Florida is one of the most important states in the United States, with a large population, enormous tourist appeal and, above all, plenty of business opportunities.
It is also among the best states to start a company, and also to open a corporation. It also has plenty of room to expand a business and to find potential partners and investors, as it is one of the country's main economic hubs.
That's why today we bring you a complete guide on how to create a corporation in the State of Florida, United States of America. So let's get started.
Why open a corporation in Florida?
There is documented evidence that Florida is an excellent option for opening a corporation. Here, we can mention at least 3 major advantages of creating your corporation in this territory.
- Limited liability: in this state, in general, shareholders are not directly liable for the corporation's debts and obligations; the only liability they bear is limited to the money they have invested in the company.
- Incentives for business growth: in Florida, you can benefit from the so-called “Target Industry Incentives”, that is, incentives in the form of tax advantages for those who meet growth targets for their businesses. There are at least two incentives: the Qualified Target Industry tax refund (QTI) and the Capital Investment Tax Credit (CITC).
- Tax benefits thanks to the great stability and favorable tax climate for companies registered in Florida, greatly reducing the taxes you must pay to the state compared with other states.
This gives corporations here a wider scope of action and better incentives to grow and establish themselves in this state, which makes it an excellent option for starting a new business or creating a new corporation.
Steps to open a Corporation in Florida
1.Choose a business name
The first thing you need to do is choose your corporation's name. It should be a name that expresses your company's values, ideally easy to remember and catchy, since that's better for marketing.
The name must include the words Corporation, Company, Incorporated, Limited, or their abbreviations, which in the same order would be: Corp, Co, Inc and Ltd. You cannot use the words Bank, Credit Union, Trust, Trustee or others related to the banking sector without authorization.
To find out whether your name is legally available, you can search for it on the website of the Secretary of State.
2. Register a DBA (optional)
This step only applies to those who want to publicly use a name different from their corporation's name. It lets you adapt your trade name to one that is more attractive for marketing and thus improve how your target audience receives it.3. Appoint the directors
It's important to stress the importance of forming an initial board of directors at this stage of the process. This step is extremely important, since this is where the company's bylaws will be established.
This board of directors will be in charge of building relationships with regulators, as well as organizing how the corporation operates and the initial allocation of shares once they are issued.
4. Appoint a registered agent in Florida
If you are using a registered agent, you must appoint it in the state of your choice. A commercial agent is a professional who handles, negotiates or closes business transactions on behalf of the company. They may be responsible for several companies, including yours.
This agent must be properly registered with the relevant agencies and hold the necessary permits to do so.
There are many registered commercial agents in Florida; in fact, since it is one of the most important corporate hubs in the country, there are agents who specialize in forming corporations and in getting the best possible deals for their clients.
5. File the articles of incorporation
The articles of incorporation are basically forms you must fill out with information about the corporation you are forming, and they are used to request corporation status before the IRC.
These forms also allow the U.S. tax authorities to keep a record of your company, which is necessary for your corporation to comply with the regulations set out in U.S. law and pay taxes in the United States.
They generally include: the corporation's name, its purpose or line of business, the name and address of the registered agent, and the type and number of shares to be authorized.
6. Draft the corporation's bylaws
The board of directors must draft the corporation's bylaws. These are simply well-defined rules that will govern the corporation and must set out the chain of command and the responsibilities of each party. They should include:
- How many shares your corporation can issue.
- How many directors are required.
- Meeting and record-keeping procedures.
It's important to complete this step since, although bylaws are not required to stay in good standing with the state, they will be needed later on if legal help is required and to establish operational order in the company.
7. Draft a shareholders' agreement
The shareholders' agreement is a contract that sets out the responsibilities and interests of each owner. This agreement will protect the shareholders if certain events take place. It is used in two cases:
- If one of the owners dies.
- If their shares are transferred to a third party.
In general, this agreement is extremely useful for dealing with unexpected events and sets out the actions to be taken if any of them occur.
8. Hold the first board of directors meeting
The first board of directors meeting, no matter how many directors the corporation has, must be attended by all of them. Otherwise, the corporation will lack direction and clarity when making important decisions. All directors need to be clear about their place within the company, as well as their responsibilities. That's why the following points must be established at the initial meeting:
- The company's bylaws must be adopted.
- Appointment of the corporate officers.
- Authorizations to issue shares.
On the other hand, if your organization will later apply for S status, you must also address it at this official meeting, making sure each director understands the requirements of this corporate status.
9. Issue shares
Now it's time to issue the shares and put them up for sale. At this point you set the number of shares each owner will hold, and also whether you want to make an initial public offering. At the initial meeting, as we said, you must establish which directors are authorized to issue shares. Once this is set, you must keep a record of the following:
- The buyers of the shares.
- How many shares they bought.
- How much the shares cost, a price that will be set by the market starting from the initial price you established.
- When the shares were bought.
For a person or institution to hold your shares, you must deliver a physical or digital certificate stating how many shares belong to them.
10. Get an EIN
The Employer Identification Number, or EIN, is essential to comply with the requirements of the U.S. tax authorities and the IRS. Basically, it is needed so that the agency can track your corporation and make sure you are up to date with your taxes. The level of scrutiny will depend on the type of corporation you have, as we explained in previous paragraphs.
11. Apply for licenses and permits in Florida
You're almost done; now you just need to obtain the necessary permits. For this, however, you'll have to do some research. You need to be clear about which permits you must obtain, and for that a professional is almost indispensable. To get the permits you need to go to different entities, mainly city and county governments, state and federal agencies and the authorities for the industry you belong to.
You can find information about this on the Small Business Administration website.
What to do after registering your corporation in Florida?
Of course, the work continues after you register your corporation. The process in the United States is usually quite fast, and much of it is done online. It's even faster if you hire a commercial agent, such as businessenusa.com.
Once registration is done, you should take the steps we describe below so that everything runs smoothly in your company and you run into as few problems as possible.
Get a bank account for your corporation
Among the main steps you need to take is opening your business bank account in your corporation's name. This step will separate the corporation's earnings and banking operations from those of its owners, creating a clear distinction between the entities that handle the company's money.
To open a business bank account you need to present:
- The corporate resolution
- The articles of incorporation and
- Your employer identification number.
That way, the bank can open your account, linking it to the U.S. tax services.
Register the company at the state and federal level for taxes
Next, you'll need to register your company at the state and federal level. In Florida, you have many advantages for this, since the agencies are very open to welcoming new companies. In the State of Florida, you'll need to have your Employer Identification Number on hand and contact the regulators, your industry's representatives and the local governments under the jurisdiction of the State of Florida.
There are many websites where you can find this information, but you can also do it through your registered commercial agent.
To complete this process, you will most likely need to go to different entities, such as local governments, or to the local tax offices, represented in the state by the Florida Department of Revenue.
This step goes hand in hand with obtaining the permits needed to operate in a specific territory. If your corporation has branches in different states, you'll likewise need to register it in each of them so that it can operate legally in any of the states where you want to offer your services.
Keep your Florida corporation in compliance
In principle, to keep your Florida corporation in good standing you have to follow the same steps as in the rest of the country, since these kinds of details are set out in the IRC, which applies nationwide.
You must make sure you fully comply with every requirement the IRS demands; to do so, you need to take into account the requirements for the type of corporation you created. You can consult the IRC to find out exactly what they are and how often you must file your corporation's profit and loss report, depending on each case. This must be done with the IRS, and you need to have someone in charge of this task.
You must hold at least one annual shareholders' meeting, although the first one must take place shortly after formation. At this annual meeting a new board of directors is elected and new bylaws are recorded, which must state the date of the next meeting, which must be held on schedule, either in person or through electronic channels.
In addition, meetings may need to be held during the course of the fiscal year, and they must be preceded by a notice of meeting. This notice must contain information about the place and date of the meeting and whether it is a regular or a special meeting, also called an extraordinary meeting.
A special or extraordinary meeting is held when a decision is about to be made that will significantly affect the corporation. The bylaws must contain unique notice requirements for these cases.
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How much does it cost to register a corporation in Florida?
The process of creating a corporation in Florida is quite inexpensive. If the United States is famous for anything, it is for having excellent conditions for creating companies and corporations; in Florida, however, conditions are especially good, which is why many people prefer to form their corporations here, given its stability and variety of opportunities. This will depend on the industry, the state where you form it and whether you do it through a registered agent or on your own. Costs, however, don't usually exceed $125 for an LLC, although this will depend on the industry. On the other hand, it can take a lot of time and effort, since several very important steps must be completed to finalize the incorporation.
Is it easy to register a corporation in Florida?
Registering a corporation in the United States is not a difficult task, but we can't say it's an easy one either. Many things need to be coordinated, the right forms filled out and the right statuses chosen. You need advice, knowledge and legal guidance to know which steps must be taken and to carry them out. Fortunately, there are companies that handle these procedures for you, and depending on the type of corporation, the state and the verification and validation processes, the timing can vary, although forming a company is generally much faster in the United States than in other countries, thanks to the conditions and guarantees provided by law. This usually takes between 20 and 25 days.
What is the difference between a C-Corp and an S-Corp?
There are several differences:
Should I choose a C-Corp or an S-Corp in Florida?
To answer this question, you need to think about your company's short-, medium- and long-term goals. C Corporations, for example, suit companies with much broader projections, that is, those seeking much larger financing in less time. You should also consider the tax burden; some companies cannot afford to cover these expenses, depending on the industry. Smaller companies usually choose S status, which passes the tax burden through to the shareholders, thereby reducing tax costs.
What taxes do corporations pay in Florida?
Companies and corporations have to pay similar taxes, although in general this will depend on the industry they operate in, the state where they are located and other variables. However, the most common are the following However, corporations have many tools for deducting taxes, so many end up paying much less than other entities, at least in percentage terms. Specifically in Florida, however, corporate taxes reach 5.5%, and you can obtain tax incentives by meeting targets, thanks to the programs we mentioned in this same article, which especially benefit new companies and corporations registered in Florida.
How to dissolve a corporation in Florida?
To dissolve a corporation, whether in Florida or anywhere else in the country, you must complete a series of steps that you cannot skip, since otherwise the closure could drag on for many years and there could be legal consequences for the directors. If you want to dissolve your company, you must take the following actions:
Written by
Ignacio Navarro
Ignacio Navarro is a Certified Public Accountant, founder of Start Companies and a specialist in U.S. companies for entrepreneurs, freelancers and digital businesses in Latin America. With training in international taxation and studies at UCEMA, he advises non-resident clients on forming and maintaining LLCs, opening bank accounts, invoicing, accounting and taxes. His experience combines tax strategy, compliance and practical vision for operating in the U.S. in a simple, organized and professional way.
