Florida enjoys a business-friendly regulatory environment and its population is growing -thanks, in part, to warm weather and lack of income tax. This can translate into rising demand for goods and services, making the Sunshine State is an attractive place to start a business. But before you start a business, there are certain things you should know, including business license and registration requirements.
Consider working with a financial advisor as you launch, buy or sell a business in Florida.
Make a Business Plan
To start a Florida business, begin with the business plan. First, decide on a product or service to sell. Most entrepreneurs are guided in this by personal strengths and individual objectives as well as the realities of the market.
Florida is known for a dynamic tourism industry warmed by its position as the southernmost contiguous U.S. state. Agriculture, international trade, aerospace and aviation are also important. Although the state’s economy is diverse, new Florida businesses in these industries are especially likely to find ready-made markets, suppliers, and workers.
Creating an effective sales and marketing strategy is the next objective of business planning. Basic steps include identifying the most likely prospects and figuring out the best ways to attract them and turn them into customers. With a large Hispanic community and close ties to Latin America, Florida is ideal for marketing internationally.
Unless a business is envisioned as a one-person enterprise, a plan for staffing is next. The planner’s tasks include determining how many workers, what skills and whether to use independent contractors or full-time employees. Florida’s unemployment rate is often lower than the nation as a whole, so new businesses take extra care to see that staffing needs will be met.
Going into business requires money for fees, stationery, rent, salaries and other costs. Founder’s savings capitalize most businesses. Other sources may include bank loans, selling shares to the public, issuing debt or crowdfunding.
Florida offers business owners a number of financial incentives from state and local government and non-profit organizations. Enterprise Florida has information on loans, grants, credits, refunds, rebates and other financial assistance for businesses.
Choose a Business Structure
In Florida, the Department of State Division of Corporations handles registering business entities. Florida recognizes four main types of business structures:
- Sole proprietorships. Most businesses use this simple structure that makes no distinction between business and owner.
- Corporations. This structure insulates owners from liabilities but at the cost of more documentation and regulatory filings. There are two types of corporations, C corporations and S corporations. The latter type lets profits pass directly to owner(s), who therefore avoid double taxation.
- Limited liability companies. LLCs offer liability protections like corporations but have fewer paperwork and meeting requirements.
- Partnerships, including general partnerships and limited partnerships. Partnerships have two or more owners who share in profits and losses. General partnerships distribute rights and responsibilities equally among partners. Limited partnerships have two types of partners with different degrees of liability and authority.
- Limited partnerships. These partnerships have two kinds of partners, general and limited and offer some protection from liability to limited partners. Ohio limited partnerships have to register and pay fees to the state.
- Limited liability partnerships. To protect general partners from liability, a partnership can be registered as a limited liability partnership. This also requires paying a fee to the state.
You can file registrations and pay fees online at the Division of Corporations website.
Register the Business Name
You have to file a Fictitious Name Registration if you are:
- Doing business under a name different from your personal name if you are setup a as a sole proprietor, or
- If you’re set up as a corporation or other separate legal business entity, doing business under a name different from your entity’s legal name.
Note that if you’re doing business as a sole proprietor under your name, or under the name of your legal business entity, you don’t have to file a Fictitious Name Registration.
To file a Fictitious Name Registration online, visit the Division of Corporations Fictitious Name Registration website. You can also file by mail.
Get Tax ID Numbers
Although Florida has no personal income tax, it does have a corporate income tax as well as other taxes. New businesses must register with the Internal Revenue Service as well as state taxing authorities.
To get a federal Employer Identification Number, businesses can apply with the Internal Revenue Service. The EIN is needed to facilitate withholding taxes on wages and salaries and to file the business’s federal tax return.
The Florida Department of Revenue website has information on corporate income taxes, sales taxes, unemployment taxes and the various forms and processes required to comply. The department also has information on state tax incentives that can benefit businesses.
In addition, most Florida counties collect occupational taxes and some cities also have business taxes. The Department of Revenue website has a tool to help businesses locate tax appraisers and collectors for each county. The Department of State website helps businesses connect with cities to learn about local taxes.
How Businesses Are Taxed in Florida
The Florida corporate income tax rate, effective Jan. 1, 2022, is 5.5% of net income. Florida also applies some adjustments, including a $50,000 exemption on net income.
Florida collects a 6% state sales tax from businesses located in or doing business in the state. Most counties in the state also collect sales taxes, up to an additional 1.5%. The average local sales tax in the state is 1.058%.
Local governments collect property taxes at varying rates on business assets located in their jurisdictions. While Florida has no state income tax or state property tax, these local property taxes are higher than in most states.
Obtain Licenses and Permits
Here are the key agencies that oversee most licenses and permits in Florida.
- The Department of Business & Professional Regulation. If you’re an architect, engineer, real estate agent or similar business professional in Florida, the DBPR is the place to go to get the proper permits and licenses.
- The Department of Agriculture and Consumer Services. Beekeepers, dance instructors, pawnbrokers, telemarketers, travel agents and many other service providers are licensed by DACS.
- The Division of Library and Information Services website has information and links to the license-issuing agencies for healthcare professions, day care providers, group home managers and financial services providers.
The Bottom Line
Low-tax, business-friendly Florida is home to more than 2 million businesses of all sizes. There’s always room for one more new business in the Sunshine State, as long as the proper procedures are followed.
Tips for Starting a Business
- Many financial advisors specialize in working with business owners. If you don’t have a financial advisor yet, finding one doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Picking the best structure for your new business is critical. Besides considering how Florida taxes and regulates various business structures, it’s important to understand the benefits and liabilities of your choices. Check out this helpful summary of tips for making sure your new business is organized for maximum success.
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