LLC vs S-Corp in Florida


Steve Goldstein
Steve Goldstein
Business Formation Expert
Steve Goldstein runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

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LLC vs. S Corp in Florida

Making choices as an entrepreneur is a big challenge, especially when choosing what business structure to form in Florida. When it comes to a business structure, you can choose whether to have a C-corporation, S-corporation, Sole Proprietorship or an LLC in Florida. Before you start Florida LLC filing, you must compare which structure suits you. You might be considering two popular options: a Limited Liability Company (LLC) or an S Corporation (S-Corp). Both of these structures offer distinct advantages and protections, but selecting the right one depends on various factors, including your business goals, tax preferences, and management style.

If you are confused with Florida LLC vs. S-Corporation, and thinking which one is better and more suitable for the business that you will form, there are a few things that you should consider. Before we get through this article, you should understand what an LLC and S-Corporation mean in Florida.

LLC vs. S-Corp: Definition

While forming an LLC, you must follow some major steps. It is a business structure that protects your personal assets from getting affected by business liabilities. On the other hand, the S Corp is not a conventional business structure, but it is tax status that your can file with the IRS. S Corp does not provide personal asset protection like an LLC. Here are the detailed definitions of the two-

What is an LLC in Florida?

A limited liability company (LLC) is a formal business structure that provides personal asset protection. Under this structure, the LLC owner/member can save his/her personal assets in case the business is in debt or is being targeted with a lawsuit. In some special cases, if your company is legally sued, the other party can go after your personal assets. This is called piercing the corporate veil, where you become personally liable for the company’s debt.

Forming an LLC in Florida gives you a pass-through tax benefit where you don’t have to pay an income tax based on your business revenue; instead, the income tax will be calculated based on your personal income.

What is an S-Corp in Florida?

An S-Corporation (S-corp) is not a type of corporate entity, unlike a limited liability company (LLC) or other business structures. It’s a tax classification that might result in significant financial savings for corporations and LLCs but in different ways. S-Corporation is similar to LLC, except that the IRS treats it as a corporation for tax purposes.

S-corp is a prominent alternative to the LLC. Unlike a conventional C-corp, S-corp is more suitable for small and medium businesses, such as businesses with 100 shareholders.

LLC Vs. S-Corporation: Which is More Preferable in Florida?

In Florida, forming a business is crucial since you need to be adequate in your decision, especially when you think if Florida LLC or an S-Corporation in Florida is preferable. An S-Corporation is a tax classification that some small businesses are qualified for, whereas an LLC is a legitimate company form. By submitting a document to the Internal Revenue Sector (IRS), corporations and LLCs can choose S-Corporation taxation. An S-Corporation can be less formal than forming an LLC and doesn’t normally provide the same protection. Also, unlike LLC, S-Corporation in Florida doesn’t provide the same protections entrepreneurs seek from an LLC. It’s important to consider your options when launching a business from a legal and tax point of view.

It is better to consult a legal professional before you set up an LLC or S-corp. We shared basic differences and how you can form an LLC and S-corp. But it is always recommended to consult a professional before making any decision.

LLCBuddy Editorial Team

Tax Difference Between Florida LLC and S-Corp in Florida

There is a difference between LLC and S-Corporation when it comes to paying taxes. Based on Federal and State Tax differences between the two, you can determine if S-Corporation or LLC in Florida is suitable for your business.

Federal Taxes: There are a few federal tax factors to consider when selecting whether to operate an LLC or S-Corporation in Florida. Tax differs in terms of Pass-Through Taxes and Self-Employment Taxes.

Pass-Through Taxes: LLC and S-Corporation in Florida are the same in terms of pass-through taxation at the federal level. LLCs and S-Corporations do not pay federal income taxes as separate legal entities because of pass-through taxation. Only their owners are required to pay federal income taxes on their portions of the business income. The company does not pay twice the tax in this kind of taxation. Unlike LLCs and S-Corporations, C-Corporations in Florida are mandated to have double taxation. It means that they must pay federal taxes at the entity level.

Self-Employment Taxes: Most LLC owners choose S-corporation taxation in Florida to reduce their self-employment taxes. This is because if you own an S-corporation, you are not required to be self-employed. Instead, you can join the company as an employee and receive regular salary benefits. On the other hand, an LLC member must include their guaranteed payments and a portion of the LLC’s earnings in calculating their self-employment tax. Distribution of shares defines S-Corporation shareholders in terms of their corporate incomes.

Consider the scenario where you are the only owner of an LLC in Florida with a $150,000 annual profit. And let’s say that $100,000 is a fair wage in your location for someone doing the same job as you. Under the default LLC taxation, you must pay self-employment taxes on the entire $150,000 profit. But, if your company is taxed as a Florida S-Corp, you will only be responsible for paying payroll taxes on the standard wage of $100,000. Income tax will still apply to the remaining $50,000.

Florida State Taxes: At the state level, there aren’t any significant tax differences between regular LLCs and S Corporation LLCs. In terms of the annual LLC fee in Florida, it costs $138.75 that can be paid to the GA Secretary of State. Of course, before forming the whole LLC, you must pay the initial fee of $125.

On the other hand, you also need to pay taxes if you form an S-Corporation in Florida; besides, you must pay the S-Corp filing fee and an annual report fee after a year of establishing your S-Corp. You must also go to the GA Secretary of State to pay this.

How do Florida LLCs and S-Corporations Handle Liability Protection?

In Florida, you have no personal responsibility for the financial and legal liabilities of an LLC you will form. An S-Corporation does not provide liability protection because it is a tax designation rather than a distinct business entity. Whatever liability defense an S-Corporation provides is provided by the underlying business entity that chose the tax status. You will have the liability protection the LLC offers if it chooses S-Corporation status for tax purposes.

LLC Vs. S Corporation Ownership Requirements Comparison

Strict ownership requirements exist for LLCs and S-Corporations in Florida. LLC ownership regulations are strict because a new member can only be accepted with the approval of all existing members. On the other hand, S-Corporation ownership regulations are also strict because only specific people are permitted to become shareholders. Also, an S-Corporation can’t have more than 100 shareholders and needs one class of stock.

The following are the reasons why some cannot be shareholders in the S-Corporation in Florida.

  • Insurance business
  • Domestic and International sales corporations
  • Partnerships
  • Corporations
  • Unauthorized Immigrants
  • Certain financial institutions

Although you know most of the reasons regarding the ownership requirements of both LLC and S-Corporation, you should still seek legal advice in preparation for your business and it is best to visit LLCBuddy for your Florida LLC or Florida S-Corp.

Which is Easier to File in Florida: LLCs or S-Corporations?

Filing an LLC or S-Corporation in Florida takes time and preparation. Even though it is not as easy as it seems, something manageable still makes it not difficult. LLC and S-Corporation can be filed by Florida Registered Agent. However, in order to establish an LLC in Florida, you must submit a Articles of Organization to the Florida Department of Business and Professional Regulation. Your Articles of Organization must contain information for your LLC, along with payment of the associated filing fee.

In addition, you need to submit more papers to make the Florida S-Corporation election. File a Form 8832 to inform the Internal Revenue Sector (IRS) that you prefer to tax your LLC as a corporation rather than a partnership. Then you will then submit Form 2553 to choose S-Corporation status.

Do not forget that you must submit annual tax returns and reports after creating your LLC in order to maintain legal compliance.

Important Information

Who Pays More Taxes, an LLC or S-Corporation?

Taxes differ for LLC and S-Corporation in Florida because it depends on the tax purposes and how much profit will be generated. Usually, LLCs are frequently taxed at personal rates and LLC owners can elect to be treated as a separate company with its own federal tax identification number.

On the other hand, owners of S-Corporations must receive a salary that includes Social Security and Medicare taxes. The owner, however, can get dividend income or some of the leftover profits, but not as an employee; thus, they won’t be subject to Social Security and Medicare taxes on that money.

Should I Convert an LLC to S-Corporation?

Since your business assets are separated from your personal assets if you’re a sole proprietor, it may be advisable to form an LLC. You are not restricted to modifying the structure of your LLC to an S-Corporation. Although an S-corporation must have a board of directors, a maximum of 100 shareholders, and adhere to more regulations, it would be ideal for more companies with more shareholders.

How to Structure an LLC to S-Corporation?

To structure an LLC to S-Corporation in Florida, you must submit Form 2553, Election by a Small Business Corporation, to the IRS in order to choose S-corp taxation. Filing a form 2553 should be done 75 days after the formation of your S-Corp, or not more than 75 days after the beginning of the tax year in which the election is to take effect.

If your LLS-Corp has passed the deadline of 75 days, you must also file Form 8832, Entity Classification Election, in order to opt to be taxed as a corporation. Then you would send Form 2553 and Form 8832 jointly by certified mail from the USPS. In Florida, you can file your form 2553 in the Department of the Treasury Internal Revenue Service Center – Ogden, UT 84201 Fax: 855-214-7520 .

FAQs

What is the difference between an LLC and an S-Corp in Florida?
An LLC in Florida is a limited liability company, which offers protection from personal liability for owners (members). An S-Corp is a type of corporation that allows profits and losses to pass through to the shareholders.
What is the filing process for forming an LLC or S-Corp in Florida?
To form an LLC or an S-Corp in Florida, you must file Articles of Organization with the Florida Department of State. You must also register with the Florida Department of Revenue for tax purposes.
What are the legal requirements for LLCs and S-Corps in Florida?
LLCs and S-Corps in Florida must comply with the Florida Business Corporation Act, the Florida Limited Liability Company Act, and all applicable local, state, and federal laws.
How much does it cost to form an LLC or an S-Corp in Florida?
The cost to form an LLC or an S-Corp in Florida depends on the type of entity and the filing fees. Typically, LLCs cost between $50 and $200 to form and S-Corps cost between $100 and $800.
What is the annual reporting requirement for LLCs and S-Corps in Florida?
LLCs and S-Corps in Florida must file an Annual Report with the Florida Department of State. The filing fee is $150 for LLCs and $150 for S-Corps.
What are the minimum capital requirements for LLCs and S-Corps in Florida?
There are no minimum capital requirements for LLCs and S-Corps in Florida.
Are there any restrictions on the types of business activities an LLC or S-Corp can conduct in Florida?
LLCs and S-Corps in Florida must comply with all applicable local, state, and federal laws. Additionally, LLCs may engage in any type of lawful business activity, while S-Corps may only engage in activities related to their business purpose.
What are the benefits of forming an LLC in Florida?
LLCs in Florida provide owners with limited liability protection and the ability to choose how their business is taxed. Additionally, LLCs are relatively easy to form and maintain in Florida compared to other business structures.
What are the benefits of forming an S-Corp in Florida?
An S-Corp in Florida provides owners with limited liability protection and allows for shareholders to pay themselves a salary. Additionally, an S-Corp can give shareholders access to certain tax benefits and deductions.
What are the potential drawbacks of forming an LLC in Florida?
The main potential drawback of forming an LLC in Florida is the requirement to pay annual fees, such as registration fees and the Florida Annual Report Fee. Additionally, LLCs in Florida are subject to the state’s franchise tax, which can be costly depending on the size and income of the LLC.
What are the potential drawbacks of forming an S-Corp in Florida?
The main potential drawback of forming an S-Corp in Florida is the requirement to adhere to certain regulations and rules, such as filing taxes and keeping records, that other business structures may not have. Additionally, S-Corps are subject to double taxation, which can be costly.
What is the cost to form an LLC in Florida?
The cost to form an LLC in Florida is typically around $125 – $150. This typically includes the state filing fee, the registered agent fee, and the Florida Annual Report Fee.
What is the cost to form an S-Corp in Florida?
The cost to form an S-Corp in Florida is typically around $100 – $150. This typically includes the state filing fee, the registered agent fee, and the Florida Annual Report Fee.
What is the tax rate for an LLC in Florida?
The tax rate for an LLC in Florida depends on the type of LLC and how it is taxed. Generally, LLCs in Florida are subject to the state’s franchise tax, which is based on the LLC’s income and assets.
What is the tax rate for an S-Corp in Florida?
The tax rate for an S-Corp in Florida depends on the type of S-Corp and how it is taxed. Generally, S-Corps in Florida are subject to corporate income tax and the state’s franchise tax, which is based on the S-Corp’s income and assets.
What are the requirements to form an LLC in Florida?
The requirements to form an LLC in Florida include filing an Articles of Organization with the Florida Department of State, registering a registered agent in Florida, obtaining an employer identification number, and paying the Florida Annual Report Fee.
What are the requirements to form an S-Corp in Florida?
The requirements to form an S-Corp in Florida include filing an Articles of Incorporation with the Florida Department of State, registering a registered agent in Florida, obtaining an employer identification number, filing an S-Corp election with the IRS, and paying the Florida Annual Report Fee.
How long does it take to form an LLC in Florida?
It typically takes about 5-7 business days to form an LLC in Florida.
How long does it take to form an S-Corp in Florida?
It typically takes about 10-14 business days to form an S-Corp in Florida.
Do LLCs in Florida need to file an Annual Report?
Yes, LLCs in Florida need to file an Annual Report in order to remain in good standing with the state.
Do S-Corps in Florida need to file an Annual Report?
Yes, S-Corps in Florida need to file an Annual Report in order to remain in good standing with the state.
Are LLCs in Florida subject to the state’s franchise tax?
Yes, LLCs in Florida are subject to the state’s franchise tax, which is based on the LLC’s income and assets.
Are S-Corps in Florida subject to the state’s franchise tax?
Yes, S-Corps in Florida are subject to the state’s franchise tax, which is based on the S-Corp’s income and assets.
What is the Florida Annual Report Fee?
The Florida Annual Report Fee is an annual fee that businesses in Florida must pay in order to remain in good standing with the state. It is typically around $150.
Is there an age limit for forming an LLC in Florida?
No, there is no age limit for forming an LLC in Florida.
Is there an age limit for forming an S-Corp in Florida?
No, there is no age limit for forming an S-Corp in Florida.
Does an LLC in Florida need to have a board of directors?
No, an LLC in Florida does not need to have a board of directors.
Does an S-Corp in Florida need to have a board of directors?
Yes, an S-Corp in Florida is typically required to have a board of directors.
Does an LLC in Florida need to have corporate officers?
No, an LLC in Florida does not need to have corporate officers.
Does an S-Corp in Florida need to have corporate officers?
Yes, an S-Corp in Florida is typically required to have corporate officers.
Is there an annual fee for LLCs in Florida?
Yes, there is an annual fee for LLCs in Florida, which is typically around $150.
Is there an annual fee for S-Corps in Florida?
Yes, there is an annual fee for S-Corps in Florida, which is typically around $150.

Also Read

Why Florida LLC Vs S Corp is So Important

Florida LLCs have become increasingly popular due to their flexibility and simplicity in terms of formation and operational requirements. LLC owners, also known as members, can enjoy the benefit of limited liability protection while having the flexibility to choose how they want the company to be taxed. By default, an LLC is considered a pass-through entity for tax purposes, meaning that profits and losses are reported on the members’ personal tax returns. This can be advantageous for owners who want to avoid double taxation and maintain structural simplicity.

In contrast, S Corporations have more restrictions in terms of ownership, with eligibility limited to U.S. citizens and only certain types of entities. S Corps also have stricter operational requirements, with the need to hold regular meetings, keep minutes, and adhere to various regulations set by the IRS. However, S Corps offer potential tax benefits that can outweigh these limitations. S Corp owners can take advantage of pass-through taxation while also receiving some of the income as wages and some as dividends, potentially reducing their overall tax liability.

The decision between a Florida LLC and an S Corp ultimately comes down to a business owner’s priorities and goals. For those looking for simplicity and flexibility in their business structure, an LLC may be the most suitable option. With fewer regulatory requirements and the ability to choose how the business is taxed, an LLC can provide the necessary protection and operational freedom for many entrepreneurs.

On the other hand, for those seeking potential tax advantages and willing to comply with the stricter regulations of an S Corp, the benefits of pass-through taxation and the ability to split income between wages and dividends may be attractive. S Corps can be a powerful tool for tax planning and maximizing profits, particularly for businesses with substantial revenue and profits.

In conclusion, the choice between a Florida LLC and an S Corp is a crucial decision that requires careful consideration based on each business owner’s unique needs and circumstances. By weighing the pros and cons of each business entity and seeking professional advice, entrepreneurs can make an informed decision that will set their business up for success in the long run. Ultimately, the decision between a Florida LLC and an S Corp can have far-reaching implications for a business’s taxation, liability protection, and operational flexibility, making it a decision that should not be taken lightly.

Conclusion

Even though you can choose a different corporate structure, consider whether it will primarily assist your organization. Striking the perfect balance between corporate benefits and legal protection that suits your particular needs is important. In forming an LLC or S-Corp in Florida, you must be aware that every detail is well-formed so that starting your business will be successful. And, if you would like us to help you form a Florida LLC and S-Corp in Florida, read our other business guides.

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