Florida Incorporation

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Corporations are managed by the State that provides the incorporation. Each state may regulate corporations differently. Corporations are usually larger organizations with shareholders as owners, but a corporation could also be a small organization and have a single owner.  The main objective of a corporation is to establish an autonomous entity that will stand on its own with the same rights as an Individual. A corporation can enter into contracts, hold property, and sue or be sued as if it were an individual.

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Nonprofit Corporations are usually structured a little differently in that they do not have stockholders or owners, but they have a specified charitable purpose. They are also treated as tax exempt.

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Florida has a ‘Not for Profit’ corporation defined under their Chapter 617 statutes. This easy to obtain incorporation costs just $75 and filling out a few simple forms. If you are one of the many who think this is an easy path to becoming a corporation, you may want to rethink this action. While you are officially a Florida Corporation what does that really mean? As a not for profit or nonprofit corporation you are tax exempt from Florida’s corporate tax. But what about Federal Taxes? To be legitimate you need to follow through with the Federal side of things by getting a Tax ID number and then filing a yearly tax return. If you’re a small organization, you will introduce the more complex corporation along with the added expense of being a corporation.

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Be careful with your use of this Florida incorporation under these statutes. Unless you are willing to structure as a 501 (c) (3) nonprofit on the federal side you may be creating a non-discernable entity that would not be recognized. If you are a social club or other small organization trying to buy corporate protection for $75 I’d recommend looking elsewhere. To gain the protection of a corporation requires that you do business as a Corporation. That means filing a Corporation Tax return, keeping proper records, properly documenting all actions of the corporation through proper minutes, producing standard accounting financial statements and more. If you do not follow that path you will most likely not be granted corporate protection when you are in need of it.

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By itself, what does the Florida Incorporation get you? In my mind I see only the prestige of saying you’re a corporation and being able to add .inc after your business name. I am doubtful that corporate protection will follow unless you’re a larger organization and really look and do business as a corporation. If you follow through with the Federal corporate structure, then you would have what I see as a legitimate corporation. Be sure that what you want is a corporation before going through this process. If you are looking for multiple owners through distribution of Stock, don’t mind double taxation, more governmental requirements, and higher costs then the Corporation is what you’re looking for. For the many small businesses who are looking for incorporation to get the ‘protection’ a corporation affords, I say look elsewhere and choose a different entity type.

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NOTE:

(You may also want to reference the ‘Corporate Protection’ topic)