If you’re thinking about setting up a small business in the Sunshine State, then you’ve found the perfect place to start your new journey as a business owner. There are several advantages to starting a small business in the state of Florida. These include lower tax rates, access to substantial startup capital, and a steady flow of tourists and locals who consistently drive the state’s economy.
Florida doesn’t require you to pay personal income tax, provides low rates for property taxes, and is driven towards providing growth opportunities for small businesses and entrepreneurs. The state has twenty one foreign trade zones, which makes it especially lucrative for import and export businesses. The availability of seaports, as well as other transportation facilities, provides avenues for various kinds of business operations.
But even though starting a small business in Florida is easier than in many other states, there are still rules and regulations you need to follow carefully. Below are a few tips and insights about starting a small business in Florida.
1. Decide On Your Business Structure
First thing first, you need to decide on your business structure. This is crucial as different structures have different tax requirements.
- Sole Proprietorship: This means that you’re running your business alone. You’ll need to pay federal taxes to the IRS based on your business income. You also don’t have to file any organizational documents to operate as a sole proprietor.
- Partnership: This implies that you and a partner are responsible for running and maintaining your small business. You’ll need to file for federal taxes based on the income you and your partner make. Like with sole proprietorships, you don’t need to file organizational documents with the state either.
- LLC: To register an LLC in Florida, you’ll need to file Articles of Organization with the Department of State. LLCs in Florida aren’t required to pay corporate income tax. Instead, you’ll have to report your tax returns based on the individual incomes of members within your LLC.
- Corporation: To operate as a corporation within the state of Florida, you’ll need to file Articles of Incorporation with the Department of State.
2. Register Your Business
After you’ve decided on your small business’ structure, you will need to get a name and register your business with the Department of Revenue. When you’re registering your business, you should also inquire about whether you need to register with any other bodies.
When you’re registering your business with the DOS, you’ll have to provide basic information about your business and pay a small filing fee as well. Businesses operating under fictitious names, that is, under any name that’s different from the one your business, also have different registration requirements. In this case, you’ll need to register with the Department of State.
3. Employee Identification Number, Business Licenses, And Other Permits
Having an Employee Identification Number (EIN) can be very useful, even if you don’t need it to set up your small business. An EIN is required by banks if you want to open a business bank account in Florida. Other businesses and corporations may also need your EIN number to process any payments to your small business.
A general business license is usually required for small business owners. But other than that, you may also need other licenses, especially for skilled trades. In Florida, the flowing bodies provide licenses for skilled trades:
- Department of Professional and Business Regulation: Includes occupations such as restaurants, food vendors, veterinarians, architects, and more.
- Department of Agricultural and Consumer Services: Includes telemarketers, pawn shops, etc.
If your small business is operating under any name other than the one registered by the state, then this is called a fictitious name. You’re legally required to register fictitious names with the Department of State in Florida to get a ‘Do Business As’ (DBA) license. Before you can register your fictitious name, you’ll need to ensure that that fictitious name isn’t already being used by any other businesses.
4. Sort Out Your Tax Requirements
In order to operate your small business in Florida, you’ll need to pay taxes to various governmental agencies. These include:
- Federal Taxes: Collected by the IRS, these include taxes like income tax, employment tax, excise tax as well as estimated taxes.
- State Taxes: Collected by the state Department of Revenue, these include sales tax, corporate income tax, reemployment tax, etc.
- Local Business Taxes: Collected by the local county, you’re required to pay taxes to the county within which your small business is operating.
- City Business Tax: Some cities require you to pay taxes to operate within their boundaries. You can check and find out whether you need to pay taxes to the city where your small business is by checking the municipal directory.
5. Financing And Capital
There are various investment capitalists and angel investors looking to promote small businesses within the state of Florida. If you don’t know where to start, you can consider visiting the Florida Small Business Development Center.
The state of Florida also provides various assistance programs for small businesses, minority businesses, etc.
Once you’ve obtained your startup capital, opening a business bank account is your next step. There are also several perks you can enjoy as a small business owner when you open a business bank account, such as a higher credit limit when compared to personal bank accounts.
6. Location And Hiring Employees
Now that you’ve settled all the legal issues when it comes to setting up your small business, it’s time to find the right place to start your business. Conduct market research to see where your small business can best fit in within Florida. Your ideal location will be easily accessible by transportation, have the availability of skilled employees nearby, and will be close to your target demographic.
As a small business owner, you can also consider getting business insurance. Insurance provides a safety net for your small business in the event there are any disruptions, damages, or your small business faces legal problems. To find out more about insurance for small businesses in Florida, click this link.
The Sunshine State is a warm and welcoming place for new small business owners. Follow these steps to set up your small business, and enjoy scaling and growing your business in the sunny, bright, and popular state of Florida.