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Florida offers a large population, several industries for small businesses to grow, and a year-round climate for visitors to the state.

Starting a business in Florida may seem simple, but you should still know a few things. Here are the steps to follow if you want to start a business in Florida.

Benefits of Starting a Business in Florida

Becoming a small business in Florida can be very beneficial. Several large cities would make great starting locations. As a whole, the state offers the following: 

  • A growing economy and growing population
  • Infrastructure
  • Job creation 
  • Lower taxes (no sales tax within the state)

    • Florida also offers these benefits to small business owners:

  • No corporate franchise tax on capital stock
  • No corporate income tax on limited partnership
  • No corporate income tax on subchapter S-Corporations

    • Florida offers property tax benefits for small businesses:

  • No property tax on business inventories
  • No property tax on goods-in-transit for up to 180 days 

    • Florida offers sales and use tax benefits for small businesses:

  • No sales and use tax on goods manufactured or produced in Florida (for export outside of the state)
  • No sales or use tax on co-generation of electricity
  • No sales tax on purchases of raw materials incorporated in a final product for resale (This includes non-reusable containers or packaging)

    • Florida offers tax benefits at the state level for small businesses:

  • No state-level property tax assessed 
  • No state personal income tax (guaranteed by constitutional provision)

    • Finally, the state of Florida has several sales and use tax exemptions. Depending on your business structure, and small business idea, this can also be a great benefit.

    What Are The Steps to Start a Small Business In Florida?

    If you want to know how to start a small business in Florida, follow these steps.

    1. Choose a Business Idea 

    The first thing you should do to start a new business in Florida is to choose a business idea. A great way to do this is to write a business plan that will guide you as you develop your small business. 

    You can choose from two business plans: a lean plan and a traditional plan. While both plans can provide insight, there are some differences. 

  • A lean plan is more of a summary. This plan is useful if you’re planning to establish the most important details of your small business.
  • A traditional plan will be more comprehensive. You’ll use this plan to provide details if you want to request financing from lenders.

    • In either case, you’ll write as many details about your small business as you think you’ll need.

    2. Choose a Business Name

    Second, you’ll choose a business name. Your business name can be your legal name, or it can be a name you’ll do business as (or a fictitious name). This name must: 

  • Differ from your entity’s legal name. 
  • Differ from your personal name (if you are doing business as a sole proprietor).

    • Regardless of your business name, there are things to consider:

  • You’ll need to advertise your business name at least once in a newspaper in the county where your business is located. 
  • Proof of advertisement isn’t required.

    • 3. Choose a Business Entity 

    Third, you’ll choose a business structure. You can choose from the following business entities in Florida:

  • C-Corporation (also known as C-Corp) 
  • Limited liability company (LLC)
  • Partnership
  • Sole proprietorship
  • S-Corporation (also known as S-Corps)

    • You can also open your business entity as a general partnership or as a limited partnership.

    4. Register Your Business

    After you choose your business entity, the next step you’ll do is register your business. You should have an Employer Identification Number (EIN) before this step. If you are wanting to start an LLC in Florida, having a Florida registered agent is also essential. Next, you’ll also register your new business with the city or county where you’ll operate your business.

    Finally, you’ll register your small business with the Department of State. Then, you’ll be ready to proceed to the next step.

    It is important to note that if you plan to do business with a name different than your legal one, you must also register for a Florida DBA.

    5. Understand the Tax Implications 

    There are several small business taxes in Florida you should be aware of. 

  • C-Corps in Florida has a corporate tax rate of 5.5% on its federal taxable income. At a corporate level, C-Corps will pay either 5.5% of its federal taxable income (minus any credits or tax exemptions), or it will pay the minimum tax rate of 3.3%.
  • If you pay the minimum tax rate of the normal rate, up to $50,000 of your small business income will be exempt from corporate tax in Florida.
  • Partnerships (general partnerships, limited partnerships, and limited liability partnerships) don’t have a state income tax requirement in Florida.
  • Instead, small businesses and their partners will pay their federal income tax at the tax rates based on their income.
  • S-Corps don’t have a federal tax payment requirement because of their structure.
  • Their owners have no state income tax payment requirement before passing any gains or losses to their shareholders.
  • Sole proprietorship owners must pay their federal taxes according to their individual income. The owner won’t pay income taxes for state income in Florida.
  • The state of Florida classifies LLCs as either disregarded entities or as partnerships.
  • A Florida LLC can incorporate. If that happens, the LLC will have to pay the minimum rate (3.3%) or the 5.5% rate.
  • LLC owners won’t pay state taxes on the income passed through from their Florida business.
  • Whether your Florida LLC is a disregarded entity or a partnership, the LLC doesn’t pay state income taxes.

    • 6. Acquire the Necessary License and Permits

    Florida has two licensing agencies for small businesses:

  • Department of Agriculture and Consumer Services (DACS)
  • Department of Business and Professional Regulation (DBPR)

    • Also, business permits are available for new businesses. You may need to contact the city or county where your small business will operate for more details.

    7. Apply for Insurance

    Florida has several insurance requirements that small business owners should know. First, the exact insurance you’ll provide as an employer will depend on your industry. 

  • All employers in the state of Florida must provide workers’ compensation insurance to their employees. 
  • Commercial auto insurance is also a requirement for business-owned vehicles. 

    • There are several optional small business policies: 

  • Business Owner’s Policy 
  • Commercial Property Insurance
  • Employment Practices Liability Insurance
  • Professional Liability
  • Product Liability

    • 8. Comply with Reporting Requirements

    Florida has annual reporting fees that small businesses must pay. These fees will vary based on the business entity chosen. The fees for annual reports are: 

  • Limited Liability Company: $138.75
  • Limited Partnership or Limited Liability Limited Partnership: $500.00
  • Non-Profit Corporation: $61.25
  • Profit Corporation: $150.00

    • 9. Open a Business Bank Account

    If you are opening a small business in Florida, it is important that you open your own business bank account. This account will keep business finances separate from personal finances and allow you to keep track of income and expenses easily.

    To open a business bank account in Florida, you must have your business's legal documentation and identification on hand. This includes your articles of incorporation or articles of organization, Florida business license, and Employer Identification Number (EIN). When choosing a bank, it is essential that you research different options to find one that fits your needs and offers low fees for business accounts.

    What Else Should I Know?

    There are a few things to consider before starting a Florida business. 

    First, Florida is a very spread-out state. There are few large cities in the panhandle but several large cities on the peninsula. Where you decide to open your small business within the state can allow you to have an advantage. 

    Second, the population is also significant when considering where to open your small business in Florida. The northern region of the state isn’t as populated as the state’s central and southern regions. Depending on your business, this may be a benefit or a disadvantage. 

    Third, your small business may qualify for corporate income tax incentives. In Florida, your small business can be eligible for: 

  • Incentives Related to Energy
  • Incentives Related to Insurers and Health Maintenance Organizations 
  • Incentives Related to Investment in Florida
  • Incentives Related to Jobs
  • Incentives Related to Other Taxes Paid

    • Let Us Help You with Your Small Business

    Starting a small business in Florida can be a daunting but exciting prospect. Consider working with the tax and entity formation professionals at 1-800Accountant to help you turn your dream into a reality. 

    This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.