Why Florida is a popular state to start your LLC
Internationals tout Florida to be a “tax haven” after the president moved his tax base from New York to Florida. So what is there you should know about registering a business in Florida?
Besides its warm weather, Florida is one of seven states in the U.S. that levies no personal income taxes. President Trump has recently moved his tax residence to the Sunshine State, and is making Palm Beach his official home.
Florida is home to some of the biggest companies in the U.S., which are drawn to it because of its climate, beautiful cities, rich business culture, and its access to an organized transportation network.
What are the benefits of starting an LLC in Florida?
For any new business, starting a Limited Liability Company (LLC) in Florida is fast and easy. The LLC is able to have all the advantages of larger corporations in Florida, but has to conform to simpler rules and regulations.
The benefits include:
Limited personal liability
With an LLC the business is separate from the owners and in the event of debts or legal actions the owner’s personal assets are protected.
Florida has no state taxes, meaning that LLC owners pay less taxes on the earnings of the LLC. Besides the tax advantages, filing of taxes is easier in Florida.
Flexibility in ownership, management and profit distributions make LLCs a very popular business model, especially for smaller businesses.
Even though corporations also offer limited liability, they don’t offer simplicity. LLCs don’t need to make annual reports, keep extensive records or pay annual state fees.
What you need to start an LLC in Florida?
The process is very easy and there are only five basic steps to forming an LLC.
The first step is choosing a name and you need to make sure that it hasn’t already been taken in Florida. You will also need to check if the URL is available. Florida has three basic requirements for naming a business:
- It must include the phrase limited liability company or its abbreviations
- The name should not include words that could confuse it with a government agency
- Restricted words which may include Bank, Attorney, University, etc., will probably require additional paperwork and the necessary licensed individuals
Nominate a Registered Agent from the state to receive all important documents. This individual could even be yourself if you live in the state of Florida. If you don’t live there you can choose from a number of registered service agents that are authorized to partake in business in Florida.
The Articles of Organization is the next step and can be filed online at MyFlorida Sunbiz or by mail. This filing should also include the names and addresses of the LLC managers only. If left out it will be assumed that the LLC is member-managed, but if you haven’t decided on the management yet, you will have until the due date of the first annual report to decide.
The state filing cost for Florida is $125, it’s non-refundable and paid to the Florida Department of state.
The Operating Agreement may be optional but its best that every LLC has one to reduce conflicts and ensure that everyone is working toward the same goal.
Getting and Employer Identification Number (EIN) is the final step in the process. With this you can apply for a business bank account for your LLC, submit state and federal taxes, and hire employees.
Getting your LLC of the ground
Once you have registered your LLC, you will need to apply for all the right permits and licenses to operate it in the state of Florida. Depending on the type of business, you may need health permits, building permits, signage permits. Guidelines for these can be found online, but there are also professional services that can help.
What your Florida based LLC will be liable for annually
Florida’s state taxes that you may need to register for include sales tax for the sale of physical products, employer tax if you have employees, and any industry specific taxes.
Even though you will be exempt from paying state taxes in Florida, you will be liable for your yearly federal tax requirements.
All LLCs have to file an annual report with the Florida Department of State, and this can be done online. The annual fee is $138.75 and the company could face fines or dissolution if it fails to comply. The owners also risk losing their limited liability protection.
If you are too busy to remember to file the annual report, its best to have a registered agent remind you or, even better, do it for you at a small fee.
If you, like President Trump, are feeling constrained by state taxes and prefer year-round warm weather, then Florida is a fantastic choice for creating an LLC for your business.