The Benefits of Incorporating in Florida
As a Florida resident, you will be able to take advantage of all its benefits including the state's low business tax rate and its many tax breaks. As an incorporated entity, you'll also have access to a variety of professional services that can help your business succeed. However, if you're outside of Florida or located in another state but want to incorporate in Florida, it's important to know the laws surrounding this process.
Benefits of Incorporating in Florida
Incorporating in Florida allows you to enjoy the benefits of state tax rates, as well as local tax incentives, such as state and county business tax exemptions. In addition, Florida offers several resources that are available to corporations regardless of where they are located. The benefits of incorporating in Florida include:
After incorporating in Florida, your business will be able to take advantage of the many advantages that doing business within the Sunshine State has to offer. You will have access to a mature market with a growing population and a highly educated labor pool.
Applying for an EIN for Your Corporation
Currently, a corporation's Federal Tax Identification Number is typically the social security number (SSN) of one of the corporation's officers. To obtain this number, you must apply in person at a local IRS office. After obtaining your identification number, you can then apply for a Florida EIN by mail or online. Corporations located in Florida can apply online through the department of revenue website. The forms will ask for basic information about your corporation including your name and address and how much capital your business has on hand. Also, you'll need to know the nature of your business and whether or not it is active or inactive and if it is incorporated foreign entity, as well as its location. The Florida EIN number is essential to using any financial instruments attached to your business such as a credit card.
By incorporating in Florida you will gain access to a wide variety of tax breaks. Many states offer fairly limited tax exemptions, but Florida has many exceptions that will benefit many types of businesses. Florida provides the following state and local tax benefits:
In addition to these exemptions, Florida also offers a number of other tax relief programs including:
In order to qualify for any of these exemptions or benefits, you must be incorporated in the state and file your corporation's annual information form with the department of revenue. Florida does not require a publicly filed Florida corporate return.
Applying for an EIN for your Business
To obtain a business EIN, your corporation must file a form with the Florida department of revenue using Form DE-013, Application for an Employer Identification Number. This form requires basic information such as the name of your corporation and date of incorporation as well as when the entity was created and registered with the state. Your application will include all of your corporate officers and those who are required to get a copy of their certificates issued by the IRS. The name on this type of business identification card is typically different from its legal name – it is used instead to identify one specific business from many other businesses that have similar names.
After filing your application you will receive a business EIN number. You will then be able to apply for the Florida business tax exemption certificate by submitting Form DR-15, Florida Business Tax Exemption Certificate. This form is for corporations that are considered active and have tax liability. The form will ask you for basic information about your corporation including the name of the corporation, federal employer identification number and its ownership status as well as income details and address information on the owners of record of the corporation.
This exemption can also apply to limited partnerships, sole proprietorships or other types of entities that are taxed as partnerships or disregarded entities if they meet certain requirements. You will be required to register a Florida business tax exemption certificate with the department of revenue within 60 days of your incorporation. If your company is exempt from paying taxes, you will be issued a statement to that effect.
The main differences between a tax-paying corporation and an exempt corporation are:
Because Florida requires corporations to file an annual report, in addition to not having state income taxes, it is considered one of the most favorable states for incorporation. Some other states that do not charge income tax include Nevada, Washington and Wyoming. However these states do require corporations to file an annual report with their secretary of state's office in order to maintain their legal status with the state. In addition to this many states require corporations to meet specific requirements in order to remain exempt from state income taxes including having a certain number of shareholders or employees.
Many states allow for the possibility of filing an annual report and still maintain its legal status with the state. As such, many people choose to do business in these other states instead of Florida while still living in Florida. For example, California requires corporations to file an annual return with their secretary of state's office but does not charge corporate income tax. However, if you reside outside of California you will not be able to take advantage of this exemption and therefore will need to file an annual report with your secretary of state's office in Florida in order to maintain your legal status with the state.
As a part of its business-friendly rules, Florida encourages small businesses to open credit card accounts to help them stay ahead of vendors that may offer them discounts. To do so, you will need a valid Florida EIN number and your company's financial data on file with the state as well as an application. This is a very common way in which small businesses obtain credit cards. There are several other major benefits of holding a Florida business EIN including obtaining more favorable business financing terms and being able to take advantage of many of the state's tax breaks and exemptions.
Florida is one of many states that have chosen to abolish their corporate income tax in order to attract new business into their borders. In addition to providing business tax breaks and exemptions, Florida is a common choice for incorporation because of its centrally located location and ease of doing business. However, some states have chosen to maintain their income taxes on corporations in recognition of the benefits that these types of entities bring to their local economy. California is an example of such a state where even though corporate income tax is abolished, corporations are still required to file an annual report with their secretary of state's office. In addition, any corporation (whether taxable or not) that has assets or shareholders outside of California must file a Florida corporate return with the department of revenue annually in order to maintain its legal status.
In 2001, the IRS issued a subpoena to Florida requiring it to disclose the names of all those with offshore bank accounts and accounts held in Panama. After initially refusing the request, Florida did release its information to the IRS in June 2005. On October 15, 2007, while a federal grand jury was investigating offshore tax havens and money laundering through off-shore bank accounts held by UBS AG, Florida's treasurer and comptroller were indicted "on charges of filing fraudulent tax returns" In 2008, Terrie R. Bowen was convicted of perjury by a federal court jury after she lied under oath during an investigation when she said that "Florida has no secret offshore account.
Conclusion
Florida has a unique record-keeping responsibility, as the name ‘Florida’ is used for other states, including Tampa and Jacksonville. Florida has more off-shore companies than any other state but in 2011 the Department of State refused to release the identity of any companies that were in Bermuda, Cyprus and the Cayman Islands. This contradicts IRS opinion which claims that no one can hide money offshore from the IRS’s reach through this system. The new Secretary of State Chris Kise wants to change this policy saying that it "hurts taxpayers who have done nothing wrong"".