There are many good reasons to start a business in Florida. The state’s government keeps regulatory requirements and business taxes low. There are no personal income, capital gains, or death taxes. The state’s higher education institutions work closely with the business community to build programs that assist Florida’s industries.
While Florida is a great place to start a business, the process can be tricky and time-consuming, so we’ve put together a list of 10 of the most common steps for new businesses in Florida. While these are the most common steps to take, if you are considering opening a new business, you should consult your legal and financial advisors to guide you through the process.
1. Determine the business structure
One of the first tasks you’ll need to complete is to determine your business structure, which will depend upon your business type or industry. Some businesses require a specific business structure depending on the industry or required licenses of the profession. Another consideration for your business structure is if your business will be For Profit or Not-For-Profit.
The business structure can have implications for taxes and other business operation aspects. Your options for business structures in Florida are Corporation, Limited Liability Company (LLC), Partnership, General Partnership, Limited Partnership or Sole Proprietorship. You should consult with your legal and financial advisors to determine the best fit for your business, but the most common of these are:
- Corporation
You’ll want to form a corporation to limit the liability of the owners and shareholders. While limiting liability can be a beneficial thing to do, the process of developing a corporation can be time-consuming and expensive. Establishing a corporation can be beneficial once your business is larger or if you plan to go public at any point in time. - Sole Proprietorship
A sole proprietorship is when an individual owns and runs a business by him or herself. When it comes to taxes, there is no difference between you and your business, so all taxes are submitted as one. Establishing a sole proprietorship can be beneficial if you are the only person involved in the business. An important downside to mention is that because you and your business are not separated, you as the individual carry all legal liability. - Limited Liability Company
With a Limited Liability Company (LLC), you’ll gain the limited liability that a corporation provides, but with the same tax process as a sole proprietorship. LLCs are great for growing businesses, as there are no limits to the number of employees you can have, but you can establish an LLC with as few as one employees. Ownership of an LLC is shared by all its members, either by percentage or by membership units, similar to shares of stock in a corporation. Both methods of establishing ownership grant each member the right to vote and to share in profits. Anyone can be an owner of an LLC, regardless of the capital that member contributes to the company.
2. Register with the Department of State (DOS).
Register the business with the DOS by completing and submitting the Articles of Incorporation found on Florida’s Department of State Website. In order to do this, you’ll need to gather the following items:
- Business Name
Your business name will need to be “distinguishable” – it cannot be the same as another business, even when modified by articles, pluralization, abbreviations or punctuation. You can search your proposed business name at the Division of Corporations; - Principal Place of Business Address & Mailing Address
This is the street address where your business will be located. If your mailing address is different (P.O. Box or otherwise), you will need to submit that as well. - Registered Agent’s Name, Address & Signature
The registered agent is the individual who will accept service of process on behalf of the business entity. The registered agent may be an individual or a business with an active Florida filing; however, a business may not serve as its own registered agent. An individual or principal associated with the business may be the registered agent. - Corporate Purpose
You’ll need to define one specific purpose for your business, such as “digital marketing” or “practicing medicine.” - Effective Date
Typically, a corporation’s effective date is the date the Division of Corporations receives and files your Articles of Incorporation unless you specify an alternate date. This date can be no more than five business days prior to or 90 days after your Articles of Incorporation are received by the DOC. - Stock Shares
If you are establishing a corporation, you must enter the number of stock shares your corporation will use. The number of shares is dependent on the number of people who own a portion of the corporation. For example, if the corporation has one owner, you can establish with just one share, which would be valued at 100% ownership. If you have several owners, you can establish as many shares as needed, each share having an equal interest in the company. - Payment
You’ll also need to submit payment when you file your Articles of Incorporation. If you want to pay by credit card, you’ll need to file online; otherwise, you can mail in your documents with a money order.
3. Register the business name
If you have filed as a sole proprietorship and your business has a name other than your own, you must register this as a fictitious name. If you have formed a corporation, LLC or other separate legal entity, and the business name is not the same as what you registered, you’ll need to file a fictitious name. Visit the Florida DOS website to learn more about specific requirements and exemptions from this step of the process.
4. Register for an EIN
An EIN – or Employer Identification Number – serves the same purpose to a business as a Social Security number serves to an individual. With an EIN, you’ll be able to open a business bank account, establish business credit, hire employees more easily, and apply for business licenses. You can obtain an EIN by filing a Form SS-4 with the IRS. You’ll only need an EIN in the following circumstances:
- You filed as a corporation or partnership
- Your business has employees
- Your business is involved with a trust, estate, non-profit or farmers’ co-op
If you are establishing an LLC in Florida and none of the above apply to you, you are not required to register for an EIN. However, most banks will require one for a business savings account, loan, business line of credit (BLOC) or other business accounts.
5. Register with the Florida Department of Revenue (DOR).
There are a few reasons why you will need to register with the FDOR, most importantly to pay Sales and Use Tax, as well as Corporate Income Tax.
Sales & Use Tax
When it comes to Sales and Use Tax, you will need to register as a sales and use tax dealer. These taxes apply to the sale, rental, lease, or license to use goods, certain services, and commercial property. Sales and Use Tax is to be collected at the time of each sale and is due to the DOR at the end of each reporting period.
Corporate Income Tax
All corporations, LLCs and partnerships doing business in Florida must file for Florida’s Corporate Income Tax. There are many tax incentives you can employ to help abate these costs, such as operating within a designated rural county, producing renewable energy and rehabilitating a brownfield site or site contaminated with dry-cleaning solvent.
6. Fund the Business
There are various ways to fund a new business, including Small Business Administration (SBA) loans, short-term loans, credit cards, crowdfunding, and others. Florida’s Small Business Development Center provides helpful resources and offers free financial advice for new entrepreneurs regarding funding options. The bank where the business checking account will be housed is also a good source for lending options.
7. Register for the new hire program
All employers are required by federal and state law to report newly hired and re-hired employees to the DOR. There are a variety of ways to report new hires, including online reporting, electronic reporting and by mail or fax. Information is available at the website for the Florida Department of Revenue, Child Support Services for Employers.
8. Apply for a business license, permit or registration
If your business deals with a skilled trade, most likely, you will need to apply for a business permit or license. Florida’s Department of Business & Professional Regulation (DPBR) licenses a wide range of industries, such as community association managers, geologists and restaurants, while Florida’s Department of Agriculture & Consumer Services (DACS) licenses businesses like private investigators and agricultural dealers.
The State of Florida’s Business Information Portal website provides information on the licenses, permits, and registrations that may be required for starting a business in Florida.
9. Check local regulations and requirements
Local county and municipal governments may have their own requirements for new businesses, and they may also require additional permits and licenses. Be sure to check your local county or city’s website to ensure you are familiar with local ordinances, as well as any additional requirements they may have for opening a new business.
10. Open a business bank account
While a business bank account isn’t required unless the business is incorporated, it’s a good idea to keep business and personal finances separate. Doing so can help reduce confusion at tax time or during an audit.
It’s best to work with a bank that offers distinctive account types for businesses and individuals. Many business bank accounts come with business-specific perks that can provide value to a new company, such as longer billing cycles or higher credit limits.
11. Get insured
Most Florida businesses that have employees are required to carry workers’ compensation insurance. Workers’ compensation requirements vary depending on factors such as your industry and the number of employees.
You should also consider other insurance options such as Florida errors and omissions, and general liability insurance for your business. It’s best to consult a lawyer if you are unsure of what insurance you need.
Aligning with a bank for business banking services is a good step to take early on in the business start-up process. Also, take advantage of the free resources available on the Florida Department of Revenue website.
