Knowing the pros and cons of C corporations in Florida can help first-time business owners to make an informed decision regarding the type of business entity they should form. If you are starting a business or considering starting one, then this article is for you. When you start a business, one of the most critical decisions you need to make is establishing your business structure.
Why is this so critical? Because making the wrong choice can destroy your business even before you finish creating it. So, if you are considering starting a C corporation, read on to learn the pros and cons of C corporations in Florida and why this type of business entity is not always the best option.
The Pros and Cons of C Corporations in Florida
One of the main benefits of creating a C corporation is that it can attract investors very easily, as it is ideal for investing. The two main reasons for this are: (1) C corporations can offer investors different classes of shares with distinct advantages that are highly attractive, and (2) investors can buy shares from anywhere in the world.
Another big advantage of C corporations that makes them ideal for businesses issuing shares is that there is no limit on the number of shareholders. Nor is there any regulation regarding the location from which investment funds may come. In other words, if you want to make your business public, establishing a C corporation is likely the right move for you. However, there are some disadvantages you should take into account.
One of the most significant downsides of C corporations is double taxation. C corporations are subject to corporate income tax. Thus, C Corporation’s generated income must be taxed at a corporate level and then at an individual level when the revenue goes to the shareholders in dividends. This double taxation is something that deters many people from establishing C corporations.
However, although double taxation is a significant drawback, many tax deductions are available for C corporations. These deductions can often counterbalance the impact double taxation has on corporations. In other words, in some cases, double taxation may not be that big of a problem.
Another significant disadvantage of C corporations is the high number of formation requirements this entity requires. For example, to start a C corporation, you will have to develop an original name, file incorporation documents, and obtain an EIN. Several other formation requirements need to occur before you can begin operating, such as creating an excruciatingly detailed operating agreement.
In addition, your operating agreement must address a myriad of complex issues about your entity. For example, such issues could relate to the classes of shares you will be issuing, corporate bylaws, and annual shareholder meetings. Simply put, C corporations are more sophisticated and, therefore, require more work.
Is Starting a C Corporation the Right Move for You?
If the answer is yes, then I can help you. If the answer is no, then I can help you. If you do not know the answer yet, then I can help you.
If this article made you realize that establishing a C corporation is the right move for you. In that case, I can help you navigate the formation process and, most importantly, remove the stress from it. However, if starting a C corporation does not seem to be the best choice, I can help you choose the right business structure for your unique needs and circumstances.
We will discuss what you would want for your business and I will communicate to you the available options, with its pros and cons, so you are able to make an educated decision for what you and need.
If you are finally taking steps to start the business of your dreams, I can help you do it the right way. Get in touch with me today by calling (305) 921-0440 or email me at Romy@jflawfirm.com to schedule a consultation.