Understanding the Basics of a Florida Corporation Business Formation
The latest report from the Florida Department of State, Division of Corporations shows that there are 818,067 corporations in our state. This does not include nonprofit corporations and foreign corporations. As you can see, the corporation is a popular form of business entity due to its many benefits and advantages — the primary reason being to avoid personal liability. Today, we will explore the aspects that make-up a Florida corporation.
What is a Florida Corporation?
A Florida corporation is a legal business entity. The entity is separate from its owners. The entity can legally enter into its own contracts, act as a lender or borrower, and participate in employment activities such as hiring employees.
Additionally, a Florida corporation can pursue legal action against a person or another entity and have the same action reciprocated.
The Two Types of Corporations
Understanding corporations can be complex, particularly if you’ve never heard of them before. Corporations are how many of the major businesses that exist today are organized. There are basically two common types of corporations – S Corp and C Corp. It is important to know the differences when deciding a business structure. The primary difference is as follows:
- S Corp: A Corporation that is not taxed separately
- C Corp: A corporation that is taxed separately from its owners
The Small Business Association states that S corps allow profits and losses to pass through directly to the owner’s personal income, without being subject to corporate tax. In addition to registering the S Corp with the Secretary of State in Florida, to get S corp status, a corporation must file documentation with the IRS to use this special designation.
According to an article in Investopedia, a C corp is the most prevalent and it legally separates the owners’ assets and income from the corporation. They also limit the liability of investors.
Florida Corporations Need ByLaws
Each Florida corporation will have corporate bylaws. The bylaws are usually a large document consisting of the rules of governance for the corporation and set forth how the corporation will operate. Bylaws govern the ownership of the corporation and provide structure for managing the corporation.
All requirements such as qualifying the board of directors, officers, and when annual meetings are held are governed by the corporation bylaws. The bylaws also include how to handle shareholder and partner disputes.
If you need help preparing your corporation bylaws, consult an experienced West Palm Beach business formation attorney. Your attorney will draft the bylaws to ensure the corporation is running efficiently and legally.
When You Need Help Forming a Florida Corporation, Contact Our West Palm Beach Business Formation Attorneys
If you’re in the process of forming a corporation, contact Kelley, Fulton & Kaplan at 561-264-6850 for a consultation. Our experienced West Palm Beach business formation attorneys will provide you with sound legal advice on the best type of corporation for you and your corporation needs and help you fulfill the requirements so your corporation can start off on the right path.