The Economics of Starting a Business in Florida

If you’re reading this, chances aren’t bad that you’re in Florida. The Sunshine State is the nation’s fourth biggest by population and is soon to overtake New York as the third. It’s a state with hundreds of miles of beach, no state income tax, glitzy and glamorous cities, as well as unique natural beauty, and relatively low property taxes.

With over 19 million residents, there are plenty of entrepreneurially minded Floridians asking the same question: What are the economics of starting my own small business? And since the answer is unique to where you live, it’s worth exploring what the startup process is in the southeastern-most U.S. state.

It’s clearly a popular query: Florida has the second-highest density of startup businesses in the U.S., with more than 100 startups per 1,000 total firms. Plenty of new entrepreneurs either flock to or crop up in the state, particularly Miami.

That being said, as you might expect, there’s still a certain amount of red tape to navigate on your way to starting and operating your business in Florida. Let’s review the steps that need to be taken, fees that need to be paid, forms that need to be submitted, and anything else involved in getting up and running. Some solid resources include Florida’s own Division of Library and Information Services and Florida’s Division of Corporations.

To Get Started, Officially Form Your Company

Sounds simple enough, right? For the most part, it is. The formal process of starting your business has three typical steps.

1. Choose your company type

In most cases, you’ll likely choose from the three main categories of business type: for-profit corporation, limited liability company (LLC), or nonprofit corporation.

A for-profit corporation is a company owned by a group of people, with limited liability, that pays corporate income tax. An LLC is similar to a corporation, but its income is reported on members’ individual tax returns and does not pay corporate income tax. A nonprofit corporation is a nonprofit structure that can be tax-exempt—it’s most common for churches and charities.

Another company type is the partnership, which takes a number of forms: a general partnership, a limited liability partnership, a Florida limited partnership or a foreign limited partnership.

2. Register your company

Nowadays, you can find all the necessary forms for registering your business online at the SunBiz website and can submit most of them online as well. These forms cover the basic, minimum statutory filing requirements, though depending on your business you may need to file additional items. When you file, you supply basic business information, list the owner names, and pay the filing fee.

The fees for filing a for-profit corporation or nonprofit corporation as of 2017 include: $35 for filing fees, $35 for a registered agent designation, and two optional fees of $8.75 for a certified copy or certificate of status.

The fees for filing an LLC as of 2017 include: $100 for filing fees, $25 for a registered agent designation, and $30 for an optional certified copy or $5 for an optional certificate of status.

Partnerships are more expensive to register, and their full fee obligations should be viewed on the Florida Department of State’s site. View the full fee schedule here.

3. Register your fictitious name

This step is technically optional, but if you want to conduct business with a company that has a name other than your official personal one, you’ll want to invest in registering a fictitious name, or DBA (doing business as).

For example, if your name is John Doe and you want to open a bakery, you may go with the highly clever name of Doe’s Bakery (or how about Baking Doe?) rather than John Doe. To make this happen, you need to register your DBA.

You can research to see what factors are not distinguishable for a Florida business name, look up to see which entity names are already taken, pick your own, and then pay $50 to officially register it. Names cannot be reserved—they’re awarded on a first-come, first-served basis, so if you have a good idea, submit it quickly.

Set Up Your Business to Pay Taxes

This is everyone’s favorite part of owning a business. Okay, not really, but it’s the law, so might as well get used to it. Most businesses pay federal, state, and local (and sometimes city) taxes.

  • Federal business taxes are collected by the IRS. These taxes generally include: income tax, estimated taxes, self-employment taxes, employment taxes, and excise tax. You can review all the required taxes (for example, income tax is a requirement for all businesses except partnerships), notable exceptions, and necessary forms on the IRS website, or visit a local IRS office to get more information.
  • State business taxes are collected by Florida’s Department of Revenue. They generally include: sales and use tax, reemployment (formerly known as unemployment) tax, corporate income tax, and other taxes. You have to register to collect or remit taxes online, which you can do here.
  • Local business taxes are collected by—surprise—local county tax collectors. Each county requires you to pay taxes to operate within them. Here’s a list of all state’s counties so you can contact yours for more information.  
  • City business taxes aren’t collected by every city, but some require you to pay taxes in order to operate within their limits. The municipal directory can point you in the right direction; then, contact your city officials for more information.

Obtain a Business License, If Necessary

Many industries in Florida require a specific business license. There are two main licensing agencies for “skilled trades”: The Department of Business and Professional Regulation (DBPR) and The Department of Agriculture and Consumer Services (DACS).

The DBPR provides licenses for a wide variety of professional services, including, but not limited to: architects, barbers, geologists, home inspectors, restaurants and food vendors, and veterinarians.

Note: Just because you work in one of these industries doesn’t mean you necessarily need a license. It depends on what you do, exactly. For example, a geologist working as a teacher or researcher without affecting the health or welfare of the public doesn’t need a license; one that performs professional “geological work” does.

Go here for the full list of DBPR businesses and to contact the DBPR on how to obtain a license.  

The DACS licenses everything from private investigators to pawn shops to beekeepers to telemarketers. The full list is here.

Those aren’t the only licensing agencies, just the biggest. Businesses in “health professions” (which can include tattoo artists as well as nurses and pharmacists) and those in other services such as financial services or daycare need to contact other agencies.

Open a Business Bank Account

Whether you’re operating an LLC for your home business or striking out to create Florida’s next great Fortune 500 company, you should probably have a business bank account separate from your personal accounts.

There are a few important reasons for this: One, you want to keep your personal and business expenses separate to reduce confusion come tax or audit time. Two, if your business is incorporated, a separate business bank account is required. Three, business bank accounts usually come with business-specific perks, such as longer billing cycles or higher credit limits.

Pick a Location

Let’s be honest: This was probably one of the first things you did. Maybe you’re interested in running a business out of your home office, or maybe you’ve envisioned opening something on the main street in your hometown for years. But when taking into account things like county or city taxes, or where to cultivate the best customer base, you may need to look elsewhere.

From Tallahassee to Miami, take your time and consider the pros and cons of each location wisely. There’s a reason “location, location, location” has become a real estate mantra for the ages.

Cover Your Business Planning Basics

If you’re opening a business in the modern era, there are certain bases you need to cover regardless of whether you’re in Florida, Alaska, or most places in between. That includes: writing a comprehensive business plan, creating a business website and social media channels, acquiring working capital or financing, and exploring what grants or loans might be available to you specifically.

Once you get to this point, you’ve moved beyond simply starting a business in Florida. You’re now running one. Where things go from here is up to you.

***

There’s a reason some consider Florida one of the best states in the country to start a business: It’s pretty simple. Filing fees are relatively low, most of the registration process can be done online, and lots of local resources are available to help you get started.

If you’re a Florida resident thinking of starting a business, or a long-time entrepreneur with your sights set on a sunnier and tax-friendly location, feel free to bookmark this guide (as well as information provided by the state of Florida, such as the Department of Revenue’s Start-up Kit For New Business Owners) and come back whenever you have questions. And if things don’t work out, maybe give Texas a shot instead.

The post The Economics of Starting a Business in Florida appeared first on Fundera Ledger.

from Fundera Ledger https://www.fundera.com/blog/starting-a-business-in-florida
The Economics of Starting a Business in Florida

first seen on http://barbarapjohnson.blogspot.com

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About mojafarma

Know how to a get business line of credit and promote online. Then come and read our blog. It’s a great resource for business related topics.
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