There are several benefits of incorporating a business in Florida. Recent stats show that the state’s private sector added 35,000 new jobs to the market in October 2022, which makes it fertile soil for entrepreneurs.
In this article, you will discover whether a foreign corporation can do business in Florida.
Foreign Corporation vs. Foreign-Owned Corporation – Understanding the Difference
The term “foreign corporation” is often used to describe corporate businesses from abroad that choose to form a subsidiary in the United States. However, the same term is also used to describe companies seeking to conduct business in a state other than the state where it was formed.
Under Florida law, there are two types of business entities – foreign entities and domestic entities. Domestic entities are those formed and operated within the state. Conversely, foreign entities are out-of-state businesses with authorization to operate in Florida legally.
Any foreign corporation must apply with the Florida Department of State before “transacting business” within state jurisdiction. Foreign-owned companies formed abroad must also meet specific requirements to operate in Florida.
Can a Foreign Corporation do Business in Florida? – The Fundamentals
As long as the company meets all applicable laws at the federal, state, and local levels, a foreign-owned corporation formed abroad can do business in Florida. Generally, international corporations operate in the US through subsidiaries.
A subsidiary is a separate legal entity controlled by a parent company, which is a corporation established abroad in this case. The parent company must have at least 50% ownership of the subsidiary.
Once the subsidiary is established in Florida, the parent company must act in the best interest of the new company, maintaining a separate identity and promoting its corporate interests separately.
The parent company’s ability to control the subsidiary lies in the possibility to choose the individuals to occupy any strategic role in the newly-established company (i.e., directors, officers, etc.).
While foreign-owned corporations can establish a branch location to conduct business in Florida, the most sought-after alternative is operating through subsidiaries due to the tax implications and potential liabilities.
Can a Foreign Corporation do Business in Florida? – C Corps vs. S Corps
There are two types of corporations in the United States – C-corporations and S-corporations. C-corporations are corporate businesses by default, while S-corp status must be elected at the time of formation or a later moment.
US law restricts the ownership of S-corps exclusively to US citizens and lawful permanent citizens. Non-residents and foreign corporations cannot own interest in an S-corp. Hence, corporations established abroad can only opt to establish subsidiaries in the form of C-corps.
As separate legal entities, C-corps enjoy limited liability but are exposed to double taxation. In such cases, the income generated by the corporation is subject to taxes on the corporate level and after the distribution of dividends on the shareholder level.
Identifying an ideal strategy to establish a foreign-owned corporation in Florida through a subsidiary or branch company requires expert legal guidance. Only an experienced legal advisor can ensure foreign corporate investors a smooth process of incorporation.
Do You Want to Establish a Foreign-Owned Corporation in Florida? – Immediately Seek Expert Legal Guidance
With years of experience with the incorporation of foreign businesses in Florida, Attorney Romy B. Jurado willingly wants to help you succeed. Contact us by calling (305) 921-0976 or emailing [email protected] for expert legal guidance.