Florida Incorporation

The Good, The Bad, The Ugly of Florida Incorporation



When it comes to incorporation there are many benefits and many costs. Some of those costs are one time fees and others come around each year. No matter how you look at it there are out of pocket expenses, especially at start-up.

We are based out of Florida, so I'll use Florida for an example. The laws for incorporation vary from state to state and follow a guideline set forth by our big brother the IRS. The main reason a club would incorporate would be to gain status as a tax exempt organization.

Let's start with the basics. Florida's requirements for incorporation:

A corporation is a separate legal entity that exists independently from its owners. A corporation comes into existence when articles of incorporation are properly created and maintained, filed with the prescribed fees, and accepted by the Florida Secretary of State.

Any entity that transacts business in Florida as a corporation is required by Florida Statutes to file documents of incorporation with the State of Florida and pay the filing fee(s).

Some of you are probably saying to yourself "What are articles of incorporation?". Simply put articles of incorporation state the purpose and structure of a business.

The official definition is:
articles of incorporation n. the basic charter of a corporation which spells out the name, basic purpose, incorporators, amount and types of stock which may be issued, and any special characteristics such as being non-profit. Each state has its own system of approval of articles, prohibits names which are confusingly similar to those of existing corporations (so an incorporator can test the name by applying to reserve the name), sets specific requirements for non-profits (charitable, religious, educational, public service, and so forth), and regulates the issuance of shares of stock. Articles must be signed by the incorporating person or persons or by the first board of directors. Major stock issuances require application to the Securities and Exchange Commission. The starting point for filing and approval of Articles of Incorporation is usually the state's Secretary of State. There will be a fee and, often, a deposit of an estimated first year's taxes.

This definition holds true here in Florida too. The definition even says that each state has its own system of approval. It is highly recommended that if you are thinking of incorporation in any state you thoroughly research the requirements for your state.