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Markstone492 Oct 8th 2014 10:21 pm

Florida Corporation Tax?
 
Apologies if this is in the wrong part of the forum, but i'm trying to establish what the Florida equivalent of Corporation Tax would be on my E2 business. Does it work in the same way, a fixed % tax on profit? Any advice greatly appreciated.

sir_eccles Oct 8th 2014 10:35 pm

Re: Florida Corporation Tax?
 
I don't know the answer but it may depend on what sort of business you have and how it is structured. Is it an LLC? S-corp?

Markstone492 Oct 8th 2014 10:37 pm

Re: Florida Corporation Tax?
 
Hi, it's a Computer Sales and Service business, owned by my Holding Company LLC. Hope that helps. Thanks.

Michael Oct 8th 2014 11:33 pm

Re: Florida Corporation Tax?
 
In the US, only large corporations are setup as C corporations since they have plenty of lawyers and accountants to get tax benefits. For others, they are setup as a LLC or a S corporation. For a LLC, all profits are taxed at the individual tax rate and for a S corporation, the owner(s) can chose to be taxed like a C corporation or a LLC. Almost every company that is setup as a S corporation, choses to be taxed like a LLC since most would pay more taxes if taxed as a S corporation.

Steve_ Oct 8th 2014 11:59 pm

Re: Florida Corporation Tax?
 

Originally Posted by Markstone492 (Post 11432533)
Apologies if this is in the wrong part of the forum, but i'm trying to establish what the Florida equivalent of Corporation Tax would be on my E2 business. Does it work in the same way, a fixed % tax on profit? Any advice greatly appreciated.

Well there is a Florida corporation tax, I think it's 5.5%, this is pretty much it chapter and verse: Florida Corporate Tax Rates - 2014

Like it says, the corp has to pay unless it's a flow-through entity like an S-corp (which is subject to personal rates of income tax, which in Florida means the Federal rates). So it depends on the structure you've used for your E-2 business.

In reality even if you used a C-corp, if it's a small business, you would simply pay yourself a large enough salary to reduce profits to zero so there would be no corporation tax.

The advantage of using a C-corp is that it looks less like a "subsistence" business, which is one of the criteria they use for issuing E-2. But I wouldn't get too worked up about it. I knew a dentist in Florida a long time ago who had E-2 and he was using an S-corp.

Markstone492 Oct 9th 2014 8:25 am

Re: Florida Corporation Tax?
 
Thanks Steve, and Michael, for the replies. Very helpful and greatly appreciated. I'm going the LLC route, as i'm the sole owner of the business. Thanks again guys.

thinbrit Oct 9th 2014 6:05 pm

Re: Florida Corporation Tax?
 

Originally Posted by Michael (Post 11432593)
...Almost every company that is setup as a S corporation, choses to be taxed like a LLC since most would pay more taxes if taxed as a S corporation.

I think you mean that almost every LLC chooses to be taxed as an S Corp, right? In the most simple terms, an S-Corp is a tax election, not an entity. You cannot elect S Corp status unless you are already a sole proprietorship/partnership, C-Corp, or an LLC/PLLC.

I elected S Corp status for taxation of our PLLC so we can save on self-employment taxes. In essence, we pay ourselves a wage with the required employment taxes, but we can also take some money out of our business without paying Social Security and Medicare taxes (we pay income tax as usual on this portion).

Hotscot Oct 9th 2014 10:08 pm

Re: Florida Corporation Tax?
 
Here in CA there's a mandatory $850 franchise tax for an LLC plus a percentage of profits after a certain amount.
Yup a tax whether you make any profits or not.

JAJ Oct 10th 2014 2:38 am

Re: Florida Corporation Tax?
 

Originally Posted by thinbrit (Post 11433544)
I think you mean that almost every LLC chooses to be taxed as an S Corp, right? In the most simple terms, an S-Corp is a tax election, not an entity. You cannot elect S Corp status unless you are already a sole proprietorship/partnership, C-Corp, or an LLC/PLLC.


A single member LLC may also be a disregarded entity (for tax purposes), while a multi-member LLC could be taxed as a partnership.
Single Member Limited Liability Companies

As far as I understand, an S-Corp entity cannot be owned by a non-resident alien (if such an entity is so owned, it normally loses S-corp status). This is an important consideration for anyone on a visa like E-2.

Some State income tax authorities follow the Federal rules closely, others do not.

Steve_ Oct 10th 2014 9:16 pm

Re: Florida Corporation Tax?
 

Originally Posted by JAJ (Post 11433984)
As far as I understand, an S-Corp entity cannot be owned by a non-resident alien (if such an entity is so owned, it normally loses S-corp status). This is an important consideration for anyone on a visa like E-2.

You can have an S-corp on E-2. E-2 is a non-immigrant status but you can file as a resident for tax purposes. Anyone in a non-immigrant status can, the requirement is that for an S-corp they cannot be a non-resident alien for tax purposes. In fact if you're on E-2 and you're in the US more than 183 days a year you basically have to file as a resident.

Steve_ Oct 10th 2014 9:20 pm

Re: Florida Corporation Tax?
 

Originally Posted by thinbrit (Post 11433544)
I think you mean that almost every LLC chooses to be taxed as an S Corp, right? In the most simple terms, an S-Corp is a tax election, not an entity. You cannot elect S Corp status unless you are already a sole proprietorship/partnership, C-Corp, or an LLC/PLLC.

These terminologies, like LLC, Ltd., etc. are all really State designations. The name doesn't really mean anything for federal tax purposes, it's the actual way it's organized as matter of fact that is relevant, not the name of it. Corporate terminology varies from State to State. I know here in Alberta there's a whole list of terminology you can pick from when you incorporate, the registry agent was like: "well this one makes it sound more American but this one might sound better internationally" - it's all meaningless.

JAJ Oct 11th 2014 1:24 am

Re: Florida Corporation Tax?
 

Originally Posted by Steve_ (Post 11434910)
You can have an S-corp on E-2. E-2 is a non-immigrant status but you can file as a resident for tax purposes. Anyone in a non-immigrant status can, the requirement is that for an S-corp they cannot be a non-resident alien for tax purposes. In fact if you're on E-2 and you're in the US more than 183 days a year you basically have to file as a resident.

Of course.

Except that since E-2 does not automatically lead to a green card status, E-2 holders should normally assume they will some day return home and become non-resident aliens again. At that point, if they have maintained their U.S. S-Corp, the status becomes invalid and it reverts to C-Corp. At a minimum, it may be prudent to dissolve the corporate entity, or distribute any retained income, before this occurs. In other words, if keeping the U.S. entity, make sure the transition to C-Corp status is planned, not unintentional.

Also be careful at the start of U.S. residence about forming an S-Corp at any time before the substantial presence test is made. At least, discuss the issue with a competent CPA.


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