TRUiC on the Advantages of a Florida S Corporation
Electing to form an S corporation (S corp) comes with a range of advantages for businesses and their individual owners. Although this varies by location, Florida holds a wide range of benefits for businesses in general, and even more so for S corps alike.
The filing process presents various requirements, restrictions, and steps which need to be adhered to in order to qualify for election. The Really Useful Information Company (TRUiC) breaks down the filing process for S corporation Florida status in a concise way to get started.
An S corp is a sort of tax designation given to businesses by the Internal Revenue Service (IRS). This status can be filed once a limited liability company (LLC) or corporation is formed and this brings with it numerous benefits for the business. Keep in mind that this IRS classification is considered the status of the business rather than a business structure.
With electing this type of tax classification, you first have to evaluate whether this strategy would be best for your Florida business. Considering the benefits already applicable from the localization of a small business within the state of Florida, there already are major advantages.
Factors to keep in mind are whether the applicable S corp tax benefits are best for your business but also why an LLC has an optimal structure for S corp status. One also needs to take note of the restrictions respective to an S corp and what the requirements for election are. Once aware of the influential factors
Besides the tax benefits that are a major advantage of having S corp status as a business, the election also brings with it increased credibility. By having this tax classification of the IRS, a business can be seen to be more authoritative and established than solely being an LLC.
In a general sense, liability protection is a major advantage for the business as a whole but also for individual shareholders. Furthermore on a personal level, with shareholders being considered employees of the business they are able to take out an employee salary.
These advantages see businesses reaping the structural benefits of being an LLC with the added benefit of S corp status going beyond that of just the purpose of income tax. As it is, small businesses that are Florida LLCs or S corps are not subject to income tax, nor are individual business owners. On top of this, there is just a 6% sales tax which allows individuals to do more with their money on a day-to-day basis, and in the long run, grow their business
The pro-business environment of Florida allows for the rapid expansion and growth of small businesses, which opens up even more space for investment and economic growth. This is a sustainable cycle that will only continue to grow as small businesses locate in Florida and elect S corp status.
The main requirements that need to be met when electing Florida S corp status come down to the members that make up the organization. Shareholders may only be private individuals who are U.S. citizens or nationals. No businesses are allowed to be shareholders within the business and the total number of shareholders may be no more than 100. The distribution must be equal between all members in the form of an equal stock portion.
Electing Florida S corp status is a relatively easy process with comprehensive steps to follow. Once an LLC or a corporation has been formed and named, a Registered Agent is to be chosen and elected. This is followed by the Articles of Organization is filed as well as the creation of an Operating Agreement. S corp status may then be elected once the employee identification number (EIN) is received and IRS Form 2553 is filed.
A Final Note
With the status of Florida S corp comes a multitude of advantages that the majority of small businesses will be able to reap. Upon considering all influential factors that come into play, electing this status for applicable businesses can bring with it a spectrum of benefits that add to the already advantageous business climate within the state of Florida.