Florida Corporation Advantages and DisadvantagesFlorida Corporation Advantages and Disadvantages
- In Florida's case, the Legislature earlier this year passed a full sales tax exemption on new manufacturing equipment, it had been only a partial exemption before and approved a sales tax exemption on research and development equipment.
In doing so, Florida joined 36 other states that already have the manufacturing equipment exemption and the other 24 states that have the research and development exemption.
Still, business leaders regard the passage of those measures extremely important to the state's economic growth and its ability to be competitive. Florida Corporations
and other artificial entities, including those located in other states, that are partners in a partnership or members of a joint venture doing business in Florida must file Florida Form F-1120 (Corporate Income/Franchise and Emergency Excise Tax Return). A partnership is required to file a Florida Partnership Information Return (Form F-1065) if it is doing business in Florida and a corporation is one of the partners.
Should I Incoprorate in Florida ?
A corporation, chartered by the state in which it is headquartered, is considered by law to be a unique entity, separate and apart from those who own it. A corporation can be taxed; it can be sued; it can enter into contractual agreements. The owners of a corporation are its shareholders. The shareholders elect a board of directors to oversee the major policies and decisions. The corporation has a life of its own and does not dissolve when ownership changes.
Advantages and Disadvantages: Advantages of a Corporation
- Shareholders have limited liability for the corporation's debts or judgments against the corporations.
- Generally, shareholders can only be held accountable for their investment in stock of the company. (Note however, that officers can be held personally liable for their actions, such as the failure to withhold and pay employment taxes.)
- Corporations can raise additional funds through the sale of stock.
- A corporation may deduct the cost of benefits it provides to officers and employees.
- Can elect S Corporation status if certain requirements are met. This election enables company to be taxed similar to a partnership.
- A corporation pays 15% federal income tax on taxable income up to $50,000; 25% tax on income from $50,001 - $75,000; 34% tax on income from $75,001 - $100,000; 39% tax on income from $100,001 - $335,000; and 34% tax on income over $335,000.
- A sole proprietor who filed a federal income tax return under the status of married, filing jointly, would pay 15% federal income tax on taxable income up to $35,800; 28% tax on income from $35,801 to 86,500; and 31% tax on income over $86,501.
Disadvantages of a Corporation
- The process of incorporation requires more time and money than other forms of organization.
- Corporations are monitored by federal, state and some local agencies, and as a result may have more paperwork to comply with regulations.
- Incorporating may result in higher overall taxes. Dividends paid to shareholders are not deductible form business income, thus this income can be taxed twice.
Federal Tax Forms for Regular or "C" Corporations
- Form 1120 or 1120-A: Corporation Income Tax Return
- Form 1120-W Estimated Tax for Corporation
- Form 8109-B Deposit Coupon
- Form 4625 Depreciation
Florida's 2012 Business Tax Climate Ranks 5th
Florida ranks 5th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property.
Tax Freedom Day Arrives on April 11 in Florida
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2011, Florida taxpayers work until April 11 to pay their total tax bill, ranking it 16th highest in the nation. That's one day earlier than national Tax Freedom Day (April 12).
Florida's State and Local Tax Burden Below National Average
Florida's 2009 state and local tax burden of 9.2% of income is below the national average of 9.8%. Florida's tax burden has increased overall from 9.0% (37th nationally) in 1977 to 9.2% (31st nationally) in 2009. Floridians pay $3,897 per capita in state and local taxes.
Florida Levies No Individual Income Tax
Florida is among seven states in the country that collect no individual income taxes. Since most small businesses are either S Corporations or partnerships or sole proprietorships, they pay their business taxes at the rates for individuals. This makes the tax environment for small businesses in Florida very competitive compared to other states. Reference - Tax Foundation
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