Frequently Asked Questions

When you incorporate, you tell others that you are serious about your business and your future. Incorporation with Florida Incorporators, Inc. takes the hassle and expense out of what can be a slow and bewildering process. We hope you'll take the few minutes it takes to fill out the form and start today on the road to security and success. Please scroll down & click on the questions to learn more about incorporating in general and about using Florida Incorporators, Inc.'s services.


What is a Corporation?

 

We hear the term all the time, but what exactly is a corporation? Webster called it "A body ... formed and authorized by law to act as a single person, and endowed by law with the capacity of succession." Historically in England (please forgive the apparent ethnocentricity, our U.S. law originates mostly in England), the King authorized a group of persons to undertake a business activity by granting a charter to their corporation. This charter prevented the investors from being legally a partnership, in which the partners' entire wealth would be available to creditors if the business failed (instead, only their investment in the business could be lost). In the days when establishing trade with India was equivalent to a moon shot, this degree of protection spurred investment that otherwise might not have happened. We retain corporations today for the same reason: they serve the convenience of businesspeople. Along the way, many changes have come to pass and many types of business entities have been developed as the needs of the business community changed.

 

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The Benefits of Incorporating...

 

Shielding Personal Assets: Starting any business is risky. Although you will do everything in your power to operate fairly and ethically, an unexpected claim could wipe out your personal assets, including your home, car, another business or your retirement. With a corporation, the exposure to loss is limited to the capital in that corporation. Structuring your business activities in one or more corporations can provide an important firewall protecting you from the business liabilities, and multiple distinct businesses from each other's liabilities.

Tax Advantages:  No one has to tell you that taxes are a major concern of any entrepreneur. However, if you form a corporation you can set up pension, profit-sharing and stock ownership plans, that benefit both you and the corporation. Medical, life and disability insurance premiums can become tax-advantaged as well when provided by the corporation. Corporations also can take advantage of the 80% dividends-received deduction for dividends they receive from other corporations. Additionally, a corporation or LLC separates your business tax profile from your personal tax profile in a way that sole proprietorships and partnerships do not.

 

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Reasons why businesses should Incorporate in Florida...

  • Florida has no minimum capital requirement. Some states require that a corporation be capitalized with at least $1,000.
  • For-profit Florida Corporations require only one director, and the same person can be the President, Treasurer and Secretary. Some states require more than one director and/or that the officers be different people.
  • Florida has a quality, impartial Court system. Florida courts are well-versed in corporate issues, and even the transnational concerns of global businesses. Nevertheless, if the business will be done primarily in Florida, it makes sense not to go to court in the guise of a "foreign" corporation from a state such as Delaware.
  • Incorporating in a foreign state and doing business in Florida  requires the corporation to formally qualify to do business as a "Foreign Corporation" in Florida . This additional annual filing costs money (in fact, the same amount as incorporating in Florida  in the first place!) and exposes the corporation to a second set of large late penalties. Because the corporation could be in good standing in another state, this crucial qualification may go unmonitored. Unless you can be sure a filing date won't be missed because of having to keep track of more than one state's requirements, it simply makes better sense to incorporate in the state where you will be doing business. Additionally, if you incorporate out of state you will be paying an out-of-state registered agent to serve as such for each year your company operates.
  • Florida  is becoming more friendly to corporations. The annual fees for forming and maintaining a Florida  corporation are already low compared to many other states, and annual fees were cut several years ago at the request of Sandra Mortham, then Florida Secretary of State. The current Secretary of State has maintained those lowered fees.
  • The Secretary of State of Florida does not keep records of who owns the stock of a Florida  corporation.
  • A corporation may be formed to undertake all lawful business activities. This permits businesses formed in Florida to engage in any type or types of business (other than certain licensed professions, which are usually permitted to form professional associations [corporations having certain restrictions, including stock ownership being permitted only to holders of a particular profession).
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Types of Florida Business Entitites...

 

FLORIDA BUSINESS CORPORATION (FOR PROFIT) 

(Suffixes Used: Inc, Corp, Company, Corporation, Incorporated or PA)

This is the business organization is the most familiar and typically the one chosen for routine business ventures. It may issue stock representing its shareholders' investment in it. The shareholders elect a board of directors who oversee the strategic goals of the business. The board of directors in turn selects officers who in turn oversee the day-to-day operations of the business and hire other employees. A Florida  business corporation may elect S Corporation status with the Internal Revenue Service, in which case the corporation's profits or losses flow directly through to its shareholders without tax at the corporate level. To do this at its inception, a corporation must file an IRS form 2553 signed by all shareholders and file it within 75 days of the first date the corporation has shareholders, acquires its first asset, or commences operations.

 

NON-PROFIT CORPORATION 

(Suffixes Used: Inc, Corp, Corporation or Incorporated)

These corporations are formed for advancing charitable, religious, educational or scientific purposes. Although Florida does not tax its non-profit corporations, the Internal Revenue Service must approve the corporation's application for recognition as a non-taxable corporate entity under section 501(c)(3) of the Internal Revenue Code. Nonprofit corporations grant memberships to qualified persons (who pay money and/or share some common bond) rather than issuing stock.

 

LIMITED LIABILITY COMPANIES

(Suffixes Used: LLC, L.L.C. or spelled out)

The Limited Liability Corporation (LLC) shields its members from liability like a corporation, however, certain tax advantages are provided that mimic those of a partnership even more than the S Corporation's flow-through of gains and losses. Unlike an S Corporation, however, the number of members, their citizenship, the rights of the members relative to each other, and other corporate matters are not restricted. Unlike a corporation, the limited liability company is not perpetual, having a life limited to somewhere between 30 and 50 years in most states. In Florida, the limited liability only recently was freed from a 5% tax on its profits that was at odds with its character as an otherwise pass-through entity (like S Corporations and Partnerships); and this tax hampered its attractiveness until its repeal. Now that the LLC has been "freed", entrepreneurs considering using this business form should research it carefully: use of true partnership accounting principles is time-consuming for the CPA, and thus costly, the LLC costs more to form but less to renew than an S Corporation, and the bottom line is that it is a very flexible entity allowing the owner(s) to choose between treatment as a sole proprietorship, partnership, S Corporation and C Corporation, and even to change the tax treatment under certain circumstances. 

 

LIMITED PARTNERSHIPS

(Suffix Used: Ltd)

A limited partnership is a partnership in which there is at least one general partner who is liable for the partnership's debts and one or more other partners who are required to stay uninvolved with the management of the partnership and whose liability is limited to the amount they invested (similar to shareholders of nonvoting stock in a corporation). Limited partnerships are attractive where there will be more partners than an S Corporation is permitted to have shareholders, where some partners will be foreigners or otherwise disqualified from holding S Corporation shares, or where the general partner wants to assure that the investors will be entirely passive. Florida Incorporators, Inc. does not set up limited partnerships, because it is best to consult a lawyer regarding their formation and Florida Incorporators, Inc. is a filing service. Additionally, limited partnerships are costly to form and their benefits are largely duplicated by limited liability companies, and for that reason LLCs have replaced them except in special cases.

 

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How long does Incorporating with Florida Incorporators, Inc. take?

As little as 24 hours, but it really depends on how fast you respond to our emails. For rush orders (an extra $50) we use electronic filing. If Florida Incorporators, Inc. serves as Registered Agent for your company, you will simply need to review the Articles of Incorporation and contact us via email or phone with approval to send.  If you are serving as your own Registered Agent, you will need to print out the emailed Articles of Incorporation, sign and fax them to us.  Once received, we submit them to the State and the State expedites the processing of these filings within 24 hours in most cases. We usually receive the filing back from the State the following morning after submission.  A rush form SS-4 (an extra $40) can be processed the same day you incorporate. The corporate kit (sleeved 3-ring binder, corporate seal, share certificates etc..) can reach you in as little as 48 hours. For non-rush orders, the time frames depend on whether you have us serve as Registered Agent. Where we serve as registered agent, articles are placed in the mail typically the same day they are received. Once the Secretary of State receives the articles in Tallahassee, they claim 7-10 working days processing time. Then there is mailing time back to Florida Incorporators, Inc., at which time we scan and email your Certificate and Filed Articles to you.  The corporate kit (sleeved 3-ring binder, corporate seal, share certificates etc..) will then be ordered and will reach you in approximately 48-72 hours. If we do not serve as Registered Agent, there is also mailing time for the articles to reach Florida Incorporators, Inc. with your signature. 

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FAQs about the process of Incorporating...

How do I name the Corporation? Unlike general partnerships, which exist and hold themselves out to the public with no formal naming requirements, formalized entities (corporations, limited partnerships, etc.) must provide notice to the public of their special character by including identification of their special status in their names. For that reason, business and nonprofit corporations typically use "Incorporated", "Corporation", "Inc.", or "Corp."  as suffixes to their names. In Florida, for-profit corporations may also use "Company". Limited partnerships use "Limited" or "L.P.", and limited liability companies use "Limited Liability Company", or "L.L.C." Professional Associations, a species of for-profit corporations, use "Professional Association", "P.A." or "Chartered". Corporations are restricted from using a few words and phrases without authorization, including Professional Engineer, Land Surveyor, "insurance" or "bank" (and derivatives thereof), the name of a political party, Disney and Olympic. Otherwise, other than the use of one of the required endings and the requirement that the corporation's name not be deceptively similar to another corporation's or trust's name or someone else's trademark (or to a government agency's name), you can be as creative as you like! For a quick check of name availability, go to the Florida Department of State Division of Corporations web site. Remember, homonyms are not considered distinguishable, nor will variant spelling, adding "of Florida" or using a different suffix resolve a name conflict. "Tasty Quick Company" and "Tastee Kwik of Florida, Inc." would be considered indistinguishable by the Department of State, so only one could be in use at any one time.
 
What is an S Corporation and why would I want my corporation to be one? Congress determined that the tax laws should give small businesses a break. If your small business has no more than 70 shareholders (husband and wife in joint ownership count as one shareholder) who are all U.S. persons or qualified trusts, and issues only one class of stock, it typically can make an election to be treated as an S corporation. While this election can be made at any time, it is effective only for the following tax year unless made within 75 days of the inception of the corporation. The stockholders of an S Corporation include its losses (and gains, if any), on their personal tax returns. Typically, a startup company is formed as an S Corporation so that its owners can reduce their own tax bills. Later, as the corporation generates gain than it distributes currently, it converts to the standard "C" corporation and is taxed on its earnings; however, the shareholders' stock appreciates in value without current taxation, in part because of the retained earnings of the corporation. We can help you file for S Corporation status for an additional $35.
 
Can a Florida Corporation do business elsewhere? There is no restriction on where a corporation from any state does business, other than the possible requirement to register to do business as a "foreign corporation" in other states, and restrictions on doing business in certain countries with which the U.S. does not maintain friendly relations (for example, Libya, Cuba and North Korea). In addition, there are tax disadvantages to doing business in some countries that participate in the Arab League boycott against Israel.
 
How does the state of Florida tax a Corporation? Any corporation doing business in the state of Florida pays an annual fee to the Secretary of State. It also remits to the state use taxes on its physical property located in Florida, sales taxes owed by its customers, fees for any licenses it holds (for instance, a travel agency license), and an income tax based on what it owes to the federal government (meaning that for an S Corporation, there is no income tax), however, limited liability companies only recently were freed from tax that was calculated as though they paid federal income tax (but their higher formation and maintenance costs still limit the latter's attractiveness).
 
How many shares should be authorized and should stock have a par value? Florida requires documentary stamps on stock in proportion to its par value, which can be very small. Most people are comfortable with stock having$.001 par value, and typically 1,000 shares of stock are sufficient to handle the potential ownership arrangements of a small company (fractional shares can always be issued), and round numbers have the added benefit of making it easy to calculate the percentage owned. If ownership will be more fragmentary, we recommend that the number of shares authorized be increased but kept at a round power of ten. Remember, too, that ownership by more than a small group people who are actively involved in the business may raise securities law issues best addressed by an attorney practicing securities law.
 
Can I reserve a name in Florida without incorporating (yet)? Not anymore. Formerly, for a fee of $35 we could reserve your company's name for 120 days, however, the legislature abolished this option several years ago.
 
What is a corporate kit, and why would I need one? A corporate kit is a sleeved 3-ring binder designed to hold the records of the corporation's formation, meetings, stock transactions, and its corporate seal (which comes with the corporate kit, along with a starter set of stock certificates, which is usually all that is ever needed).  Together these items form the minute book of  the corporation. If a corporation is being formed simply to open a safe deposit box that won't become inaccessible on the owner's death, a corporate kit really isn't necessary. If there will be an active and ongoing business with multiple stockholders, it is probably a good idea to have a corporate kit so that stock may be issued. We get our corporate kits from one of the largest suppliers of corporate kits, and we provide them at cost ($50) as a service to our customers.
 
What else should I know about incorporating / my corporation? There are many things you will need to do to make your corporation an effective business entity. One of the most important is a federal tax ID number (also known as the EIN or T/I/N, it is the corporation's equivalent of your social security number, and will need to be provided by the corporation for any transaction or filing of major consequence). The number is issued by one of the IRS's three (3) TELE-TIN service centers  (Holtsville, NY; Covington, KY and Philadelphia, PA) and can be notoriously time-consuming to obtain. We can assist you in obtaining this number by preparing the SS-4 form ($20), and can call it in on a rush basis ($40). Additionally, banks and accountants typically require a corporate resolution retaining their services, authorizing the opening of an account, or the taking of a loan. If the corporation sells or buys real property, a corporate resolution will likely be required so that the authorization can be placed in the public records. We can also assist you with these items.

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What is a Registered Agent and do I need one?

Florida (along with other states) requires registered agents for the protection of those dealing with a corporation. Basically, a registered agent is an office designated to receive suit papers and other official notices and documents. In Florida, the registered agent is required to be present at a physical address between the hours of 10:00AM and 2:00PM. It is to the corporation's benefit that a registered agent exist as well. In the absence of a registered agent, official papers can be handed to the lowliest employee at any one of your business premises. That employee could well line his birdcage with suit papers requiring an immediate response on your part! Florida Incorporators, Inc. can serve as your registered agent in the State of Florida.

Florida Incorporators, Inc. charges $50 per year to act as Registered Agent.  We scan and email you the papers served and call you to inform you of the service of process.  If you so wish, we will send all items received by any method you choose for an additional shipping/handling fee.  

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Do I need a Fictitious Name?

Only if doing business in other than your exact corporate name.  For instance, if you want to drop the "Inc." you would need a Fictitious Trade Name Filing.  Any more extensive changes would of course, trigger the need for a Fictitious Trade Name.  The question of whether you are doing business in a different name is mainly answered by what appears on your business cards, letterhead, signage, and/or vehicles.  Florida Incorporators, Inc. does not do Fictitious Trade Name filings, however, our separate law firm, Mark Hankins, P.A., will be able to assist you with the filing or you can do so online at www.sunbiz.org  You can contact Mark Hankins, P.A. via startnow@flacorps.com or call 813-632-7882. You can find information on Mark Hankins at:

http://www.markhankinslaw.com

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How do I get started on Incorporating with Florida Incorporators, Inc?

Once you understand the basics and are ready to move forward, its as simple as clicking on our online order forms (incorporation order form or llc order form) filing it out and submitting.  If you wanted, you could click on our offline forms (incorporation or llc form) to fill in and either fax, mail or email to us.  

If you have additional questions not answered here, please contact us via phone (813-632-7882) or email startnow@flacorps.com