When you incorporate in Florida you will have to select the type of corporation you are creating. The S corp has become very common for a vareity of reasons. Below are highlights.
If you're ready to incorporate in Florida here are links to a State Approved provider.
A S Corporation is a C Corporation that files IRS form 2553 to elect a special tax status with the IRS. A S corporation is also called a standard business corporation. This tax status allows the corporation not to be a separately taxable entity. Instead, the income of the corporation is treated like the income of a partnership or sole proprietorship. Instead of the corporation being taxes, the income is passed to the shareholders who are taxed on individual tax returns.
The articles of incorporation that are filed with the state are same whether a corporation is a C or S Corporation. Both a S and C corporation protect the owners from personal responsibility for debts and liabilities of the business. Both a S and C corporation are required to hold an annual meetings with their shareholders and directors. Corporate meeting minutes must be kept with the corporate records.
In order to qualify for S corporation status, the corporation must have no more than 75 shareholders. The shareholders must agree in writing to the election to be an S corporation. The S corporation can have only one class of stock (disregarding voting rights). You should refer to the IRS instructions for filing Form 2553 for all restrictions including submission dates of Form 2553.
For existing corporations, the Form 2553 to elect S corporation status must be made by March 15 in order for the election to take effect that year. Newly formed corporations must file form 2553 within 75 days of the formation date in order to possibly obtain S Corporation status for the current year.
The S corporation is a pass-through tax entity which means income or loss by the business only impacts a personal income taxes. Whereas, a C corporation is a separately taxable entity which means profits and losses are taxed directly to the corporation along with taxation on personal income tax and dividends that are paid out of corporate profits to the owners.
Yes, the C corporation can have an unlimited number of shareholders while a subchapter S corporation can not have more than 75 shareholders. Also, non-US residents can be owners of a C corporation while a S corporation must have US residents as shareholders.
S Corporations cannot be owned by C Corporations, other S Corporations, most trusts, LLCs, or partnerships. C corporations are not subject to these restrictions.
The information listed here assumes you are setting up a relatively small business. If you are setting up a large enterprise or feel you need professional advice then an attorney that specializes in incorporating in Florida is recommended.