Choosing A Legal Structure
In opening your business the legal structure will determine what kind of taxes you will pay, who is liable financially and legally and what forms to file.
What is a Corporation?
A corporation is a separate legal entity that must be incorporated with the Florida Department of State, Division of Corporation. There are two types of corporation, the C-Corporation and the S-Corporation. With a C-Corporation, the corporation rather than the individual pays taxes. An S-Corporation allows up to 75 shareholders to share income and expenses and to report them on their individual tax returns.
What is a Limited Liability Company (LLC)?
Limited Liability Companies or LLC’s are a hybrid form of business that combines elements of partnership and corporation. LLC’s may elect whether to be taxed as partnerships or corporations. LLC’s with one member are considered sole proprietorship and with more than one member are considered a corporation.
What is a partnership?
An unincorporated business allows two or more people to share liability and provide capital. Business income is reported on partners’ individual tax returns.
What is a Sole Proprietorship?
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 proprietorship owners have unlimited personal liability for any debts or other obligations the business incurs.
IRS Tax Topic 408, Sole Proprietorship
IRS Publication 541, Partnerships
Instructions for IRS form 1065
IRS Publication 542, Corporations
Florida Division of Corporations
TAXES and Your Business
When are federal corporate income taxes due?
It is due March 15 if the business’s fiscal year corresponds to the calendar year. C-Corporations pay income tax using federal form 1120 or 1120A. A limited liability classified as a corporation for federal tax purposes must file a federal corporate income tax form. S-corps generally are not liable for federal income tax but they must file federal form 1120S annually and pay tax on certain investment income and capital gains. Returns are due by the 15th of the third month after the close of the corporation’s fiscal year.
What is Federal Employment Tax
This comprises Income, Social Security and Medicare and are due monthly or semi weekly. Businesses that have employees must withhold federal income tax, Medicare tax and Social Security tax from employees’ wages. In most cases the tax is paid semi weekly or monthly. Small employers have an employment tax liability of $1,000 or less for the year may pay annually on January 31. File form 944 Employer’s Annual Federal Tax Return.
What is Federal Unemployment Tax?
This is due January 31, April 30, July 31, and October 31. Floridians are required to report wages and pay taxes to Federal Unemployment Compensation if they paid $1,500.00 in wages within the calendar quarter or employ one or more people for any portion of a day in 20 different weeks during the calendar year.
U.S. Internal Revenue Service
Individual tax questions (800) 829-1040
Business tax questions (800) 829-4933
Forms and Publications (800) 829-3676
For more questions, please contact us at:
Phone: (954) 572-3113 Ext. 206
Fax: (954) 572-3136