Corporations are a popular business type because they are treated as independent legal entities, limiting the liabilities of the owners and managers and allowing the corporation to enter into contracts and maintain stability over time.
Corporations fall into the following three categories:
- C corporations. C corporations are owned by shareholders who elect a board of directors to oversee operations. They are taxed as a separate legal entity from anyone else involved and provide the greatest amount of protection between business and personal assets.
- S corporations. S corporation earnings are split among shareholders and are taxed at that level only, not also separately as a business entity.
- Nonprofit corporations. Nonprofits can apply to be tax-exempt at the federal level (employees still pay taxes on their salary), but they require significantly more paperwork and must adhere to strict regulations.
Are you ready to get your Florida corporation off the ground? Read on to learn how.
How do I form a Corporation in Florida?
Steps to form your Florida Corporation
- Name Your Corporation
- Appoint Directors
- Choose a Florida Registered Agent
- File the Florida Articles of Incorporation
- Create Corporate Bylaws
- Draft a Shareholder Agreement
- Issue Shares of Stock
- Apply for Necessary Business Permits or Licenses
- File for an EIN and Review Tax Requirements
- Submit your Corporation’s first report
To start a corporation in Florida, you must file the Articles of Incorporation with the Florida Department of State office.
To simplify the process of forming a corporation in the state of Florida, we’ve put together 10 easy steps for you to form your business:
Step 1: Name Your Corporation
As any parent of a child knows, naming your baby is not the easiest decision. When it comes to naming your corporation, you need to make sure you comply with Florida business naming laws. There are many factors to consider during the process. These include making sure your business name is unique, suits your business well, aligns with all regulations, and includes a corporation designator.
You also don’t want to overlook the importance of choosing a name for which you can reserve a matching website domain name that has not already been taken. Additionally, you should give consideration to any “doing business as” (DBA) names or trademarks you may want.
Here are some guidelines to help you through the naming process:
- Start by brainstorming a list of potential names. Names on this list should match your business’s purpose, and the more names you have, the better. The next several steps will begin to narrow down your options.
- The final version of any name you choose must include a corporate suffix. One of the following words or abbreviations must be included: “corporation,” “company,” “incorporated,” “Corp,” “Inc,” “Co,” “Corp.,” “Inc.,” or “Co.” Professional corporations must contain the word “chartered” or “professional association,” “PA,” or “P.A.”
- Search your prospective business names on the Division of Corporations Sunbiz website to eliminate any names that are too similar to existing businesses. (Note that words or abbreviations in a name that indicate the type of company — “Corporation,” “Inc.,” etc. — are not considered when determining if a name is unique. Differences in punctuation, capitalization, etc., are also not enough to make a name unique.)
- Corporation names also cannot contain language implying they are organized for a purpose other than stated in the Articles of Incorporation.
- The name cannot suggest that it is associated with any government agency or include anything indicating that it will be engaged in business that is illegal.
- Once you’ve narrowed down your list based on the above, the next task is to search for available domain names to ensure you will be able to secure a website domain that matches your business name.
- Search the state and federal trademark databases to make sure your corporation name isn’t trademarked. Consider if you would like to apply for a trademark of your own for your business name, logo, or slogan. If so, you will need to complete a Trademark Registration Application and pay $87.50. But while it’s easier and quicker to file at the state level, you could also consider filing at the federal level for broader protection, especially if you plan on doing business outside of Florida.
- If you would like to do business under a name different from your official business name (often called a “doing business as,” or DBA, name), you will need to file a Fictitious Name Registration and pay a $50 filing fee. There’s also a requirement to advertise the fictitious name at least once in a newspaper located in the county where your principal place of business is located.
- Once you have settled on a business name, you can reserve the name if you are not ready to register your business yet. You can do this by submitting a letter to the Secretary of State specifying the name to be reserved and your name and address. A $35 fee should accompany this letter.
When you reserve your name or register your business, you should also register the domain name you plan on using with it at the same time.
Step 2: Appoint Directors
The board of directors for a corporation oversees the operations of the business. As such, your business needs one to get started.
The initial incorporators — those filing the Articles of Incorporation for the business — often appoint the initial board of directors. Afterward, the board is elected annually by shareholders (those who hold stock in the company — this can include the original incorporators). In Florida, the minimum number of directors on the board varies based on the type of corporation. Nonprofits and agricultural co-ops require a minimum of three, private schools require five, but in general, the minimum needed is one.
Incorporators may be directors and also shareholders. In fact, a single person can start a corporation and hold all associated titles. But the three titles are associated with different roles within the company. To clarify, here are some of the different roles that exist in a corporation:
- Incorporators are responsible for starting the business and filing the initial paperwork.
- The board of directors oversees the operation of the business.
- Shareholders finance the business by owning shares in the company; they also often have voting power when selecting the board of directors.
- Officers execute the duties associated with running the business.
It’s a good idea for all incorporators to meet and elect an initial board of directors before filing the Articles of Incorporation. This board can then begin creating the corporate bylaws (described in a later section).
Step 3: Choose a Florida Registered Agent
A registered agent is a person or entity that receives service of process on behalf of the corporation as well as important government correspondence. Service of process can include legal documents, such as court summons.
You are required to name a registered agent when you file the Articles of Incorporation. In Florida, a registered agent must meet the following criteria:
- The registered agent must be an individual or corporation with a street address (not a P.O. box) in the state of Florida.
- A corporation cannot serve as its own registered agent.
- The director or an officer on the board may serve as the corporation’s registered agent.
- The registered agent must agree to accepting the role of agent in writing.
Step 4: File the Florida Articles of Incorporation
Now that all the details have been sorted out, you can file your Articles of Incorporation. This document officially registers and establishes your business with the state. In this document, you will need to include:
- The name of your business with the chosen suffix designation
- The street and mailing address of the principal office (location of business)
- The purpose for which the corporation is organized
- The number of shares of stock (this is often determined by the board of directors or the incorporators)
- The names and addresses of the directors or officers
- The name and street address of your registered agent
- The name and address of the incorporator (person filling out the form)
- Signatures of the registered agent and incorporator
This filing is completed online through the Sunbiz website or can be completed and submitted by mail. The address is:
New Filing Section
Department of State
Division of Corporations
P.O. Box 6327
Tallahassee, FL 32314
A filing fee of $70 is required with additional optional fees of $8.75 for a certified copy or certificate of status.
Step 5: Create Corporate Bylaws
The creation of corporate bylaws by the board of directors should happen as soon as possible. The bylaws establish all of the rules and functions of the corporation. Florida requires all corporations to adopt bylaws.
Your corporate bylaws may include:
- A clear statement of your business purpose
- A list of owners and the rights, responsibilities, and qualifications of each
- A list of the board of directors and the rights, responsibilities, and qualifications of each
- Details of your management structure and the duties of each officer
- Annual meeting scheduling and goals for directors and shareholders
- How ownership and shares are distributed and how the stock is sold or transferred
- How changes are made or voted on
- Details of any committees and their responsibilities
- How conflicts of interest are to be handled
Since the bylaws are legally binding, it is a good idea to seek assistance when creating them. However, you can find templates online to get yourself started.
While you are not required to file your bylaws anywhere, you should keep them safe with any other corporate records. It’s often a good idea when starting to set up a corporate records book where you can keep all of your corporation’s important papers, including bylaws, minutes from meetings, and stock certificates.
Step 6: Draft a Shareholder Agreement
Next on the list of things to tackle is the shareholder agreement. This is a document that outlines the rights and responsibilities of all shareholders and may include:
- The names of all shareholders and their contact information (address, phone number, etc.)
- Shareholder responsibilities, including rules about how officers are appointed and any actions that shareholders are allowed to take on behalf of the business
- Shareholder voting rights, including whether a simple majority or higher percentage may be required for certain decisions
- How changes to the original shareholder agreement may be made
- How stock can be sold or transferred
- The financial obligation and time commitment for each shareholder
- A clear outline of how dividends are distributed
- A plan for the distribution of assets should the business close
Again, this agreement can be drafted from a template, but you may want to utilize professional assistance. Your shareholder agreement should be kept with your other important corporate records.
Step 7: Issue Shares of Stock
One of the requirements for starting a corporation is issuing stock. When you filed your Articles of Incorporation, you stated the number of stock shares that were authorized. The number of shares you issue should always be less than or equal to this number.
It’s a good idea to determine how much capital you need before issuing shares of stock so that you can determine a reasonable value for each share. Shares of stock may also be issued in exchange for services or other noncash value and capital contributions.
Each share is only issued once. However, after being issued, it can be traded and sold. All issued shares must be documented in the company’s annual report. Although it is not typically required, most corporations issue certificates to shareholders, indicating their shares.
Stock may be issued publicly or privately. Privately issued stock is usually issued to the founders, officers, employees, or a private group of investors. A public corporation makes a portion of its stock shares available for public purchase.
Companies that issue public stock need to file quarterly statements with the Securities and Exchange Commission (SEC). They must also track how many shares are issued and to whom. You should also check with the Florida Division of Securities for their record requirements.
Step 8: Apply for Necessary Business Permits or Licenses
Florida law requires businesses to obtain a local business tax receipt before engaging in any business in Florida. These are administered at the county level, so the cost will vary depending on your location and other factors.
Depending on your business type, you may need additional licenses. Visit the Florida Department of Business and Professional Regulation and see if your business requires additional state business licenses or permits. You’ll also need to research what federal, local, and industry-specific licensing your corporation needs.
If any of your business activities might impact the environment, visit the Florida Department of Environmental Protection to see what sort of permits may be required.
Step 9: File for an EIN and Review Tax Requirements
Corporations are generally regarded as distinct entities separate from the people involved in them. As such, you will need to acquire an Employer Identification Number (EIN). This number acts like the corporation’s Social Security number for tax purposes.
To apply for an EIN, you need to visit the IRS website and fill out the online form. It only takes a few minutes and is free. Afterward, you will receive your EIN. You should keep track of this number, as you will need it for future documentation and filing your business’s tax returns.
Remember that corporations must pay their own taxes separate from any taxes paid on shareholder earnings. This must be done at the federal and state levels by submitting the appropriate returns each year. You may also be responsible for sales tax, employee withholdings, and other local taxes.
Step 10: Submit Your Corporation’s First Report
Florida corporations are required to file an annual report each year. This report is a chance to update some of your business’s information. The following information will need to be included in the report:
- Your business entity number assigned by the state
- Your business name
- Your EIN
- Principal place of business address
- Mailing address
- Registered agent name, address, and signature
- Officers, directors, etc. associated with your corporation (names and addresses)
The report can be submitted online and requires a $150 filing fee payable by credit, check, or money order.
How much does it cost to start a corporation in Florida?
The cost of starting a Florida corporation can vary considerably, depending on the size and type of business and location. At a minimum, you will need to pay the $70 fee for filing the Articles of Incorporation. Additional fees may include:
- $8.75 for copies of paperwork
- Registered agent service fees
- $87.50 for trademark registration
- $50 for a fictitious name
- $35 for name reservation
- Fees to reserve a domain name and create a website
- Fees for assistance with paperwork
- Licensing and permit fees
- $150 annual report fee
- Fees assessed for amendments or other business filings
ZenBusiness can help alleviate any stress of getting your corporation off the ground by assisting with many of the required steps for a low annual fee.
What are the benefits of a corporation in Florida?
Many benefits come with starting a corporation in Florida. As a business type, the benefits of a corporation include:
- Protection of personal assets
- Legal recognition as a separate entity in and outside the U.S.
- The ability to issue stock (which can help with funding and capital)
- Does not dissolve if owners leave or pass away
There are disadvantages you should be aware of, however. Among these are the tax structure (profits are taxed at both the corporation and personal income tax levels), and there is a lot more red tape and paperwork involved than other structures, such as limited liability companies (LLCs).
How is a Florida corporation taxed?
How exactly your corporation will be taxed depends on its designation as a C corporation, an S corporation, or a nonprofit.
C corporations are treated as separate entities and must file their own tax returns. In addition to this, all owners and shareholders file tax returns for earnings and dividends. This results in double taxation. While that might seem less than ideal, there are some benefits to this tax structure, including more flexibility in what can be deducted.
S corporations are pass-through entities. All profits are passed through to the owners, who must pay on their individual income taxes.
Nonprofit corporations can apply to be exempt from paying federal taxes, provided they stay within the rules for nonprofit activity. However, anyone drawing a salary from a nonprofit corporation will pay income tax on that salary.
Visit the Florida Department of Revenue website for more information about additional taxes your corporation may be responsible for, including sales and use tax.
Florida Corporation FAQs
Does running a corporation in Florida involve more paperwork than running other types of businesses?
It can, especially since you are required to create bylaws and keep track of all stock issuances. Corporations also often keep extensive meeting notes and records of all changes and transactions.
What is the difference between an LLC and a corporation in Florida?
LLC stands for limited liability company. This type of business structure is a pass-through entity for tax purposes, and it is useful in keeping the owners’ assets separate from business assets. However, LLCs do not have a board of directors and do not issue shares.
How do I change my corporation’s name in Florida?
To change your corporation’s name, you will need to file the Articles of Amendment with the Florida Division of Corporations and pay a $35 fee.
How many people are needed to form a corporation in Florida?
Technically, only one person is required, as the incorporator can act as the director initially. However, most corporations will have more.
Can I form my Florida corporation online?
Absolutely! You can form your Florida corporation online through the Sunbiz website or with the help of ZenBusiness.
What is the corporate tax rate in Florida?
The Florida corporate income tax rate is 5.5%.
How many DBA names can my corporation have in Florida?
Florida does not limit the number of DBA names (fictitious names) a corporation can have, but all fictitious names must be unique and registered with the state.
How do I register a foreign corporation in Florida?
To register a foreign corporation, you must file a profit qualification form with the Department of State and pay a $70 filing fee.
How do I dissolve my Florida corporation?
To dissolve your corporation, you will need to file the Articles of Dissolution with the Department of State and pay a $35 fee.