What form of business structure is recommended for a new business and what form of business structure is needed to maximize your effectiveness and minimize your costs?
Each form of business structure:
Sole proprietorships are easy to set up and easy to disband. Profits are taxed at the owner’s individual federal tax rate, with the amount reported on Schedule C or Schedule CZ. Sole proprietorships do not file Florida corporate income tax returns, but owners have unlimited personal liability for any debts or other obligations the business incurs. In Florida, that liability is limited by the state’s homestead rights laws, preventing creditors from seizing an owner’s home.
IRS Tax Topic Sole Proprietorships
Partnerships can be formed as easily as sole proprietorships. These unincorporated businesses allow two or more people to share liability and provide capital. Business income is reported on partners’� individual tax returns. A partnership can’t be dissolved on a whim, so enter into one carefully. Limited partnerships must file with the Florida Department of State, Division of Corporations and, as of early 2006, pay $35 to designate a registered agent and anywhere from $52.50 to $1,750 in filing fees.
Tax Information For Partnerships
Corporations are separate legal entities that must be incorporated with the Florida Department of State, Division of Corporations.
The two types of corporations are the C-Corporation and the S-Corporation. With a C-Corporation, the corporation rather than individuals pays taxes and assumes liabilities. Florida’s corporate tax is 5.5%.
An S-Corporation allows up to 75 shareholders to share income and expenses and to report them on their individual income tax returns.
Tax Information For Corporationshttp://www.irs.gov/businesses/corporations/
-Limited Liability Company
Limited liability companies, or LLCs as they are known, are a hybrid form of business that combines elements of partnerships and corporations. In Florida, LLCs may elect whether to be taxed as partnerships or corporations. (The Internal Revenue Service allows LLCs to choose whether to be taxed on the federal level as partnerships or corporations)
LLCs must file with the Florida Department of State, Division of Corporations ($125 for new LLCs; $50 annually).
•Florida Division of Corporations
They have advantages and disadvantages. The one you should choose depends on your specific circumstances. You need to discuss this with your lawyer and tax adviser.
Choose your legal structure carefully. The type of legal structure will determine what type of taxes you’ll pay and the tax forms you’ll file. The choice you make will stipulate your legal and financial liability.
Tax Information For Corporations
Registering a business in Florida may require an entity to register not only at the State level but also with the local county government. Corporate entities are usually required to register with the Division of Corporations, (http://www.sunbiz.org/) while many professions are required to register with the Department of Business and Professional Regulation. County occupational licenses are usually obtained from the local county government.
Before opening the business an occupational license is required. The county license is obtained from the county tax collector, and the city license is normally obtained at the city hall. Both these entities will check with the zoning department before issuing a permit. After selecting a business location you may need a certificate of occupancy or certificate of use. These are obtained from the zoning department.
Occupational License COUNTY LISTINGS
Orange CountyOsceola County
Obtaining an Employer Identification Number
Simplified Tax And Wage Reporting System
Employer Identification Number (EIN)
An Employer Identification Number (EIN) is used to identify a business entity such as a corporation, partnership, or retirement plan. Generally, businesses need an EIN. An exception is a sole proprietor with no employees. However, sole proprietors who must pay federal excise or employment taxes will need an EIN, too. Note: You may not transfer your EIN if you sell or otherwise transfer your business. The new operator may not use your EIN.