The following write-up discusses in general how corporations are viewed in the State of Florida.
The material is summarized in a table following this discussion.
Domestic Corporation If the corporation is organized under Florida statute, it is said to be a Domestic corporation. A foreign corporation is organized under the laws of a state other than Florida, but it may conduct business in Florida if it first obtains a certificate of authority from the Florida department of state. An alien corporation is authorized by a jurisdiction other than any of the US, the District of Columbia, Puerto Rico, Guam or any possession or territory of the US to conduct business.
About Profit and Losses
A corporation’s profits and losses accrue to the company. It is taxed on its income under corporate tax rules. When the corporation distributes dividends to its stockholders, the stockholders report the dividends as income. In effect, corporate income is taxed twice, once to the corporation and again to the stockholders. Losses may not be deducted by the stockholders; however, they may be carried forward and applied to the corporation’s future earnings.Why Incorporate
Typically, individuals who choose to incorporate are associated with closely held corporations owned by relatively few people, all or most of whom are involved directly in the corporation’s business. As such, the business may qualify as S corporation. An eligible domestic corporation can avoid double taxation by electing to be treated as an S corporation under the rules of Subchapter S of the IRS Code. In this way, the S corporation passes income, loss deductions and credits to its stockholders, to be included on their separate returns.
Limited Liability Company
Limited Liability Company {LLC}} provide the owners protection from personal liability for business debts in the same way corporations do, but the IRS treats LLCs as partnerships for tax purposes. Income is taxed only once, as in a partnership, and an LLC has great flexibility in how it passes income and deductions to its members.
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