Should You Structure Your Florida Business as an LLC or S Corp?

Many entrepreneurs are advised to file articles of incorporation as an S corporation in Florida. A major selling point, they are told, is that it receives pass-through taxation but still enjoys many of the benefits of corporations. There are many factors that go into determining the optimal business structure for Florida companies, but it is worth comparing and contrasting S corps and limited liability companies (LLCs) due to their many similarities. 

Benefits of LLC Over S Corp

LLCs have been growing in popularity in recent decades. In 2015, Florida passed a law that made it easier to operate an LLC in the state. To start, LLCs are fairly inexpensive and simple to set up. Another advantage of incorporating an LLC over an S corp is that your LLC can have an unlimited amount of members. S corps, on the other hand, must have no more than 100 shareholders. 

Benefits of S Corp Over LLC

Many think of S corporations as a middle ground between LLCs and C corporations. C corps are what many visualize when thinking of a traditional corporation; publicly traded corporations that are featured on Wall Street are commonly structured as C corps. One advantage of S corps over LLCs is that the corporation’s owners can be classified as “employees,” which entitles them to reasonable salaries. Any earnings left over after paying certain expenses can be passed through to owners as passive dividend income, which is not subject to the self-employment tax. 

However, you may choose to have your LLC taxed as an S corporation to take advantage of tax treatments.

What do LLCs and S-Corps Have in Common?

LLCs and S-corps both have the coveted pass-through taxation structure for the owner/founder. This means that profits generated by the business itself are not considered taxable income; instead, the income “passes through” to management and it is taxed on an individual basis. This prevents business profit from being taxed twice. 

Another attractive feature of both these business types is the nearly impenetrable barrier between the personal finances of owners/founders and the company’s liability. In other words, you will not have to personally pay up if someone wins a civil lawsuit over your business. 

Conclusion

Only after meticulous study of your goals and current financial situation can you start to make an informed decision on the best structure for your Florida business. Even then, you need the help of a Florida business law attorney to ensure your company is set up correctly and within the law. Reach out to Bryant Taylor Law today by calling us at 954-282-9331. We offer complimentary 15-minute strategy sessions to prospective clients.

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