Everything you need to know to start your business in Florida
Stunning beaches and exhilarating theme parks may pop into your head when you think about Florida, but it may surprise you to know that the Sunshine State is also a nourishing breeding ground for small businesses.
Florida for startups
The business climate in Florida is one of the best in the nation. A comprehensive study
comparing 100 cities across three metrics (access to resources, business environment and business cost) rated Florida as the most accommodating environment for burgeoning businesses.
Florida by the numbers
Florida ranked the highest for "Business Environment," which included factors like average growth of business revenues, growth in the number of small businesses and five-year business survival rate.
Florida’s unique coastlines and ports make it an optimal station for global trade network (a benefit of being the protruding appendage of the United States).
Another benefit of starting a business in Florida is that there's no state income tax.
But it’s not all sunshine and rainbows (no pun intended). There are a couple of downsides to starting a business in Florida.
Some argue that the lack of state income tax is offset by the higher cost of living in Florida. Housing is the the biggest factor in this high cost of living. The higher cost of living is further exacerbated by the lower average income of the state.
Thankfully, Florida is a plentiful source of funding capital for entrepreneurs.
Many venture capitalists and angel investors actively invest in startups across this state. As a result, Florida is regarded as one of the United State’s economic powerhouses
. In fact, if Florida were a country, its GDP would rank 17th in the world.
Planning your business in Florida
Once you've decided on your business idea the next step is to document the details of it in a business plan. Thankfully, we've written an in-depth guide
on how to craft a winning business plan.
The typical business plan is comprised of the following chapters:
Sales and marketing
Before you launch your business, you'll want to research the market opportunities in your area. According to Profitableventure.com, some of the fastest growing industries in Florida are:
Pet product stores
But don't worry if your business idea doesn't fall into these categories. There are still plenty of opportunities in the Sunshine State.
Structuring and registering your business
There are 7 main business structures, and all are applicable to both brick and mortar businesses and e-commerce businesses:
Limited Liability Company (LLC)
Regardless of what business structure you choose, there are a few steps you'll have to follow. First, you'll need an Employer Identification Number (EIN). While Sole Proprietors don't technically need an EIN, it's a good idea to have one if you ever intend to employ anyone.
The state of Florida requires some businesses to hold a licence in order to legally run their business. This license is known as a Department of Business and Professional Regulation (DBPR)
To check whether the DBPR requires you to hold a licence for your service click here
If your business type in not listed in the DBPR website, it may not automatically mean that you don't require a license.
To be absolutely certain of your licence requirements, you should contact your appropriate Florida state agency and ask them.
A directory of state agencies can be found here
You should also check with your state agency whether you need a zoning permit to operate your business in its location, especially if you plan to operate your business from home.
With those formalities taken care of, now we can focus on the specific business structures in Florida.
How to start a Sole Proprietorship in Florida
A Sole Proprietorship is the simplest business structure to set up because you don't need to file any documentation with the Florida state department.
The owner of a Sole Proprietorship is considered as an indistinguishable entity from the business, so all personal liabilities are shared with that of the business.
To launch a Sole Proprietorship, follow this procedure:
Choose a business name
You can use your own name as the business name or register a business name.
If you choose to trade under your own legal name you won't need to file a name registration because your name will automatically be appended to your Sole Proprietorship business.
Most business owners prefer to trade under a unique business name (also known as a fictitious name). This name will need to be registered.
Before registering you business name you need to make sure that it is not already in use.
The state of Florida has a database
containing all of business names that have been registered in the state. You can search to see if yours is still available.
Register your business name
If you are using your own name as the business name you can skip this step.
If you find your business name is available, you'll need to register it. But before you register your business name you'll need to file an intention for it to be published in a newspaper where your business’ principal office is located.
This Florida statute (865.09) has been effective since 1 July 2009. Failure to comply with this statute will result in a misdemeanor of the second amendment
which could result in a fine of up to $500 and 60 days of jail time.
With your intention for newspaper publication filed, you can register your fictitious business name. To register your business name click here
. There's a $50 charge for processing this application.
Tax details for Sole Proprietors
Sole Proprietors are only taxed at the Federal level, which will include all of the income generated by the business. Business profits and losses are reported on a Sole Proprietor's personal income tax returns. Since Florida has no state income tax, you won't have to worry filing a separate state return.
You can find all the tax forms for Sole Proprietors here
How to start a Partnership in Florida
If you plan on launching a business with at least one other person, the simplest form of business structure you can choose is a Partnership structure.
There are two different types of Partnerships: a General Partnership and a Limited Partnership.
Members of a General Partnerships equally share the liability of the entire business.
Limited Partnership members cap their liability risk in order to achieve a greater level of protection over their personal assets.
A General Partnership status is adopted by members that are involved in the day-to-day activities of the business. They own the highest portion of the business and have the greatest jurisdiction over business decisions.
A Limited Partner is not involved in the daily operations of the business, but is an investor.
You're likely to only require a General Partnership structure to be established for each member.
Here's the process to register both a General and a Limited Partnership in Florida:
Choose a business name.
Register business name
Complete a partnership agreement
A partnership agreement is a formal agreement that outlines all the processes of the business and the roles of each partner. It is important to be as granular as possible when drafting this agreement, you may find yourself referring to on many occasions to quell disputes.
Once completed, you'll file it with the Division of Corporations along with your Statement of Authority (which we'll discuss in a moment). There is a $50 filing fee for each general partnership registration.Limited partnership
This form will be filed with the Division of Corporations, along with your Statement of Authority. There's a $25 filing fee.
Complete a Statement of Authority
A Statement of Authority lists all the partnership of the business and indicates who has the right to sign for the business.
You can access the Statement of Authority form for general partnerships here
, and the form for Limited Partnerships here
You'll file this form with the Division of Corporations. There's a $25 filing fee.
Tax details for partnerships
Partnerships are exempt from paying state income tax. Partnership business owners are required to report the profit and loss of their business on their Federal income taxes. All taxation forms relevant to Partnerships can be accessed here
How to start a corporation in Florida
A corporation allows you to distribute shares and also greatly increases your chances of getting funding.
The process of forming a corporation is more complicated and more costly compared to a Sole Proprietorship and Partnership.
Choose a name for your corporation
Corporation names need to be indicative of the corporated structure of the business, as a result, the name needs to end in either one of the following:
To check the availability of your proposed business name, search the Division of Corporations database here
. You may also want to do a trademark search.
Choose a registered agent in Florida
Every corporation in Florida must have a registered agent. A registered agent acts as the primary point of contact for the business. This is to ensure a reliable stream of communication between the public and the business.
Registered agent requirements
There are strict requirements that all registered agents need to meet:
Have a registered office in Florida. This can include home locations, but the mailing address cannot be a PO box.
Be available during business hours
Accept service of processes
A registered agent needs to accept the obligatory duties that are associated with the role, such as accept service on behalf of the corporation and forward all documentation to its members.
A registered agent is nominated when you submit your Certificate of Incorporation application (more details in the following section).
If you ever wish to change registered agents you'll need to fill out this form
. There's a $35 processing fee.
Make sure you also reflect your amended registered agent in your annual report
Should you be your own registered agent?
You could legally appoint yourself (or a business partner) as a registered agent, but it's not recommended.
A registered agent is usually required in every state you do business, so if you appoint yourself as a registered agent you'll need to open brick and mortar businesses in every state you establish yourself. Many business owners choose to partner with a professional registered agent service.
Professional registered agent services
If you can't find a reliable friend or family member to act as your registered agent, you could employ a professional registered agent service to act on your behalf.
Some options are listed below:
File Articles of Incorporation
This document outlines all the specifics of your corporation including:
Number of shares
Details of each shareholder
You can file this document online
, or print a PDF
and mail it to the Division of Corporations. There's a $70 filing fee for each application.
Host corporate meeting
This is the initial meeting with all directors and board members. The purpose of this meeting is to discuss all of the aspects of the business, and establish corporate bylaws
Bylaws are a list of self instituted laws that ensure that all parties are in agreement with the expectations of the business and how it should be directed.
You can download a template to help create your corporate bylaws here
During this meeting you can also formally issue stock to all members.
Unlike Sole Proprietors and Partnerships, as a Corporation you can legally distribute stock certificates, this makes your business a lot more appealing to investors.
You can either issue stock certificates through your accountant or use a template such as this one.
Establish a corporate records book
This is a formal means of aggregating all of your corporate documentation. You can either create this record book yourself have a professional
create one for you.
Submit annual reports.
Unlike simpler business structures, corporations and LLCs require annual reports to be submitted.
An annual report summarises all of the activities performed by the business throughout the year and identifies how each of these activities helped propel the business towards its growth aspirations.
This report is given to shareholders to help them clearly identify the amount of profit or loss the business sustained each year.
The fee for submitting this report is $150 and it must be filed between January 1 and May 1. An additional fee of $400 applied is the report is filed after May 1 of a particular year.
For instructions on how to file your annual report in Florida click here
To file your annual report electronically click here
Taxation for corporations
The method of taxation of a corporation depends on its type.
There are three main types of corporations:
C-corporations are to the state’s corporate income tax rate of 5.5%
. S-Corporations only pay income tax at a Federal level.
All relevant taxation forms for C-corporations can be accessed here
All relevant taxation forms for S-corporations can be accessed here
Forming a Limited Liability Company (LLC) in Florida
There are multiple benefits of choosing to form an LLC, the most prominent being the superior level of protection for your personal assets.
Below we have outlined the processes of forming an LLC in Florida
Choose a business name.
Register business name
Choose a registered agent in Florida
Just like with a corporation, you'll need to choose a registered agent for your LLC. Your registered agent accepts legal papers on behalf of the LLC.
Submit Florida Articles of Organization
The registration process of an LLC involves the submission of a form called the Articles of Organization
. Before submitting the form you need to decide whether your LLC will be member managed or manager managed.
In a member managed structure, all of the members of an LLC have a say in the operations and overall direction of the business. All members of an LLC cast a vote before making a decision, to give each member an equal opportunity to voice their opinions.
In a manager managed structure, all of the day-to-day company decision are allocated to a manager (or managers). This is a more fluid process if there is a large number of members in the company. The managers of the company handle the day-to-day decisions on behalf of all other members who then have more time available to run the business.
Once you've decided on a management structure that works best for you, you'll fill out your Articles of Organization form.
If you choose a member-managed structure, you can leave the section asking you to list all managers of the organization (article 4) blank, or list the name of each individual member. If you choose a manager-managed structure you will need to list all managers in this section.
Once filled out, send it to the Division of Corporations or file it electronically
. There's a $125 filing fee.
Create an operating agreement
This is not a mandatory step for the state of Florida but it's highly advisable. An operating agreement identifies all the owners of the company and key operating procedures.
Submit annual reports.
LLCs are also required to submit an annual report.
For instructions on how to submit your annual LLC report in Florida click here
To lodge your annual report electronically click here
Your annual report needs to be submitted between January 1 and May 1 every year. The processing fee for each annual LLC report is $138.75.
If your report is submitted after 1 May, a $400 fee applies.
Tax details for LLCs
LLC owners pay self-employment tax on business profits as well as federal tax. In order to decrease the amount of self-employment tax you pay, you would need to lodge your tax return as an S-corporation.
For instructions on how to classify your LLC click here
For all taxation forms relevant to LLCs click here
How to form a nonprofit corporation in Florida
If your motivation for running a business is not to churn profits, but rather to do good in this world, you should choose a nonprofit structure. Nonprofits are exempt from state and Federal taxes.
Below is the process of forming a nonprofit organization in Florida:
Choose a name for your nonprofit
The naming convention for nonprofits in Florida is similar to the guidelines for corporations, except “Company” and “Co” cannot be used.
So your nonprofit can only end in the following:
File Articles of Incorporation
A nonprofit is registered once this document has been processed and accepted.
When filling out your articles of incorporation form, it is important for you to be very clear specify the charitable nature purpose of your organisation in article 3 of the form. This will help differentiate your business from a for profit corporation.
It is important to note that the submission of this form alone does not grant you a tax exemption status. To receive this status you will need to submit specific documentation to the IRS (more on that shortly).
You can access the nonprofit Articles of Incorporation form here
. There's a $70 filing fee.
Apply for a tax exemption status
When establishing your nonprofit, you need to apply for a tax exemption at both the state and federal level.
Federal level tax exemption
To be exempt from Federal tax you need to fill out and submit form 1023 which you can access here
State level tax exemption
To apply for an exemption from state-based taxes in Florida, fill out this form
For more detailed taxation information for nonprofits in Florida click here
Being exempt from tax does not automatically exempt your from taxation paperwork. All nonprofits need to submit annual information returns to the IRS.
You can access the form here
Public disclosure requirements
Nonprofits need to make a certain selection of documentation, including their annual reports, readily available to the public at any time. These documents are usually accessible via links on the nonprofit’s website. The types of documents you need to make available are listed on the IRS website
For details on how to structure your nonprofit annual report click here
Here are some links to help you structure your business in Florida:
This site includes information, resources and forms for starting your own business in Florida.
This page includes listings of all Florida county websites to help you find licensing and permit requirements in your area.
This is a great resource for small business news, tips and advice, market research and industry-specific links.
The US Small Business Administration offers advice, advocacy and instruction for small businesses across the country.
Our own guide to launching your startup will walk you through every step of starting a business, from concept to execution.