What Florida Business Owners Need To Know
It’s no secret that Florida’s population is rapidly expanding. Palm Beach County has seen a surge in migration, especially during the pandemic, from residents in the Northeast, Midwest and even California. And with all the new residents comes many business owners looking to move their businesses to South Florida. However, it also brings many budding entrepreneurs looking to start a business for the first time.
If you are ready to open a business in Florida, one of the first things you should consider is the type of business structure you want. Let’s break down your options:
- Corporations—The most complex structures. Owners (called “shareholders”) possess very limited liability because the corporation is considered a legal entity with its own liability separate from its owners and operators.
- Partnerships—Structures in which two or more people share ownership and liability. There are three partnership sub-structures (general, limited and limited liability partnerships) that attribute the co-owners’ shares of ownership and liability differently.
- Limited Liability Companies (LLCs)—These structures are similar to partnerships and sole proprietorships but possess similar liability standards as those of corporations.
- Sole Proprietorships—The most basic structures. A sole proprietorship is operated and owned by a single person who is often legally indistinguishable from their business. Therefore, owners of sole proprietorships carry the most liability of any other business owners.
Forming a corporation or LLC has some definite advantages, the most important of which is that they both limit the liability of owners, meaning you are not personally responsible for the business’s liabilities and debts. There are also several types of corporations in Florida. Here is a breakdown of each:
- S corporations – These corporations are popular because corporate taxes are handled on the owners’ personal tax returns.
- C corporations – With this structure, the corporation pays its own taxes, and you can have an unlimited number of owners.
- Nonprofit corporations – Charities and other nonprofits are tax exempt and not oriented toward making profits.
- Professional Corporations – These businesses are owned by licensed professionals, such as doctors, and a professional association (PA) is set up to provide their professional service.
There are various reasons to choose each different structure, so you should discuss your options with your attorney or accountant before making this important decision.
Before choosing a name for your business, is it imperative that you first check out the SunBiz website to search for existing business names in Florida. Your business name cannot be the same as any other business in Florida, and it must be distinguishable from the names of similar businesses. And don’t forget to make sure the name isn’t already trademarked, either in Florida or nationwide. You will have to search both state and federal databases to ensure you are not infringing on someone else’s trademark. This step is incredibly important because not only is changing your business name after already registering costly, but it’s completely avoidable.
The Florida Department of State’s Division of Corporations handles all Florida business filings. You are also required to register your business with the Florida Department of Revenue. The department provides an overview of taxes that Florida businesses are responsible for paying. Your county and city may require additional taxes, so it is important to check for other tax obligations. The Internal Revenue Service (IRS) will have issued you an employer identification number (EIN) which is required for all corporations in the US because it is used to identify your business. There are also federal taxes associated with owning a business, which you should go over with an accountant who is experienced in the complexities of business taxes.
Depending on the type of business you are starting, you may also need licenses or permits from federal, state, county or city governments. As you can see, starting a corporation in Florida has numerous steps, so I recommend retaining a business attorney who can help you file your articles of incorporation with the state. They can also assist you with employer identification number filings, stock certificates, corporate seals, certificate of status and more. The process can be intimidating, but having the right people on your side will ensure you get off to a great start.