Doing Business In Florida
Florida is one of the United States’ economic powerhouses. It’s the third biggest state in the country by population, and has the fourth biggest economy. In fact, its GDP is larger than all but 16 countries. Florida’s economy is extremely diverse, with tourism and agriculture among its top industries.
Small Business and Startup Environment
Florida is one of the best states to start a business, according to a recent study by WalletHub. The sunshine state recently ranked as the sixth best of all 50 states to start a business based on multiple factors including financing accessibility to availability of human capital to office-space affordability
Step 1: Decide on a Business Structure
There are 3 basic options: a DBA, a Corporation or an LLC.
- A DBA or “Doing Business As” (also known as a “Fictitious Business Name” or FBN) is not really a separate structure, but just a different name that an individual or partners use as their business name.
- A Corporation is a separate entity (provides liability protection to the owners) that has a structure that includes shareholders, directors and officers. More complex than a DBA but the entity of choice for large companies and startups that intend to raise funding.
- An LLC or “Limited Liability Company” is a newer type of business that is both a separate entity but provides very easy management (doesn’t require directors or officers) and taxation. Has largely replaced the DBA and Corporation in popularity recently as it provides liability protection but with much less complexity (and taxation) than a Corporation.
Step 2: Pick a Business Name
A business name is often your first impression with customers. … Investors like to select businesses for their business potential, but some have more faith in qualitative factors such as marketing and the right business name. The right business name can also help differentiate you among potential investors. Here are some tips:
- Avoid hard-to-spell names.
- Don’t pick a name that could be limiting as your business grows.
- Conduct a thorough Internet search.
- Get the .com domain name.
- Use a name that conveys some meaning.
- Conduct a trademark search.
How to find a good domain name:
Its hard sometimes to find an available domain name that matches or goes with your business. You can search at http://godaddy.com or other domain name companies, try to find a short domain, two words or three maximum, and make sure its easy to spell.
Step 3: Register the Business
How to form an LLC in Florida
- File the correct paperwork with the Florida Department of State Division of Corporations
- Hire a professional Registered Agent
- Hold an Organizational Meeting (yes, even for 1 person LLCs)
- Optional: Elect S-Corporation status with the IRS by filing IRS Form 2553. Yes, even an LLC can choose to be taxed as an S-Corporation (or even a C-Corporation).
How to Incorporate in Florida
- File the correct paperwork with Florida Department of State Division of Corporations.
- Hire a professional Registered Agent
- Hold an Organizational Meeting
- Corporations can elect S-Corporation status with the IRS by filing IRS Form 2553.
- The Division of Corporations could take anywhere from 2-3 business days for e-filing to 3 to 5 days for mail filings to process the paperwork. This may increase during peak periods.
- A Registered Agent is required for every Florida Corporations and LLC. The chosen registered agent must have a physical street address in Florida. While you can serve as your own registered agent, it will make your personal information visible to the public. A professional Registered Agent who will provide their address and forward any important documents to you. This is convenient if you have to move, since you won’t have to file forms or pay fees, (just update your address with your agent).
- An “Organizational Meeting” takes contributions from the members, issues Member Certificates, adopts the company Operating Agreement and more. Many people simply do steps 1 and 2 above but this leaves your company unorganized and possibly exposed to legal, tax and compliance issues. Save time and money now by properly organizing the company.
Step 4: Obtain your Federal Employer Identification Number (FEIN or “EIN”)
Your EIN is like your Social Security Number for your company. It’s required for Corporations and LLC’s and optional for DBA’s (if you don’t have any employees, then it’s required). However, if you are a DBA and don’t obtain an EIN you will be forced to use your Social Security Number on many documents so it’s typically recommended you obtain the EIN to prevent identity theft.
You can read more about corporate tax laws in Florida on the Florida Department of Revenue site..
Step 5: Open Company Accounts: Bank and Credit Cards
Open a separate account for your business. In addition, getting business credit cards will get you started with building your business credit rating. Typically, to open a business bank account you’ll need a) your filed paperwork, b) your EIN and c) a company resolution authorizing your company to open the account (signed by the owners, members, officers or directors, etc.).
Step 6: Obtain Business Licenses and Permits
Now that you’ve registered your business name you need to obtain a business license for your company. Typically this also involves registering for state taxes and permits (the city may require them as part of the business licensing process).
The Florida Department of Business & Professional Regulation website has information regarding business licensing in Florida. It also has a list of types of businesses that require special licensing.
Step 7: Annual and Ongoing Requirements
DBA: Your Fictitious Business Name should be valid for 5 years (unless you change company name or other information listed on the FBN) at which point you’ll need to renew it with the county.
LLC: Florida LLCs are required to file an annual report, due May 1 every year, which has a filing fee of $139.
Corporation: Every year you’ll need to file the “Statement of Information” or Annual report which updates the state on your business address and other things. Florida corporations can efile. There is a $400 late fee for all for-profit corporations who do not make the May 1 deadline.
Franchise Taxes: Florida requires a franchise tax due on the last day of the month in April, June, and September, as well as on the last day of the tax year. This is calculated as a percentage of the company’s net income for that year.
Important Business Resources
- The Best Startup Funding Resources In Florida | Techli
- South Florida resources for product entrepreneurs | Miami Herald
- Resources for Startups and Small Business
- Florida Small Business – The Guide for Entrepreneurs
- Looking to Start a Business in Florida? Start Here!
- Startup Resources – Palm Beach Tech Association
- Startup Resources and Events in Miami | Miami | Techstars
- Growing Florida’s Startup Companies
- Miami Startup Resources for Entrepreneurs
- Doing Business in the State of Florida