Starting a Business In Florida

2. Decide on Your Business Entity Type

Which business structure you choose will depend on how many owners your business has and what industry you’re in. Common business types include sole proprietorships, general partnerships, and limited liability companies (LLCs), and corporations.

Sole Proprietorship

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.

General Partnership

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).

Limited Liability Company (LLC)

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.

Corporation

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.

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 affordable, value-packed business formation packages.

4. Appoint a Registered Agent

Another thing you’ll need if your register your business with the state is a Florida registered agent (you don’t need a registered agent if you own a sole proprietorship or general partnership). A registered agent is a representative you designate to accept legal notices and other government documents on behalf of your business. You’ll have to list your registered agent’s name and address on the formation paperwork you file with the state. You don’t need a registered agent if you own a sole prop

You can appoint an individual or hire a business that offers registered agent services to fulfill this role as long as the requirements are met. Your registered agent must have a physical address in Florida where they are available to receive documents during regular business hours. And if your registered agent is an individual, they must also be over 18.

While you can serve as your own registered agent, there are benefits to hiring a service (like us):

• Convenience: You don’t need to be available at your registered address M-F during normal business hours all year around. This is helpful if you want to work in multiple locations, go on a business trip, or take a vacation.
• Reliability: We’ll never miss a document, and we scan and upload your documents to your online portal as soon as we receive them. And once they’re uploaded, we notify you immediately.
• Privacy: Limit the amount of personal information put on the public record when you file your formation documents by using our business address instead of a personal address. This is especially useful if you work from a home office—you won’t get served at home.

Because we own our building, you can use our business address as your registered agent and principal business address if needed. Doing so can not only increase your privacy but also make the process of starting your business a bit easier.

For example, you may have to register your company so can rent or purchase property in the name of your business, but you also need a business address in order to your company registered. Using our service can help you solve that problem.

7. Obtain Any Necessary Licenses and Permits

There isn’t a statewide general business license in Florida, but depending on what kind of work you do and where your business is located, you might need a professional or industry-specific license or permit. For example, if you’re a massage therapist, you’ll need to be licensed. As a restaurant owner, you’ll have to get a liquor license.

You can find out which licenses you may need using Florida’s Official Business Information Portal. Licensing and permit requirements may vary by county or city, so be sure to check at both the state and local level (which you should be able to do using the information portal). For instance, in Jacksonville you may have to get a Certificate of Use.

In Florida, there are there main licensing agencies:

• The Department of Business & Professional Regulation
• The Department of Agriculture and Consumer Services
• The Department of Health

Or, you can refer to the Department of State’s Division of Library and Information Services’ list of state agency homepages to find the agency you need.

Licensing and permit costs and renewal rules vary by professional and license type.

9. Organize Your Finances

Keeping on top of your finances and making sure there’s no overlap between your business and personal funds is extremely important, especially if you own an LLC or corporation. Registered business entities have liability protection, but this protection can be disregarded in situations where owners have commingled their personal and business assets, called “piercing the corporate veil.”

Here are some of the basic steps to starting off on the right foot financially:

Open a business bank account

Even if you have a sole proprietorship, it’s important to open a business bank account so that you can keep your personal and business finances separate. 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.

Fund your business

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

Register for Florida Taxes

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.

Get Business Insurance

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.