LLC vs S-Corp vs C-Corp in Florida
A practical comparison to help you choose the right entity structure for your Florida business.
By Paul Kogan · Published January 15, 2025 · Updated April 14, 2026
Choosing the right business entity is one of the first, and most consequential, decisions you'll make as a business owner. The entity you choose affects your personal liability, your tax bill, your ability to raise capital, and your ongoing compliance burden. Here's how the three most common structures compare in Florida.
Important note: An LLC is an entity type. An S-Corp is a tax election. You can form an LLC and elect S-Corp taxation, getting the flexibility of an LLC with the tax benefits of an S-Corp. Most of our business clients who earn over $50K-$70K in profit use this combination.
| Feature | LLC | S-Corp | C-Corp |
|---|---|---|---|
| Formation cost (FL) | $125 state filing | $70 state filing + Form 2553 to IRS | $70 state filing |
| Liability protection | Strong, personal assets shielded from business debts | Strong, corporate veil protects shareholders | Strong, corporate veil protects shareholders |
| Taxation | Pass-through (default). All profits subject to self-employment tax (15.3%) | Pass-through. Salary taxed, distributions NOT subject to self-employment tax | Double taxation: corporate tax (21%) + personal tax on dividends |
| Self-employment tax savings | None with default taxation | Significant, save 15.3% on distributions above reasonable salary | No self-employment tax, but dividends taxed twice |
| Best for annual profit of | Under $50K, simplicity outweighs tax savings | $50K-$500K, tax savings are material | $500K+ or seeking outside investment |
| Payroll required | No (unless you elect S-Corp status) | Yes, must pay reasonable salary to owner-employees | Yes, for all employees including officer-shareholders |
| Ongoing compliance | Light, annual report ($138.75), operating agreement | Moderate, annual report, payroll, separate tax return (Form 1120-S) | Heavy, annual report, payroll, minutes, separate tax return (Form 1120) |
| Ownership flexibility | Unlimited members, foreign owners OK, multiple classes of interest | Max 100 shareholders, US citizens/residents only, one class of stock | Unlimited shareholders, any nationality, multiple classes of stock |
| Outside investors | Possible but less familiar to investors | Limited, ownership restrictions make VC investment difficult | Preferred by investors, standard structure for equity investment |
| Operating agreement / bylaws | Operating agreement (highly flexible) | Bylaws + shareholder agreement (more formal) | Bylaws + shareholder agreement (most formal) |
Choose an LLC If:
- • You're starting out and want simplicity
- • Profit is under $50K/year
- • You're holding real estate
- • You want maximum flexibility
- • You have foreign co-owners
Choose S-Corp (or LLC + S Election) If:
- • Consistent profit over $50K-$70K/year
- • You want to reduce self-employment tax
- • All owners are US citizens/residents
- • You don't need outside investors
- • You can handle payroll compliance
Choose a C-Corp If:
- • You're seeking VC or angel investment
- • You plan to issue stock options to employees
- • You want to retain earnings at 21% tax rate
- • You plan to go public eventually
- • You have 5+ shareholders or foreign investors
The Tax Math: Why S-Corp Election Matters
Let's say your Florida business earns $120,000 in profit after expenses.
As a standard LLC: You pay self-employment tax on the entire $120,000, that's roughly $18,360 in FICA/SE tax (15.3%), on top of your income tax.
As an LLC with S-Corp election: You pay yourself a reasonable salary of $60,000 (subject to payroll taxes: ~$9,180) and take the remaining $60,000 as a distribution (NOT subject to self-employment tax). You just saved approximately $9,180 per year.
The “reasonable salary” requirement is the key, set it too low and the IRS will reclassify your distributions as salary. Work with both a business attorney and a CPA to get this right.
A Note for Licensed Professionals
If you're a doctor, lawyer, CPA, architect, or other licensed professional in Florida, you must form a Professional Association (P.A.) under Florida Statute §621. Standard LLCs and corporations are not available to you. A P.A. operates similarly to a corporation but is specifically designed for licensed professionals. We handle P.A. formations regularly and can guide you through the licensing board approval process.
Paul Kogan
Fort Lauderdale Litigation Attorney, The Kogan Firm, P.A.
- 15+ years
- Florida Bar
- Martindale Peer Rated
Not Sure Which Entity to Choose?
We offer flat-fee formation packages for all entity types. Schedule a free consultation and we'll recommend the right structure based on your business, income, and goals.
This comparison is for informational purposes only and does not constitute legal or tax advice. Consult with an attorney and CPA regarding your specific situation.