Do you want to start a Florida S corp? If so and you don’t know the process, we can help. The following guide will tell you more about how to create an S corporation in Florida and the potential tax benefits.
For a limited liability company (LLC), filing as an S corp could provide savings on self-employment taxes for the owners. For C corporations, S corporations can be a way to avoid double taxation. For more information about S corporations in general, see our “What Is an S Corporation?” page.
An S corp isn’t a separate legal business entity or business structure. Instead, it’s a special tax status that either an LLC or a corporation can apply for with the Internal Revenue Service (IRS) if it meets all the criteria. We’ll outline those criteria and the steps you would need to take to file as an S corp if you decide that it’s right for your business.
If you want to form an LLC with S corp tax status, our S corp service can help you do just that. We also offer more services to help you run and grow your business and stay in compliance with the state.
S corporations have some filing requirements and limitations you should be aware of before you begin this process. Specifically, to qualify for S corporation status, an entity must:
If your business entity meets these requirements, read on to learn how to apply for an S corp election.
To create a Florida S corporation, you’ll need to create either an LLC or a C corporation if you haven’t already done so. Then, you’ll file an election form with the IRS.
If you’re ready to learn about filing as an S corporation in Florida, we’ll walk you through it. First, we’ll show you how to form an LLC in Florida. If you’d rather form a corporation, follow the instructions on our incorporate in Florida.
Afterward, in Step 6, we’ll explain how to file for S corp tax status as either an LLC or corporation. We’ll also discuss specific considerations for S corporations in Florida.
The first step toward forming a Florida LLC is selecting a name. You’ll need to consider marketing by making it something memorable that conveys what you’re selling, but you’ll also need to abide by Florida’s business naming regulations. Otherwise, your filing could be rejected by the state.
By law, your name must be distinguishable from all other business names in Florida. To see if your desired name is available, do a Florida Business Entity Search on the Florida Department of State, Division of Corporations website.
If you find that your name is available, follow up by calling or emailing the Division of Corporations to make sure, as search engines like this aren’t completely foolproof. Also, check online to make sure that no one has claimed a state or federal trademark on your name, as the state doesn’t check for those.
Here are a few other naming requirements for Florida LLCs:
Do you have your perfect name but aren’t ready to register? The state of Florida allows you to reserve a business name for up to 120 days.
Register Your Business as an S Corp
Enter your desired business name to get started
Appoint a registered agent. Selecting a registered agent is an important part of registering your LLC in Florida. Registered agents are required by Florida law for every business recognized by the state.
If you’re not familiar with registered agents, here’s a quick breakdown of what they are:
Since every Florida LLC is required to have a registered agent, you can’t skip this step. Legally, you can serve as your own registered agent, appoint another person, or use a registered agent service.
Although you’re allowed to be your registered agent, there are some compelling reasons to use a registered agent service instead:
Either way, all registered agents in Florida need to be over the age of 18 and have a physical street address in the state. (P.O. boxes aren’t acceptable.)
Our registered agent service can provide you with a reliable agent for your business, whether it’s an LLC or a corporation.
File your Articles of Organization with the state of Florida. This step makes your LLC in Florida an official business in the eyes of the state.
To file your Articles of Organization, submit the information online with the Florida Department of State, Division of Corporations. When you file your information online, you’ll pay the LLC filing fee with your credit card and complete everything online. An email confirmation will be sent to the email you provide.
Submitting your Articles of Organization is one of the most important steps in forming your LLC. Be sure to have the following information when submitting your information:
Want to know more about your Florida Articles of Organization? View our step-by-step guide on how to file your Florida Articles of Organization.
Remember that we can handle this paperwork for you with our business formation services.
Creating an LLC operating agreement is the next step. Even though having an operating agreement in Florida isn’t required by law, it’s a critical document for an LLC. An LLC operating agreement usually covers the rules your company will follow, lists LLC owners, each member’s ownership percentage, and much more.
The operating agreement also discusses how finances will be handled and how decisions will be made (including management and member voting structure). It’s essentially the agreed-upon rules for your LLC for you and the other members. Once signed by all members, it’s legally binding.
Get an Employer Identification Number (EIN) from the IRS. Many LLCs, including those with employees or more than one owner, are legally required to obtain an EIN, also known as a Federal Tax Identification Number or Federal Employer ID Number. Most banks require an LLC to have an EIN to open a business bank account. This nine-digit number is used for tax purposes and other financial paperwork.
We can obtain this number for you with our EIN service.
Submit the form to apply for S corp tax status. Once your LLC or C corporation formation is approved by the state, you need to file Form 2553, Election by a Small Business Corporation, with the IRS to get S corp status.
The IRS requires that you complete and file your Form 2553:
OR
There’s one caveat for limited liability companies wanting to file as an S corp: If your LLC is past the 75-day election deadline, you’ll also need to file Form 8832, Entity Classification Election, to elect to be taxed as a corporation. Then you would file both Form 8832 and Form 2553 together via USPS-certified mail.
All of the shareholders/members must sign the consent statement portion of the form. For more information on when and how to file Form 2553, visit the IRS website.
While S corp classification does come with a number of benefits for some businesses, making this election might not be right for every company. Carefully weigh the various pros and cons before deciding how you want to move forward. Consult an experienced tax professional about whether an S corp would be best for your business.
The advantages of filing as an S corporation for an LLC aren’t exactly the same as they are for C corporations. First, let’s look at the advantages for LLCs.
A traditional LLC already has pass-through taxation by default, so the benefits of S corp election for an LLC have to do with the taxes for self-employment. This does take some explanation, but it could save certain LLCs a lot in taxes.
The members of a standard LLC are considered self-employed. They’re paid by receiving their share of profits from the LLC, but they can’t be employed by the LLC, meaning that they’re self-employed. Being self-employed means paying taxes for self-employment (Social Security and Medicare, which add up to about 15.3%) on all profits they receive from the LLC. This is more than the taxes they’d pay when working for someone else because their employer would pay part of them.
But when the members elect S corp tax status, they can be compensated in two ways, by receiving their share of the profits and by being paid as an employee. Once they do that, they only pay Social Security and Medicare taxes on their salary and not the profits they receive. Depending on factors such as how profitable your company is, the savings could add up to a lot. (Of course, the members will still pay income and all other applicable taxes on their share of the profits.) Money paid out as salary is a tax-deductible expense for the business.
One stipulation to this is that the IRS expects you to pay yourself a “reasonable salary” as an employee of the LLC. If they didn’t, you could pay yourself an annual salary of $3 and avoid contributing anything to Social Security and Medicare.
So, how is “reasonable compensation” defined by the IRS? The instructions on Form 1120-S read, “Distributions and other payments by an S corporation to a corporate officer must be treated as wages to the extent the amounts are reasonable compensation for services rendered to the corporation.” While the terms aren’t completely defined, the IRS seems to consider “reasonable” to be something similar to what others in your field are earning.
If the IRS determines that the salary you’re paying yourself isn’t reasonable, it has the authority to reclassify your non-wage distributions (which aren’t subject to employment taxes) to wages (which are subject to employment taxes). Various court cases have supported the IRS’s right to do this.
Having an LLC with S corp status can have some drawbacks over a regular LLC:
As we listed above, S corps have more qualifications than a standard LLC or corporation. An S corp can have no more than 100 members, and none of them can be partnerships, corporations, or non-resident aliens. A standard LLC doesn’t have these limitations.
Because of the above restrictions and the requirements about paying yourself a “reasonable salary,” the IRS tends to monitor LLCs filing as S corps more closely. That could mean a greater chance of being audited, even if you follow the law to the letter. In fact, small business owners in an S corp may want to observe some of the same formalities that C corporations do (such as extensive record keeping), even if they’re not legally required to.
Having an LLC with an S corporation election generally means more paperwork. If you don’t already have to do payroll for your business, being an owner-employee means that you’ll have to do so. Your taxes will be more complex, as well.
With these added complications, you’re likely to have higher administrative costs. You might need an accountant, bookkeeper, and/or a payroll service or software.
If you have a C corporation (the default form of corporation), filing as an S corp has these advantages:
One major disadvantage for traditional corporations is “double taxation.” When the corporation makes money, the IRS taxes those profits on the corporate level. But when those profits are distributed to the individual owners (shareholders) as dividends, they’re taxed a second time on the shareholders’ personal tax returns.
But when a C corporation qualifies to be an S corp, those profits are only taxed at the individual level. The business itself isn’t taxed on them. This is called “pass-through taxation,” and it’s how business entities like sole proprietorships and general partnerships are taxed. LLCs are also taxed this way unless they choose to be taxed as a corporation.
Just as business profits pass through to the owners of an S corp, so do the losses. Unlike the shareholders of a C corporation, S corporation shareholders can write off the company’s losses on their personal income statements.
This can help offset their income from other sources and can be helpful if the corporation loses money in the first couple of years of business. Still, make sure you’re aware of the IRS’s shareholder loss limitations.
Under the Tax Cuts and Jobs Act, some S corp owners may be able to deduct up to 20% of their qualified business income. This deduction isn’t available to C corporation shareholders.
Qualified business income (QBI) is basically your share of the company’s profits, or, as the IRS puts it, “QBI is the net amount of qualified items of income, gain, deduction and loss from any qualified trade or business, including income from partnerships, S corporations, sole proprietorships, and certain trusts.” The IRS website has a detailed explanation as to what is and is not included in QBI. There’s an income threshold that, if exceeded, may reduce your QBI (see the IRS website for details).
S corporation status also has the following minuses:
As mentioned, an S corporation can’t have more than 100 shareholders, while a C corporation has no such restriction. That limitation could be an issue later if the corporation expands and goes public.
All S corp shareholders must be U.S. citizens, or certain trusts or estates. That could limit your ability to expand internationally. You also can’t have partnerships or corporations as shareholders. C corporations don’t have these limitations.
One way corporations attract investors is to offer preferred stock. That’s okay for C corporations, but the IRS doesn’t allow it for S corporations.
With the extra restrictions S corps have, the IRS watches them more closely to see if they’re in compliance. In other words, your corporation’s more likely to get audited.
We can’t stress enough how important it is to have tax guidance about your specific situation from a qualified tax professional. An accountant with S corp experience should be able to make sure you stay in compliance with the IRS, and they may also be able to help you find additional tax savings.
We need to add here that, since the 2017 Tax Cuts and Jobs Act, the corporate tax rate has been lowered to a flat 21%. Thus, the disadvantages of double taxation aren’t as severe now as they were.
In an S corporation, the business itself doesn’t usually pay federal income taxes. But what about Florida state income taxes?
Florida treats businesses that file as an S corp for federal purposes the same way when it comes to Florida state income tax. That is, the same pass-through taxation that applies to federal income taxes applies to state income taxes. The individual business owners will pay state income taxes on their share of the profits, but those profits won’t first be taxed at the business level. So, you shouldn’t need to worry about a separate Florida S corp tax rate. The only S corporations in Florida that would need to pay the state corporate income tax are those that pay federal income tax on Line 22c of Federal Form 1120S.
Some states require an S corporation to make a separate S corp election at the state level, but Florida doesn’t require that. If a company has a valid federal subchapter S corporation election, it will automatically be a Florida S corporation.
Forming a business with or without S corporation election can be complicated, but we’d like to make it as easy for you as possible.
When you’re ready to make your move, we can help you form a Florida LLC with an S corporation designation and provide you with valuable support from our team of business experts.
Take it from real customers
over 500,000 customers agree!
Start Your S Corp
Enter your desired name to get started
For a corporation, one of the biggest advantages is being able to avoid double taxation. Usually, a C corporation’s profits are taxed at both the business and individual shareholder level, while an S corp’s profits are taxed only at the individual shareholder level.
For an LLC, when the members elect S corp status, they can be compensated in two ways, by receiving their share of the profits and by being paid as an employee of the LLC. Once they do that, they only pay employment taxes (Social Security and Medicare) on their salary and not the profits they receive. For some LLCs, this can add up to substantial tax savings.
The naming process for your Florida corporation or LLC has nothing to do with your S corp status. Whether you file to be taxed as an S corp or not, your business remains an LLC or a corporation and follows the same Florida business naming rules.
Before formally registering a business name, you should first search the Florida business entity records to make sure that you don’t select one that’s already in use by another business. That aside, however, you can typically name your Florida S corporation what you want as long as you comply with applicable state naming regulations.
S corp election may not be right for all businesses. If you’re not sure whether to identify your LLC as an S corp or keep the default status, be sure to consult with an experienced business law attorney or accountant in your state.
Calculating taxes can be tough, but you can check out our S corp tax guide to learn more about navigating taxes for your Florida S corporation. A certified tax professional can give you more definitive information for your circumstances.
No. At the present time, our S corp service is only for applying for S corp status when you form your LLC with us. We do offer plenty of other services to support your business, though.
According to the IRS’s website, you’ll be notified of whether or not your S corp election is accepted within 60 days of filing Form 2553.
If you’re a new LLC, you must apply for S corp status within 75 days of the formation of your LLC or no more than 75 days after the beginning of the tax year in which the election is to take effect. For an existing business, you would file at any time during the tax year preceding the tax year it is to take effect.
Unless your S corporation is liable for federal income tax, you shouldn’t have a Florida corporate income tax filing requirement. Still, consult your tax advisor to make sure everything is in order, as tax laws are subject to change (and complicated).
An LLC is a legal business entity, whereas an S corp is a tax filing status. You can read more on our LLC vs. S Corp page. For more specific information on LLC vs. S corp in Florida, visit our LLC vs S Corp in Florida page.
Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
“This is your life.
You want to get it right.”– Mark Cuban on Starting a Business
Entrepreneur and Shark Tank host lays out 3 steps to follow when starting a business
S Corp Resources
Florida Business Resources
How to File an S Corp in Your State
Ready to Start Your Florida S Corp?