What is a Florida Corporation?
What are the advantages of a Florida Corporation?
What are the characteristics of a Florida Corporation?
What are the Articles of Incorporation?
What name can be used for my Corporation?
What are Bylaws?
What are Shareholders?
What is Stock of a Corporation?
What are Directors?
Who are the Officers?
What are Minutes and Resolutions?
What is “Piercing the Corporate Veil”?
What is an S Corporation?
What is a Florida Corporation?
A Florida corporation is a legal entity created and governed under the Florida Business Corporation Act (F.S. 607.010-607.193).
A Florida Corporation generally has the same powers, rights and responsibilities of any natural person and can do such things as:
- Own any property in its name such as cash, checking accounts, brokerage accounts, real estate, vehicles, etc.
- Sue or be sued in its name
- Make contracts, guarantees, incur liabilities, etc.
- Lend money, borrow money, invest or reinvest its funds, etc.
- Appoint Officers
- Hire or fire employees, define their duties, set their compensation, etc.
Corporation = Artificial Person
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What are the advantages of a Florida Corporation?
Limited Liability: Shareholders are not liable for the general debts of the corporation. As a sole proprietor, you are personally liable for any and all lawsuits which may arise in the course of business including acts by your employees or contactors.
Tax Savings: A corporation electing S corporation status will generally pay the lowest combined income and employment taxes for its owners and business.
Raise Capital: Shares of a corporation can be readily exchanged making it easier to raise capital from outside investors.
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What are the characteristics of a Florida Corporation?
- A Florida Corporation is considered a distinct person separate and apart from its owners (shareholders).
- A Florida Corporation can be formed for “any lawful purpose,” not just for business purposes.
- All property titled in the name of a Corporation is considered owned by the Corporation, not its shareholders.
- A Corporation is managed by a duly elected board of directors, and its owners do not have management authority.
- Shares of a corporation are transferable and easily traded.
- A corporation has an unlimited life.
- A Florida corporation can have one or more shareholders. One person can simultaneously serve as the shareholder, director and officer.
You are not the Corporation, the Corporation is not You.
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What are the Articles of Incorporation?
The Articles of Incorporation is the document that creates the corporation and gives it life. The Articles of Incorporation is similar to the birth certificate of a natural person and is filed with the Florida Department of State.
All information contained on the Articles of Incorporation is public information.
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What name can be used for my Corporation?
Florida corporations can use any name not already used by another Florida corporation or LLC.
The corporate name must be followed by one of the following suffixes: “Inc.” “Incorporated”, “Co.”, “Company”, etc.
If you wish to do business in a name other than the official name, the corporation must register a “fictitious” name with the Florida Department of State. For example, if “Acme Printing, Inc.” is the name of the corporation and wishes to do business as “Acme Printing”, then a fictitious name must be registered.
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What are Bylaws?
Corporate bylaws are the second most important document of the corporation after the Articles of Incorporation. Bylaws are required for all Florida corporations (F.S. 607.0206).
The bylaws set out the rules and procedures dealing with the internal governance of the corporation. The bylaws include such things as the time and frequency of shareholder and director meetings, the powers of the directors, authority of officers, etc. The bylaws are an internal document and are not made public.
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What are Shareholders?
Shareholders are owners of the Corporation. Shareholders possess the ultimate control over the corporation. Although not involved with the management of the corporation, shareholders elect the directors, who in turn, manage the corporation.
Shareholders are not personally liable for the general debts of the corporation.
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What is Stock of a Corporation?
The ownership of a corporation is represented by a stock (share) certificate. A share certificate represents the total number of shares owned by the shareholder. The owner of the share certificate is the person who is entitled to vote on shareholder matters and entitled to receive dividends.
Stock of a corporation is considered personal property and can be freely transferable (i.e. it can be bought, sold, mortgaged, given away, etc.).
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What are Directors?
The Directors are persons elected by the shareholders and are granted the overall authority to manage the corporation. The directors elect the officers, authorize dividends, and approve all major decisions on behalf of the corporation.
All Florida corporations must have at least on director. Shareholder and directors can be the same person.
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Who are the Officers?
Officers are employees of the corporation and are elected by the directors. Officers are in charge of carrying out the day-to-day business of the corporation.
Officers are classified under the Florida Business Corporation Act as President, Treasurer, and Secretary. The authority and duties of each officer is specified in the corporate bylaws or as determined by resolutions of directors.
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What are Minutes and Resolutions?
Since Florida Corporations are not real persons, all decisions and actions by corporations are made through shareholders, directors and officers.
Decisions and proposed actions therefore must be documented to demonstrate what and how the corporation was “thinking”.
Minutes are the written record of issues discussed at official meetings and how those issues are resolved.
Resolutions are formal statements of what was agreed upon. Written consents are resolutions made without a meeting and are used by single-owned corporations whereby the shareholder, director and officer are all the same person. For example, a resolution can read: “Resolved, this corporation is authorized to establish a business checking account at ABC Bank”.
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What is “Piercing the Corporate Veil”?
The term “piercing the corporate veil” is a phrase used when a legal entity’s status is disregarded and its owners (i.e. shareholders) are personally responsible for the liabilities of the corporation. YOU DON’T WANT THIS TO HAPPEN TO YOUR CORPORATION.
Piercing the veil can happen when the corporation fails to pay the annual state fees, if there is fraud on the part of its shareholders or directors, or the corporation has not operated as a separate and distinct person (i.e. no separate books or records, no bank account, the corporate name is not used on business documents, etc.)
- The corporation should maintain separate books and records
- Personal assets should not be commingled with corporate assets
- The corporation should have its own bank account
- Corporate assets should be titled in the name of the corporation
- Corporate assets should not be diverted for personal use
- The legal name (or fictitious name) of the corporation should be reflected on all stationary, business cards, contracts, and agreements
A Corporation must act like a Corporation
to be treated as a Corporation
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What is an S Corporation?
An S Corporation is not a corporation at all. An S Corporation is not a legal entity. An S Corporation is a business entity that elects to be taxed under the provisions of “Subchapter S” of the Internal Revenue Code. An S Corporation is only a tax designation.
A corporation makes an election to be treated as an S corporation by preparing and filing Form 2553 within the first 75 days after the entity is formed.
An S Corporation election generally results in the lowest combined income and employment taxes for the owners and business.
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