Small business owners frequently choose S Corporations (S Corps) as their legal form because they provide incorporation advantages such limited liability protection without subjecting them to double taxation. Instead, earnings are transferred to shareholders’ individual tax returns, which can result in considerable tax savings. It’s crucial to comprehend how the S Corp is taxed if you’re thinking about creating one in Florida.
S Corps in Florida are exempt from state income tax but are liable to federal income tax. This implies that S Corps do not submit a Florida state income tax return; instead, they file a federal tax return (Form 1120S) with the Internal Revenue Service (IRS). S Corps in Florida are however still liable for additional taxes including payroll and sales taxes.
You must submit a personal income tax return to the state of Florida if you are a S Corp owner there. This is due to the fact that S Corps pass down their shareholders’ income and losses, who then record them on their own personal tax returns. You won’t owe any state income tax on your portion of the S Corp’s profits because Florida has no personal income tax. You must still declare this income to the state, though.
Florida residents who run S corporations must submit Form 1120S to the IRS. The S Corp’s income, deductions, and credits are reported on this form, along with the distribution of these funds to the shareholders. The 15th day of the third month following the conclusion of the S Corp’s tax year is when Form 1120S is due.
In addition to filing Form 1120S with the IRS, S Corps in Florida could also need to submit Forms 941 for payroll taxes and Forms 1099-MISC for independent contractors. To prevent fines and other repercussions, it’s crucial to stay current on all tax regulations.
The IRS issues firms with a unique nine-digit number called an Employer Identification Number (EIN) to help them be identified for tax purposes. You must apply for an EIN if you’re founding a S Corp in Florida. Thankfully, obtaining an EIN is free.
You can request an EIN by mail or online through the IRS website. You should obtain your EIN right away after submitting your online application because the process is quick and simple. It could take a few weeks to get an EIN if you submit your application via mail.
Finally, S Corps in Florida are exempt from state income tax but are liable to federal income tax. S Corps do not submit a Florida state income tax return; instead, they submit a federal tax return (Form 1120S) to the IRS. Florida S Corp owners must file a personal income tax return with the state but are exempt from paying state income tax on their portion of the S Corp’s earnings. The last point is that obtaining an EIN for your Florida S Corp is free and can be done so online or by mail.