To set up a Florida construction company corporation, you file $70 Articles of Incorporation with the Division of Corporations, then license the corporation through the DBPR under a licensed qualifying agent. The incorporation is the quick part. The licensing, insurance and workers’ compensation work around it is where contractors get tripped up, so that’s what most of this guide covers.
Why form a Florida construction company corporation?
Because construction goes wrong in expensive ways. Property damage, defects, job site injuries and contract disputes can all turn into claims, and one bad project can produce a claim bigger than your insurance limits. A corporation separates the business’s obligations from your personal assets, so if the company is sued or can’t pay its debts, creditors generally can’t come after your home, vehicles or savings.
There are other benefits too. Commercial clients, general contractors and government agencies often prefer to work with an incorporated business, and “Inc.” or “Corp.” can help you win larger contracts, better financing and better vendor terms.
An S-Corp election can also lower your self-employment tax. Ownership is easier to transfer as well: bringing in a partner, passing the business to family or selling it happens through stock sales rather than complicated asset transfers.
What kind of corporation should a contractor form?
A regular business corporation, almost always. Professional corporations exist for businesses where every owner must hold a professional license, and contractor licensing doesn’t work that way. In Florida, both licensed and unlicensed people can own a construction company, as long as it has a qualified qualifying agent.
The real choice is how the corporation is taxed.
| Feature | C-Corporation | S-Corporation |
|---|---|---|
| Corporate-level tax | Yes | No, income passes through to shareholders |
| Double taxation on distributed profits | Yes | No |
| Shareholders | Unlimited | Up to 100, U.S. citizens or residents |
| Classes of stock | Multiple allowed | One |
| Best for | Retaining profits, stock options, outside investors | Most small and mid-size construction businesses |
For most small and mid-size contractors, we’d elect S-Corp status. It keeps the liability protection and avoids double taxation.
When does a C-Corp make sense?
A C-Corp pays federal corporate income tax on its profits, and Florida corporate income tax applies too. Shareholders then pay personal income tax on dividends. It can still be the right call if you plan to keep significant profits in the business to grow, want to offer stock options to key employees, are raising money from investors who want a C-Corp, or run at minimal profit so double taxation barely bites.
What does an S-Corp save?
An S-Corp pays no federal income tax itself. Income, deductions and credits flow to the shareholders’ personal returns.
The main saving is self-employment tax. Shareholders who work in the business take a reasonable salary subject to payroll taxes, and the remaining profit is distributed without the 15.3% self-employment tax. S-Corp shareholders may also qualify for the 20% qualified business income (QBI) deduction that the Tax Cuts and Jobs Act created for pass-through businesses.
To elect, file IRS Form 2553 within 2 months and 15 days of incorporating, or by March 15 of the tax year you want S-Corp treatment to start. Include the required shareholder consents. Miss the deadline and the corporation is a C-Corp for at least the current tax year.
What contractor license does the corporation need?
Florida contractors are licensed by the Department of Business and Professional Regulation (DBPR) and the Construction Industry Licensing Board (CILB). There are two kinds of license:
- Certified licenses let you work anywhere in the state. They include Certified General Contractor (CGC), Certified Building Contractor (CBC), Certified Residential Contractor (CRC) and certified specialty contractors in various trades.
- Registered licenses limit you to the county where you registered. They generally need less experience, in exchange for that geographic limit.
Which one you need depends on the work. A general contractor handling several trades needs a broader license than a specialty contractor doing only electrical, plumbing or HVAC work.
When you incorporate, the corporation holds the contractor license, not the shareholders. But it can only hold one through a qualifying agent.
What does the qualifying agent have to do?
The qualifying agent is the licensed professional responsible for making sure the company’s work meets Florida building codes, safety rules and industry standards. They must:
- Hold an active, unrestricted Florida contractor license in the right category
- Actively take part in running the business
- Directly supervise and control construction activities
- Make sure all work complies with codes and standards
- Keep their own license in good standing
The qualifying agent can be an officer, shareholder or employee, but the connection has to be real. Florida prohibits “license lending,” where someone qualifies a company without actually working in it. One person can qualify more than one company only in limited circumstances, and DBPR looks hard at whether they can really supervise all of them.
What if your qualifying agent leaves?
If your qualifying agent leaves, retires or lets their license go inactive, you must notify DBPR immediately, and you have 60 days to designate a replacement. During that time the corporation can’t enter new contracts, pull new permits or do work that requires a contractor license.
If you don’t replace them, the license can be suspended or revoked, which effectively shuts the business down. If you aren’t the qualifier yourself, plan for a backup before you need one, and put the qualifier’s obligations and notice period in writing.
What bonds and insurance does a Florida contractor need?
The license bond
All certified and registered contractors must post a surety bond with the Construction Industry Licensing Board. For certified general, building and residential contractors, the amount depends on financial responsibility requirements. Specialty contractors post lower amounts based on scope of work. Registered contractors’ bond amounts are set by local county ordinances.
The bond protects consumers who lose money because your company didn’t follow its contracts, didn’t pay subcontractors and suppliers, or didn’t follow building codes. If a valid claim is paid, the surety then comes after your corporation for reimbursement. It isn’t insurance for you.
Project bonds
Many projects require their own bonds on top of the license bond. A performance bond guarantees that you’ll finish the job to the contract’s specifications, and if you default, the surety can hire another contractor to finish. A payment bond guarantees that you’ll pay subcontractors, suppliers and laborers, which protects the owner from mechanic’s liens and unpaid worker claims.
Public projects typically require both performance and payment bonds totaling 100% of the contract price. Large private projects often do too.
General liability insurance
Florida doesn’t require general liability insurance for licensure, but almost every construction contract does. It covers third-party bodily injury at job sites, property damage during construction, and products and completed operations claims after the project is done. Most commercial clients and general contractors want between $1 million and $2 million per occurrence.
Do you need workers’ compensation?
Almost certainly. Florida’s workers’ compensation rules for construction are among the strictest in the country.
In most industries, coverage becomes mandatory at four employees. In construction, it’s mandatory with one, and that includes full-time, part-time, temporary and leased employees and day laborers. Corporate officers also count unless they’re properly exempted.
Officers can exempt themselves by filing an exemption with the Department of Financial Services, meeting the ownership percentage requirements and keeping the paperwork in order. The exemption covers only those officers. If the corporation has any non-exempt workers, you still need a policy covering all of them.
The penalties for going without coverage are severe:
- Stop-work orders that halt all business operations
- Fines of up to $1,000 per day for the first 10 days
- Fines of up to $2,000 per day after the first 10 days
- Criminal penalties for willful non-compliance
- License suspension or revocation by DBPR
A stop-work order keeps you off every project until you get coverage and pay all the penalties. For a small contractor, that can end the business.
What does the corporation protect you from, and what doesn’t it?
| Usually protected | Not protected |
|---|---|
| Contract disputes with clients, subcontractors and suppliers | Personal guarantees you signed for company debt |
| Construction defect claims | Your own negligent or intentional wrongful acts |
| Debts and vendor payables | Payroll taxes and certain other trust fund obligations |
| Regulatory fines and penalties | Criminal liability |
Courts can “pierce the corporate veil” and hold shareholders personally liable when a corporation isn’t run like one. The usual reasons are mixing personal and business money, skipping meetings and records, undercapitalizing the company, treating company assets as your own, or using the company for fraud.
Keeping the shield is mostly about habits. Run every dollar through a business-only bank account. Hold annual shareholder and director meetings with minutes, and document major decisions with resolutions. Keep the company properly capitalized and insured. Sign contracts in the corporation’s name, never your own. And file your annual reports so the company stays in good standing.
How does Florida’s lien law affect your corporation?
Protecting your right to get paid
If your corporation does work and isn’t paid, Florida’s Construction Lien Law lets you record a mechanic’s lien against the improved property. The lien secures your claim and can eventually force a sale of the property to pay it. The deadlines are strict:
- Serve a Notice to Owner within 45 days of first providing labor or materials, if you aren’t in a direct contract with the owner.
- Record the Claim of Lien within 90 days of last providing labor or materials.
- File a lawsuit to enforce the lien within one year of recording it.
Miss any one of these, or get the notice wrong, and you can lose your lien rights completely. Then you’re just an unsecured creditor. Put these dates on a calendar for every job.
Protecting your projects from other people’s liens
When you’re the general contractor or the owner, liens from subcontractors and suppliers can hold up closeout, damage client relationships and cloud title so the property can’t be sold or refinanced. Protect yourself by collecting preliminary lien waivers before paying subs and suppliers, getting final lien waivers at completion and final payment, and requiring subs to give sworn statements listing every sub-subcontractor and supplier. On larger jobs, use payment bonds. Before you make final payment or release retention, confirm everyone has been paid.
What local licenses do you need?
The state license isn’t the end of it.
Most Florida counties require an occupational license (also called a business tax receipt) to operate there. Expect an annual fee based on your business classification, plus proof of your state license and insurance and a certificate of use or zoning approval for your business location. You generally need one in each county where you regularly work, even if your registered agent is in a different county.
Many cities also require you to register with the building department before you can pull permits. That usually means submitting your state license and current insurance certificates, paying a fee and renewing every year.
Some places go further. Miami-Dade County requires additional registration for certain contractors, some cities have special permit rules for particular kinds of work, and local code enforcement agencies may keep their own contractor databases. Before you bid in a new area, check every local requirement. Getting it wrong can mean stop-work orders, fines and discipline.
How do you incorporate a construction company in Florida?
1. Choose a name
The name needs a corporate designator (Corporation, Incorporated, Company, Corp., Inc. or Co.), must be distinguishable from existing Florida entities, can’t use restricted words without authorization, and has to meet contractor licensing name rules. Search the Division of Corporations database to check availability. Many contractors add a place or a service, like “Sunshine State General Contractors, Inc.” or “Miami Commercial Builders Corporation.”
2. Appoint a registered agent
Every Florida corporation needs a registered agent with a physical Florida street address to receive legal papers and state notices. You can do it yourself, but you’re on job sites all day, and the registered agent’s address goes on the public record. A professional registered agent service is there during business hours, keeps your home address private, and can serve you in other states if you expand. We’d use a service for that reason alone.
3. File the Articles of Incorporation
The articles list the corporate name, principal office address, registered agent name and Florida street address, number of authorized shares and incorporator information. File online at Sunbiz.org. The fee is $70. Standard processing typically takes 5-10 business days, and same-day or next-day processing is available for an extra fee.
4. Get an EIN
You’ll need it to open a bank account, file tax returns, hire employees, apply for your contractor license and apply for business credit. Apply online at IRS.gov using Form SS-4. It takes about 15 minutes and you get the number immediately.
5. Adopt bylaws and hold the organizational meeting
Bylaws cover shareholder meetings and voting, director duties and meetings, officer positions, issuing and transferring stock, record-keeping and how to amend the bylaws. Florida doesn’t require you to file them, but having thorough bylaws strengthens your liability protection.
At the first board meeting, adopt the bylaws, elect officers, authorize stock, adopt a corporate seal and stock certificates, approve opening the bank account, authorize the contractor license application and approve any initial contracts. Record it all in minutes.
6. Issue stock
Issue certificates to the initial shareholders and keep a stock ledger of every issuance and transfer. Ownership decides control and profit, so think it through carefully if several people are investing in or running the business.
7. Get your licenses and registrations
- Florida contractor license through DBPR, which means passing exams, documenting experience, getting the surety bond and paying the fees
- County occupational licenses
- Municipal registrations
- State sales tax registration, if it applies to your services
- Federal and state employer registration, if you’ll have employees
8. Set up your bank account and books
Open a business account with your EIN and articles, deposit all revenue into it and pay all expenses from it. Construction accounting has its own needs: job costing by project, progress billing and retention, subcontractor payments, equipment depreciation and lien waiver tracking. Construction-specific accounting software or an accountant who works with contractors will save you trouble.
9. Get insured before your first job
You’ll need workers’ compensation, general liability, commercial auto for company vehicles, builder’s risk for projects, umbrella liability coverage and your surety bonds.
10. File the S-Corp election
If you want S-Corp treatment, file Form 2553 within the deadline and confirm every shareholder is eligible.
What do you have to keep up every year?
Annual report. File with the Division of Corporations on Sunbiz.org before May 1 each year to update your principal office, officers and directors, and registered agent. The fee is $150 for corporations. Filing late adds a $400 late fee and can lead to administrative dissolution.
Contractor license renewal. Renew with DBPR every two years. You’ll pay renewal fees, provide current insurance certificates, confirm the qualifying agent’s continuing education, keep up your financial responsibility requirements and report any change in your business structure or qualifying agent. Working on an expired license is illegal and can lead to discipline and revocation.
Taxes. A C-Corp files Form 1120 and pays corporate income tax on its profits. An S-Corp files Form 1120-S and sends each shareholder a Schedule K-1. Florida doesn’t have a personal income tax, but you may need to file Florida sales tax returns if you sell taxable goods or services. With employees, you’ll also file quarterly payroll returns and make payroll tax deposits.
Records and formalities. Keep your articles and bylaws and any amendments, minutes of all meetings, written consents, the stock ledger and certificates, major contracts, annual reports, tax returns and financial statements. Hold your annual shareholder meetings and regular director meetings, get board approval for major decisions, use the corporate name on every contract, invoice and letter, and keep the company adequately capitalized and insured. Skipping these gives a court a reason to pierce the veil.
Where to start
Settle the qualifying agent question before you file anything. If you hold the license yourself, the rest is paperwork. If you’re relying on someone else’s license, their commitment to the company is the single biggest risk you’re taking, and it deserves a written agreement before the corporation even exists. After that, file the articles, get your EIN, line up workers’ compensation and your bond, and apply for the corporation’s license.