As a business, electing S corporation (S corp) status offers various advantages in a number of ways. The Really Useful Information Company (TRUiC) provides extensive guides on all things business, including niche topics such as filing for S corp Florida status.
What is an S Corp
An S corp is a tax classification of the Internal Revenue Service (IRS) which in turn reduces the tax burden of a business. An S corp is considered a business status, and is not to be confused as a business structure.
An added benefit for owners of an S corp is the savings on self-employment taxes due to the consideration of owners as employees of the business.
Prior considerations to keep in mind
Before starting an S corp in Florida, the following factors need to be taken into consideration to determine whether this is the best option for your business.
Firstly, consider the reason a limited liability company (LLC) is considered the best structure for S corp status in terms of tax. Furthermore, whether the respective tax benefits of an S corp are best for you and your business. Other factors to consider are the respective restrictions of an S corp and whether an S corp is the optimal strategy for your business overall.
Requirements to meet
All members of the business are to have an identical distribution amount issued as an equal portion of stock. No businesses may be shareholders, only private individuals who must be U.S. citizens or nationals. And overall, an S corp is limited to 100 shareholders and no more than that.
Steps to start an S Corp in Florida
The first step in the process would be to form a corporation or LLC, afterwhich S Corp status will be elected from the IRS. This is done through receiving your employee identification number (EIN) as well as the filing of IRS Form 2553.
Obtaining Florida S corp status through forming an LLC:
Register and name the LLC adhering to Florida naming requirements. Include “limited liability company or the abbreviated “LLC” or “L.L.C”. The name is to be easily differentiated from other businesses already in existence in the state .
The name cannot include language indicating unlawful intent or purposes other than that stated in Articles of Organization. Language may also not indicate association to any state or federal government organizations and agencies.
Additional licensing and paperwork will be required for selected restricted words. Before deciding on a name, conduct ample research into the name and URL to check domain availability and secure your desired LLC name.
Elect a Florida Registered agent. On behalf of the LLC your Florida Registered Agent will accept tax notices, official documents and other legal or administrative filings. They must be listed upon filing the Articles of Organization of the LLC, which are also to be signed (written or electronically) as proof of consent of their assignment.
Submit the required Articles of Organization. This is of official use in the filing process, can be filed either online or via mail:
A nonrefundable fee of $125 to be paid to the Florida Department of State as a state filing cost.
New Filing Section
Division of Corporations
P.O. Box 6327
Tallahassee, FL 32314
Form an Operating Agreement. This is the required legal documentation outlining duties of LLC members as well as business ownership.
Elect S corp status by receiving EIN and submit Form 2553. EIN is a number of identification the IRS will use to find business and proceed with respective taxings accordingly. Upon application online, a link is provided to complete the election of S corp status for small businesses with Form 2553.
Upon the completion of the process to start an S corp, the next steps to take would be setting up a business phone number and building up business credit. These steps will ensure a well-rounded approach to protecting yourself and your business from every angle to cover all the bases.
Whilst there are certain limitations with the electing S corp status, the benefits outweigh it all in most cases. This tax designation brings with it advantages that most small businesses are needing in order to grow and level up. As an added positive factor, the process is relatively simple and can be done quite easily in most scenarios.