The business must first create a regular corporation and submit its articles of incorporation to the state of Florida before it can create a S corporation there. The corporation can then file Form 2553 with the IRS to elect S corporation status after it has been established. In order to conduct business in Florida, the corporation must also get all relevant licenses and permissions.
There are several significant distinctions to take into account when contrasting LLCs with S corporations in Florida. S corporations have stricter limitations on who can be a shareholder and how many shareholders the firm can have, but LLCs offer greater flexibility in terms of management and ownership structure. The same level of formality that corporations must follow, such as holding annual meetings and maintaining minutes, do not apply to LLCs.
A separate S election is necessary in Florida, and it must be made between two months and fifteen days of the beginning of the tax year or at any other time during the prior tax year. Making the S election requires submitting Form 2553 to the IRS.
Florida taxes S companies in a different way than some other states. S corporations must pay a state corporate income tax of 5.5% on their federal taxable income even though Florida does not have a state income tax. Florida S corporations’ shareholders must pay state income tax on their portion of the business’s income.
Finally, Florida accepts S companies and grants them tax advantages akin to those granted to partnerships or sole proprietorships. The company must first establish a traditional corporation and apply for S corporation status with the IRS before it can establish a S corporation in Florida. Both LLCs and S corporations in Florida have advantages and disadvantages that are particular to them, notwithstanding some variances.