the creation, liquidation, or change of ownership of financial assets and/or facilitating such financial transactions; underwriting annuities/insurance policies; facilitating such underwriting by selling insurance policies; or by providing other insurance or employee-benefit related services.
Health care and social assistance – providing physical, medical, or psychiatric care using licensed health care professionals or providing social assistance activities such as youth centers, adoption agencies, individual/family services, temporary shelters, etc.
Manufacturing – the mechanical, physical, or chemical transformation of materials, substances, or components into new products. The assembling of component parts of manufactured products is also considered to be manufacturing.
Real estate – renting or leasing real estate to others; managing, selling, buying or renting real estate for others; or providing related real estate services (e.g., appraisal services).
Rental and leasing – providing tangible goods such as autos, computers, consumer goods, or industrial machinery and equipment to customers in return for a periodic rental or lease payment.
Retail – selling merchandise to the general public from a fixed store; by direct, mail-order, or electronic sales; or by using vending machines.
Transportation & warehousing – transportation of passengers or cargo; warehousing or storage of goods; scenic or sight-seeing transportation; or support activities related to these modes of transportation.
Wholesale-agent/broker – arranging for the purchase or sale of goods owned by others or purchasing goods on a commission basis for goods traded in the wholesale market, usually between businesses.
Wholesale-other – selling goods in the wholesale market generally to other businesses for resale on their own account.
Other – activity not described above. Describe the applicant's principal business activity in the space provided.
What are the different types of employees?
Applies to most employees. Most new companies will designate their employees in the
Employee who performs household services, such as a maid, babysitter, gardener, or cook, in your home are not subject to social security and Medicare taxes if you pay that employee cash wages of less than $1,400.
In general, you are an employer of farm workers if your employees:
- Raise or harvest agricultural or horticultural products on your farm,
- Work in connection with the operation, management, conservation, improvement, or maintenance of your farm and its tools and equipment,
- Handle, process, or package any agricultural or horticultural commodity if you produced over half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity),
- Or do work for you related to cotton ginning, turpentine, or gum resin products.
What is the difference between a principal address and a mailing address for a corporation?
The principal address is the physical location in Florida where the company conducts business. Florida Department of State Division of Corporations mandates that this be a physical Florida address. A P.O. Box number cannot be used for this address.
The Mailing address for a corporation can be a P.O. Box and does not have to be in Florida. What the Florida Department of State does require of this address is that this be a current and good address where you can be reached at any time.
Can I change the principal and mailing address of my corporation after I have filed?
Yes, you can update both of these addresses by emailing the Florida Department of State Division of Corporations at firstname.lastname@example.org.
The principal address will still have to be a physical Florida address.
You can also update the officer and director after your initial filing.