An S-Corp election is a process that changes your tax status with the Internal Revenue Service (IRS). It does not change the actual entity structure of your company. An S-Corp election can be made by either a Florida corporation or a Florida LLC. An S-Corp election can have significant impact on how your Florida business is taxed.
Not every company is eligible for S-Corp election. The IRS has specific requirements in order for a business to be able to make the election at all.
IRS S-Corp Requirements:
- Be a domestic entity (not a company located in another country)
- Have allowable shareholders/members
- Have no more than 100 shareholders/members
- Have only one class of stock
- Not be an ineligible corporation (financial institutions, insurance companies, domestic international sales corporations)
The IRS sets specific requirements for who can be a shareholder or member of an S-Corp. Shareholders or members must be individuals, certain trusts, or estates. An S-Corp cannot have a shareholder or member that is a partnership, corporation or non-resident alien.