Starting a Business In Florida

As the name implies, a sole proprietorship is owned by just one person. A sole proprietorship is not registered with the state and is therefore a common choice for freelancers, side-hustlers, and gig workers, especially when they’re just starting out.

Sole proprietorships are easy to set up, allow owners to have full control over their business, and often have low operating costs. However, because there’s no legal separation between business and business owner, sole proprietors take on full personal liability for all business debts and any legal actions taken against the business.

As a sole proprietor, you’ll pay personal income tax using a Schedule C form.

An unregistered business with more than owner is a general partnership. As with sole proprietorships, the owners of a general partnerships are personally liable for business debts. In a debt settlement, your personal assets, such as your home, car, and savings, could end up at risk of collection.

At tax time, you’ll file Form 1065 to report the partnership’s income. Then you’ll pay personal income tax on your earnings from the partnership (since the type of income you can receive from a partnership varies, you may want to consult an accounting professional regarding the appropriate form).

An LLC is a type of business that you form by registering with the state. Unlike a sole proprietorship or general partnership, an LLC is its own legal entity, separate from its owners. Because of this, owners are granted limited liability protection in cases where the business is sued or owes debts. Typically, owners are only personally liable for debts up to the amount they invested in the business.

In terms of organization, LLCs offer owners (referred to as “members”) with a great deal of flexibility. An LLC can be owned and managed by one or multiple members. Members can also hire managers to run the business for them.

For tax purposes, LLCs are considered “pass-through” entities. LLC profits pass through to the members, who pay income tax using a Schedule C or other appropriate form (consult an professional if you’re not sure). If you choose, you can also elect to file as another entity type, such as an S-Corp.

Another advantage of LLC formation in Florida is that although you cannot form an anonymous LLC, you can maintain your anonymity with the Double (Private) LLC structure. Our Double LLC Package allows you to create two LLCs that manage each other so you can keep your name off the public record. With us as your registered agent, you can also keep your address private by using our permanent business address instead.

Like an LLC, a corporation is formed by filing paperwork with the state, which creates a legal business entity. Corporations also provide owners, referred to as shareholders, with liability protection. Unlike an LLC, however, corporations have a complicated management structure (officers, a board of directors) and can have much higher operating costs.

Corporate profits are general taxed twice: once at the level of the business and then again on shareholders’ personal income taxes. The current corporate tax rate in Florida is 5.5%, which is relatively low, and there’s no personal income tax.

For many small business owners, starting an LLC is the preferred choice. With an LLC, you’ll get liability protection and flexible management, plus simple formation and tax options.

If you choose to create a formal business entity such as an LLC or corporation, we offer an affordable, value-packed business formation service.

Opening a business bank account keeps your personal finances separate from your business assets. Mixing up your finances can make filing taxes difficult and have negative consequences if you get audited.

When shopping for a business bank account, here are some traits to look for:

• High interest rates (APY) for savings and checking
• Low or no monthly or annual fees
• Low minimum account balance requirement
• Low transaction fees
• Low interest rates (APR) for lines of credit if you plan to get a loan

When opening your account, you’ll usually need to bring personal identification and contact information, a copy of your formation paperwork, and copies of any DBA registrations or business licenses. You’ll probably also need your company’s EIN.

Many small businesses are self-funded, and if you don’t have many upfront costs, you may not need much capital to get yourself off the ground.

But if you do, especially if you want to be prepared to meet demand as you business grows, you may need to explore funding options. Here are some popular funding avenues:

• Loans from friends or family: Borrowing from friends or family can be a quick way to fund your business without a lot of red tape. However, you’ll need to make sure the funds are given to you in the name of the business and be clear about what your investor expects in return. Accepting loans from friends or family can lead to rocky relationships if you’re not able to repay them or if they don’t feel that they’ve gotten an adequate return on investment.
• Crowdfunding: With the advent of internet advertising and social media, crowdfunding has become an increasingly popular way to finance businesses and business projects. Popular crowdfunding sites for business include Kickstarter, Indiegogo, and Patreon.
• Startup loans: Startup loans are commonly available through traditional banking institutions and online lenders. But be careful–startup loans can come with high interest rates and short repayment periods.
• Small Business Administration (SBA) loans: The US SBA partners with lenders to help small businesses get better access to loans with affordable rates and flexible loan requirements. Some loans programs even provide ongoing business support. Loans amounts range from $500 to $5.5 million. Find out more through the US SBA loan program.
• Small business grants: Small business grants are offered by a variety of sources, from the state government to community organizations. The best part about getting a grant is that you don’t have to pay it back, which can really ease your financial burden as you’re starting out. If your business is minority-, woman-, or veteran-owned, be sure to look for grants aimed at assisting your demographic. Here are some grant sources and ways to search for grants:
  • Florida Small Business Grants
  • Florida Grant Watch
  • National Association for the Self-Employed Growth Grant
  • Florida Department of Agriculture and Consumer Services Grant Opportunities
  • SBDC Florida State Trade Expansion Program (STEP)
  • Florida High Tech Corridor Grant

Luckily for Florida residents, there’s no state income tax in Florida. So, if you’re a sole proprietor or own an LLC, you’ll only need to pay federal income tax.

If you own a corporation, your company will need to pay the 5.5% corporate tax on all earnings over $50,000.

Florida does change a 6% Sales and Use Tax on the sale of all taxable items and services, and counties add their own sales tax on top of that, so you’ll need to register for this tax and figure out what the rate is in your county.

Some industries must also pay additional taxes based on the products and services they sell—for example, if you run a gas station, you’ll need to pay Fuel Tax.

Florida’s Official Business Information Portal and the Department of Revenue’s  New Business Start-up Kit can help you figure out which taxes you’re required to pay.

Register to pay your taxes using the Department of Revenue’s e-Services Enrollment portal.These blocks support lists, in case you were curious.

Some professions and industries have specific insurance requirements (medical professionals, contractors). Even if your industry doesn’t have any insurance requirements, getting business insurance is a way to help protect your investment.

Depending on your company, you may need general liability or commercial property insurance. Business interruption insurance can also help if you have to cease operations due to a natural disaster or other emergency.

And if you hire employees, you may be required to purchase Worker’s Compensation Insurance. You can find out more about worker’s comp coverage requirements through the Department of Financial Services.