Florida is a state with a lower tax burden than other states, which makes it attractive to small business owners. The lack of state income tax, in particular, makes it desirable for what are known as "pass-through entities," including LLCs and S corporations. Additionally, the low corporate tax rate of 5.5% makes Florida a more small business-friendly state in which to operate due to several tax benefits.
An important consideration for Florida small business owners is whether to take on the expense of forming an LLC in Florida. The Florida LLC filing fee must be considered and weighed against the benefits of registering.
Before establishing a Florida limited liability company
Florida law is different from most other states that require name reservations to be completed before LLC registration. Small business owners cannot reserve a name prior to registering their LLCs in Florida. Instead of reserving a name for your Florida business, you may choose to file a fictitious business name registration. Filing a fictitious name registration is not required to form a Florida LLC. However, you may choose to do so to establish your business's name. One of the advantages of filing a fictitious name registration is that the state of Florida will issue a federal identification number for the business, which allows you to open a business bank account.
According to the Florida Division of Corporations, you may file for a fictitious name registration either via mail or online. You must file a separate application for each individual fictitious name. The name may not contain the words corporation, LLC, incorporated, or other such designations unless at least one registrant is a business entity of the same type. Additionally, only financial institutions may use the words bank, banking, banker, savings bank, credit union, or other words in that vein as a part of their fictitious name registration.
The mailing address of the business does not have to be within the state of Florida, but you will need to select a county (or more than one county) within Florida as the principal place of business. You must provide the name of the owner or LLC owners of the business for which you are registering the fictitious name, and these may be individual persons or existing businesses.
Other requirements for registering a fictitious name in the state of Florida include paying the $50 filing fee and confirming that the "doing business as" (dba) name you are registering has been advertised in the county where your main place of business is located. Although you do not have to provide proof of the advertisement, you must give your word that it has been published.
Costs associated with registering your Florida LLC
The first step to form an LLC in Florida is similar to that of many other states: You must file articles of organization. Although your Florida LLC articles of organization may differ slightly depending on the industry in which you plan to do business, they will contain basic information about your business, such as the Florida LLC name, physical address, industry, the date your LLC in Florida will start, and any information about your own Florida registered agent. They will also include details about any members of the Florida LLC, such as managers and officers.
Florida LLC articles of organization must be filed with the Florida Division of Corporations, which costs $100. An additional $25 mandatory registration fee is charged whether you choose to use an in-house or outside service as a registered agent. Combined, the initial state filing fee for registering your Florida LLC is $125.
Every LLC in the state of Florida is required to name its own registered agent. This person or legal entity must be available at all times to receive official legal documents and notices on behalf of the Florida LLC. While many LLCs choose to have the owner or an employee serve as the registered agent, others choose to contract a third-party registered agent service to perform these duties, particularly if the owner is not available during normal business hours. On average, a third-party Florida registered agent fee is between $50-$500 annually. Contracting registered agent services can be a worthwhile expenditure for business owners.
A mid-range option between self-filing and hiring a business attorney is to use an online LLC formation service. These services may provide more affordable assistance with the formation process and offer packages with different levels of service based on your needs and your budget.
Registering as a foreign LLC
If you have already registered your LLC in another state, you must register in Florida as a foreign LLC and pay the necessary filing fees. The Florida LLC fees for registering as such are the same as registering a new Florida LLC: a state filing fee of $125 for the filing and registration combined. You must appoint a Florida-based registered agent, and when filing for your foreign LLC, you must provide a Certificate of Existence from your home state that is dated no longer than 90 days prior. This is also known as a Certificate of Good Standing.
Furthermore, any foreign LLC must research its Florida business name to make sure that no existing Florida business has the desired business name. If there is a current Florida LLC with the same name, the new LLC will need to choose an alternative name under which to operate in the state of Florida. Moreover, the burden of any name infringement rests on the Florida LLC filing for registration.
Annual report requirements for Florida LLCs
LLCs are required to file a Florida annual report to maintain active status. These annual reports must be filed online with annual fees of $138.75. The first report is due the year following the initial registration of the Florida LLC and must be filed between Jan. 1 and May 1. If the online filing of the report occurs after May 1, a $400 late service fee is added to the overall cost of the report, although nonprofit corporations benefit from having the late fee waived.
If the report is not filed by the third Friday of September of the same year, the LLC will be dissolved administratively by the end of business on the fourth Friday of September. Each report fee may be paid online via credit or debit card, a pre-paid account through the Sunbiz website, or by check or money order using a voucher that is printable after filing the report. LLCs should be aware that paying via check or money order will take longer and, therefore, should be sent in plenty of time to avoid any late fees or dissolution.
If you do not file the annual report and your LLC is revoked, all associated fees must be paid in addition to filing a reinstatement application and paying a reinstatement fee of $100.
Purpose of the annual report
To maintain an active status with the Department of State, Florida LLCs must file an annual report regardless of whether or not there are changes to be made. The forms are required to either confirm the Florida Department of State, Division of Corporations' records or to update them with any new information. The report is not a financial statement.
If you have changes to make, such as adding, deleting, or changing the names and/or addresses of the officers, directors, managers, or authorized members of the Florida LLC, you can do so via the annual report. Also, any change to the registered agent or LLC registered office address can be done this way. Changes to the principal business address or changes to the federal employer identification number may also be done through the annual report. The name of the business may not be changed using the annual report: this requires a separate amendment form and additional payment.
Should any changes be required to the annual report after it has been filed, LLCs can file an amended annual report for an additional $50 fee.
Additional costs of LLCs in Florida
Small businesses looking to establish an LLC in the state of Florida should also consider the potential for an additional one-time LLC cost in Florida and recurring costs as they plan their operating budget. While most of these fees are modest, they can add up over time and should be accounted for in any planning. In addition to these fees, any LLC in Florida should include the cost of professional consultations with lawyers and financial planners should they be warranted.
Creating a Florida LLC operating agreement
Although Florida does not legally require an LLC to create and follow an operating agreement, doing so is highly recommended by most business professionals. The purpose of an operating agreement is to protect LLC members and their personal assets against personal liability, to clarify all verbal agreements by putting them into writing, and to protect your agreement. Once all members have signed the Florida LLC operating agreement, it is considered legally binding.
Since LLCs are not required to create an operating agreement, there is no need to file this agreement with the state. Instead, it should be kept with your business paperwork. An LLC may consider contracting an outside adviser, such as a business attorney, to create their operating agreement. Online services that offer operating agreement templates can range in cost from $99 to somewhere in the $1,000 range, depending on your LLC's individual needs.
Business permits or licenses
The cost of any associated business permit or business license will vary greatly based on your geographical location as well as the nature of your business. Some local governments require fees that are separate from state or federal government permits and licenses. For example, if you are establishing a barbershop, you will need to obtain all related licensure, including certificates of training, which have their own cost depending on the specific government entity issuing the license. These business licenses and training expenses should be factored into any operating budget for your business, and many may be ongoing fees as opposed to one-time business expenses.
Obtaining a business license in Florida
In order to obtain your business license or permit within the state of Florida, you will need to determine which agency to apply with, depending on both your industry and your geographical location. To obtain your business license, you should have your LLC name, EIN, address, and contact information ready. To make sure you are fully licensed, you will want to check with state, federal, and local (county, city, township) licensing agencies. Several regulated industries exist in the state of Florida which require such licenses.
Changing your registered agent
There are several reasons why during the life of your LLC, you might change your registered agent. Whether your registered agent is no longer a good fit or you've decided to hire an outside company to act as your registered agent, changing the registered agent with the state takes little effort and a modest fee. Anytime you wish to change the registered agent for your LLC for any reason, you will need to pay a $25 fee to do so.
Similar to changing the registered agent for your LLC, if you need to make any amendments to your business registration, such as the articles of organization, a principal address, or any other new information regarding members of your LLC, you will need to pay an amendment fee of $25.
Certificate of status
There are times during the lifecycle of your business when you may be required to provide a Florida certificate of status, which states that you are authorized to transact business in Florida. Some reasons may include: expanding your business into another state, selling your business, or even as part of legal proceedings related to your business. The cost of a certificate of status, otherwise known as a certificate of good standing, is $5. Typically, you will need to obtain a current certificate of status to satisfy the request.
Obtaining copies of documentation
There may be occasions when a business will need to provide official copies of business documentation to the bank or other entities, and that documentation will need to be certified. The fee associated with certified copies of documentation is $30.
Certificate of conversion fee
Should you decide to convert your business from an LLC to a corporation, you will need to pay a $25 conversion fee in addition to any total filing fee associated with establishing a corporation.
Certificate of merger
If your LLC merges with another entity, each party will be required to pay a fee of $25.
Although you may be able to negotiate low or no banking fees associated with your bank account, many banking institutions charge monthly fees for businesses to open a business bank account. Spend some time shopping around for the best fit for your specific LLC's banking needs, including finding a bank account with low or no fees.
Workers' compensation insurance
In the state of Florida, LLCs with more than one employee must carry workers' compensation insurance. These costs may vary depending on the number of employees as well as the industry of the LLC.
Florida LLC tax fees
There are several taxes that an LLC will need to consider, although Florida is typically considered a "tax-friendly state." For any tax-related concerns or questions regarding your LLC, consulting with a tax professional such as an attorney or accountant is highly recommended, particularly to remain compliant with the Internal Revenue Service.
Because LLCs are classified as pass-through entities, they do not owe any federal taxes, including federal income tax.
In addition to S corporations and sole proprietorships, LLCs are tax-exempt in the state of Florida. There is no income tax. While an LLC does not need to pay income taxes, if the LLC is classified as an LLC C corporation, Florida's corporate income/franchise tax fee of 5.5% will need to be paid.
If an LLC has employees, it will need to pay state employment taxes. These taxes include reemployment tax, which is taxed at a rate of 2.7% for the first 10 quarters of the LLC. After the first 10 quarters, the rate will depend on the size of the company's payroll, although there is a rate cap of 5.4%.
If an LLC sells a product, it can collect sales tax and will need to pay state sales tax. In Florida, the sales tax rate is 6%. There are additional local sales taxes in several Florida counties known as sales surtax. These surtaxes range between 0.5% and 1.5%, although not all Florida counties have surtaxes. Check with the local government for any applicable surtaxes.
Within the state of Florida, there are several industry-related taxes including asphalt use tax, communication services tax, municipal public service taxes, oil and gas severance taxes, as well as fuel and pollutant taxes. For businesses that offer merchandise or services, proof of payment in the form of a Florida LLC tax receipt is necessary to have on hand. Tax professionals can advise LLCs regarding these and any other industry-specific taxes.
While all of this information and detailing of costs may seem overwhelming, Florida business owners see establishing their LLC in the state of Florida to be advantageous. For Andrew Pickett, lead trial attorney and founder of Andrew Pickett Law based in Melbourne, Florida, running his business there was the best choice. "With Florida's pro-business climate, diverse market, and ample resources, I have seen many small businesses thrive here," he says. "Some benefits of forming an LLC in Florida include limited liability protection, tax flexibility, and ease of management. As a small business owner myself, I recommend getting an LLC to protect your personal finances and streamline your business operations."
|Registered agent fee
|Total fee for new/foreign LLC
|Late fee for annual report
|Amended annual report
|Articles of organization
|Certificate of conversion
|Certificate of merger
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