Fast, Professional Florida Corporation
Why Should I Form a Florida Corporation?
- Low Taxes and Fees
Hindsight is 20/20. Years from now you will be thanking yourself for incorporating multiple corporations in Florida to reduce the risk of your businesses all going down together. One of the major benefits of incorporating in Florida is that the state charges relatively low annual fees and has low incorporation fees while offering strong protection against stockholder liability. The only annual fee in Florida is a $150.00 annual report fee. Incorporating in Florida only costs $70, which is much lower than other jurisdictions.
- Florida Has Minimal Compliance Requirements
Florida has fewer requirements for compliance. This minimizes compliance costs and gives business owners many options. For example, it has no minimum capital requirement for a corporation. This allows a company flexibility when deciding to sell stock or issue a dividend. In addition, Florida does not require more than one director. That director can be all titles. These titles do not need to be held by different persons. The same person, therefore, can be the sole Director, President, Treasurer, and Secretary. Finally, the state of Florida protects shareholder privacy. Florida does not disclose or keep records of stockholders, although it does disclose the identities of directors, officers, and registered agents.
- Florida Has a Legal System with Experience in Corporate and Commercial Law
Florida’s legal system has experience in corporate and commercial law. For example, many parties chose Florida as the forum for maritime and admiralty law disputes. Florida’s Business Corporation Act also protects majority shareholders from liability.
- Segregate Your Personal Assets from Your Business
Many people use Florida corporations to operate their businesses. Using a Florida corporation to segregate business interests gives its stockholders protection against “enterprise liability”, which avoids having a judgment against the business also attaching to other related businesses. It is not wise to keep all your eggs in one basket, so separate companies should be filed for different locations of a business, and businesses with a different purpose, even if managed under the same roof. The time to separate your business interests is before you have a problem.
Segregating assets in a corporation protects stockholders by limiting their personal liability for claims against the corporation to the value of the corporation’s assets. For example, a person who owns a fishing charter can use a corporation to protect his or her personal assets from the claims of customers and third parties who may be injured by equipment accidents, business vehicle accidents, or other accidents. Moreover, a business owner can use a corporation to protect his or her personal assets from the claims of business creditors if the business is struggling in a slow economy. Likewise, a person who owns a vacation home in Florida can use an LLC to own the “sticks and bricks” but use a separate corporation as a management company to be the landlord to further protect the underlying real estate from claims against the management such as breach of lease contract claims. Likewise a car dealership can use an LLC to own the land and lease it to a corporation that runs the business for favorable tax treatment and liability protection. This applies to all sorts of businesses from service businesses to manufacturing businesses.
How do you form a Florida Corporation?
- Choose a Name for Your Florida Corporation
Before drafting any organizing documents, it is necessary to decide on a name for the corporation. Florida has a few statutory requirements for corporation names. First, the name cannot conflict with the names of any existing corporations or other entities or Florida trademarks. The Florida Secretary of State provides a business entity search on their website to check for any potential conflicts. The name must also conclude “company”, “corporation”, “incorporated”, or abbreviations thereof. If these requirements are not met, the Secretary of State will reject the name, requiring an alternate name to be submitted prior to incorporation.
- Choose a Florida Registered Agent
All Florida corporations must have a Registered Agent with a street address in Florida to receive service of process and notices from the state. This address must be a physical address, not just a mailing address. An incorporation service, such as Incnow, will act as a registered agent for an annual fee in addition to helping with the process of incorporating. The only time you should consider not using a commercial registered agent is if someone will be home during business hours year-round to accept official notices.
- Draft and File Articles of Incorporation
To bring a Florida corporation into official existence, articles of incorporation must be filed with the Secretary of State. There is a form available on the Florida Secretary of State’s website which outlines the minimum statutory requirements of the articles of incorporation. Those requirements are:
- The name of the corporation, which must comply with the requirements set forth above;
- A street address for the corporation, as well as a mailing address if the two differ;
- The purpose of the corporation;
- The number of shares of stock that the corporation is authorized to issue (Incnow recommends 1,500);
- The name, street address, and signature of the Registered Agent; and
- The signature of the incorporator.
If Incnow files this for you, we will have you review the document for approval before filing. Someone from our office will act as the incorporator and will hand over the company to the initial director(s) by signing minutes of the meeting of incorporation. While these are the only required provisions of the articles of incorporation, there are other optional provisions that can be included. The sample articles of incorporation provided by the Secretary of State include a spot for the names and addresses of the directors, although this information is not required for filing. Other options include an effective date for the corporation or governance provisions; however, because governance provisions can be included in later documents that are easier to amend it may be better to not include them in the articles of incorporation.
When the articles of incorporation are completed, they need to be filed with the Secretary of State. This can be done either by mailing the articles of incorporation to the Secretary of State or filing them online at the Secretary of State’s website. The filing fee for the articles of incorporation is $35, along with a $35 fee for designating a Registered Agent for a total of $70 due at filing.
- Drafting Bylaws and Shareholder Agreements
In addition to the articles of incorporation, corporations are also governed by bylaws. The bylaws, which are not filed with the state, are used to specify parts of corporate governance that are not included in the articles of incorporation. There are many provisions that should be included in the bylaws, such as listing the number of directors, notice requirements for annual stockholder and director meetings and any other regular or scheduled meetings, voting rights, and powers of the officers. Because these bylaws will govern the operation of the corporation, it is important that they are both clear and complete.
Corporations should also have shareholder agreements if there is more than one shareholder. While not required by Florida law, a shareholder agreement is important because it defines the relationship between the corporation and its shareholders. This can include provisions such as limitations on the transfer of shares and voting procedures to protect shareholder rights. This will be your most essential document during a falling out, because it is like a pre-nuptial that may keep you out of court by establishing values, triggers, and procedures for a buy-out.
- Do I Need an Incorporation Service?
It is possible to incorporate your business in Florida without an incorporation service. However, an incorporation service will make the process of incorporating much quicker and more efficient. Agents and Corporations, Inc. has years of professional experience, which is beneficial to anyone using our services. Additionally, incorporation services will also act as registered agent for the corporations which they form. Therefore you are more likely to have dependable documents in place when you need them if you save the headaches and possible missteps of incorporating yourself. An incorporation service makes the process easy, saving you time to focus on your business.