How to Start an LLC in Florida
Small businesses are a crucial part of the Florida economy, whether they offer services to tourists or professional services for locals. If you’ve decided to start a business in Florida and determined that an LLC is the right business structure for you, keep reading to learn about the steps you need to take to launch a Florida limited liability company.
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The Department of State has a Florida Division of Corporations that’s responsible for the registration and maintenance of all businesses, including LLCs. In other states, it’s the Secretary of State that handles these matters. You’ll need to follow state Florida laws and the formation process to get your LLC registered with the state and ready to begin operations.
Name the LLC
Have a name in mind? See if it’s already listed in the state’s business directory. If the name comes up in a search, it’s taken. If it doesn’t, it’s yours to claim.
Besides deciding what type of business you want to run, choosing a name is the first thing you need to know to become an official business owner in Florida.
The name you choose for your Florida will be listed on all of your paperwork and associated with your business on all state documents, so it is important to have a name selected early in the process. You should consider whether a name is easy to remember, simple to spell and find online and if it accurately represents your business. In addition to these criteria, you’ll also need to think about the naming rules in Florida.
Naming rules in Florida
Like other states, Florida requires that each business have a unique name that is not used by any other business. This includes all business structures, not just LLCs. You can use the SunBiz website to do a name search for existing business names and determine if the one you want is available. Name availability will likely be a challenge, so be prepared.
Florida also requires that an LLC’s name end with either “Limited Liability Company,” LLC,” or “L.L.C.” If the business is a PLLC, the requirement will be “Professional Limited Liability Company,” “PLLC,” “P.L.L.C.”, or “chartered”.
The name can also not include any words that are used to name a government agency, like Treasury, or words that imply professional work there when that is not true, like an attorney with no lawyers present.
If no other business has your name in Florida, you are legally able to proceed with the name. However, it can be a good idea to see if other states have a business with the same name. If they have claimed social media handles or domain names, you may want to choose another name as you could be easily confused for these existing businesses.
Select a registered agent
As part of forming an LLC, you’re required to name a registered agent who serves as the main point of contact between the business and the government. This person or entity is authorized to receive service of process and any other official legal documentation on behalf of your LLC.
In addition to being over 18 and having a mailing address in Florida (not a P.O. box), a registered agent is committed to being on-site and available during all regular business hours to accept documents.
An LLC’s member, employees, or manager can act as a Florida registered agent on behalf of the company, or any person you know can be appointed.
However, because of the business hours requirement, many people choose to use a registered agent service instead of acting as one themselves. These services must be businesses with a street address in Florida and are then able to perform these services on your behalf for a small fee.
File Articles of Organization
Information like the name of your LLC and the chosen registered agent is part of a document called the Articles of Organization. This document is what officially establishes an LLC, providing the Department of State with all relevant information and allowing them to confirm your new business is in compliance with LLC regulations.
Form LLC-1 acts as the Articles of Organization in Florida and can be submitted online or by postal mail. Before doing so, be sure that all information provided is correct and follows the requirements in Florida so that you are not denied and don’t risk starting over.
The Florida LLC Articles of Organization will require you to provide the following information:
- The LLC’s name and principal place of business
- Name and address of a registered agent
- Name and address of all LLC members or managers
- A statement of purpose for forming the LLC
- Intended duration of the LLC
- Management structure of the LLC
- Signature of the person forming the LLC
- Signature of the registered agent
Once the business formation document is approved, your LLC is an official business entity in the state of Florida. You will receive a physical certificate that confirms your LLC formerly exists.
You can fill out and submit your LLC formation documents here.
There is a $125 fee to file Articles of Organization in Florida. This fee is non-refundable, even if the LLC is not approved or formed. If paying by check, it should be payable to the Florida Department of State.
Florida processing time
Articles of Organization are processed in the order they are received. It is estimated that there is a 2 to 4 weeks period between the submission of your forms and approval.
Create an LLC operating agreement
In an LLC, it is important to show that the business is a separate entity from its owner or owners. One way this can be done is by creating a strong operating agreement at the outset of the business venture, which shows how all finances and decisions will be handled.
While Florida doesn’t require an operating agreement to be in place for an LLC, it is best practice for any business to have one.
A Florida LLC operating agreement is a legal document that outlines the ownership and operating procedures of an LLC. All members should agree on the contents and sign the agreement, which is kept as an internal record and referenced if there are any disputes in the future.
Some LLC owners choose to use an attorney when drafting their operating agreement, which can be helpful if the situation is complex or they are concerned about any issues. There are also many free templates available online to draft your own.
The basic components of a Florida operating agreement should include:
- Basic information about the LLC, like name and address
- Articles of Organization copies or similar information
- Members names and their initial capital contributions
- How future funds will be raised
- Each member’s ownership stake, voting rights, and profit share
- Division of profits and losses
- Process for an existing member leaving or a new member joining
- Management procedures
- Dissolution terms and responsibilities
An operating agreement may change over time, but having one early on protects against the future of your Florida LLC.
When all your paperwork is approved and your LLC is recognized by Florida, you have taken care of the first phase of owning a business. Having the certificate in hand, you will then be able to start operating as a formal LLC and managing your tasks for ongoing operations.
Get your EIN
Each individual in the United States is issued a nine-digit Social Security Number that is used as a unique identifier for all government interactions. Similarly, each business must be issued an EIN, or Employer Identification Number, by the IRS. This nine-digit number is specifically used for federal tax purposes but is also useful as an official identifier for your business.
Any business can obtain an EIN immediately by applying on the Internal Revenue Service (IRS) website and providing the requested information. The majority of businesses will need to do this, and any LLC with employees, or those who will file excise taxes, must do so.
Only a single member LLC with no required excise taxes can operate without an EIN. However, even these businesses should proceed with the identification – not only is it free, but it also has a number of other benefits.
Unlike a Social Security Number, an EIN is not extremely sensitive information. Having one means that you can provide an EIN on vendor documents, invoices, and other communications where you would otherwise need to provide your personal SSN. Furthermore, many institutions like banks will require an EIN before issuing funds in the name of a business. An EIN lends your business credibility while protecting your personal assets, and is recommended for any business in the United States.
You can get your EIN by visiting the IRS website.
Get Florida business licenses
Florida does not issue any license at the state-wide level for operating a business. Instead, only highly regulated or dangerous professions require licensing, such as medical professionals or cosmetologists. The Florida Department of Business and Professional Regulation is the primary issuer of these licenses and provides a full list of the occupations it regulates.
Unlike most states, Florida also does not require a seller’s permit at the state level. However, almost all counties in Florida do require businesses to have a business tax receipt before they can do any business in the county. Many cities have a similar requirement. For example, you must have a business tax receipt in Dade County, as well as one in Miami, which sits in Dade County. You can check with county and city tax collectors to find out what exact requirements you must meet.
Whatever level it is at, a business tax receipt is what authorizes you to collect and remit sales tax in the state. Keep in mind that it can take a few weeks for these to be issued, and you cannot conduct any transactions until you have them.
Open business bank accounts
In addition to tax benefits, one reason that many entrepreneurs choose to form an LLC is for personal asset protection. An LLC separates an individual from the business, protecting the members’ personal assets if there is any collection levied against the business. But if it can be proven that the individual is not properly separated from the business, a judge could shift responsibility back to the members – this is known as piercing the corporate veil. One of the best ways to avoid this is to keep separate finances.
A checking account in the name of your business is crucial to maintaining proper asset protection. Keeping all income and expenses in this checking account allows you to clearly show the finances are business-only. This also makes the process of tax filing and basic accounting simpler. You can choose to have credit cards and savings accounts open in the business’s name as well.
Review LLC tax rules in Florida
One reason many people and businesses thrive in Florida is that the state does not impose any personal income tax. Corporations do pay a 5.5% tax, but LLCs are pass-through entities where profits and losses are reflected in the personal income taxes of the members. This means that you do not have to pay income taxes on your LLC.
If your LLC has employees, Florida still requires you to pay all employer taxes, including withholdings from paychecks and unemployment taxes. This is done through the Florida Department of Revenue.
All LLCs in Florida must file an annual report each year, starting in the year following formation. Reports must be filed between January 1st and May 1st online.
Get insurance for your LLC
Even though a lawsuit will not impact the personal assets of an LLC member, you don’t want your business to end up with a large financial obligation. General liability insurance is what most LLCs purchase, as it is a broad policy to protect against claims like property damage or bodily injury. Most small businesses have this in place for peace of mind.
If your LLC includes professional service providers like accountants or medical professionals, it is usually recommended that you also have professional liability insurance. This coverage protects against claims of malpractice and other business errors.
Florida also requires you to have workers’ compensation insurance if your LLC has employees. This provides coverage in the event of a job-related illness, injury, or death.
Additional resources to help you set up a business in Florida
The Florida Department of State Division of Corporations operates a website called SunBiz which provides all the necessary information to start a business in the state. Some highlights include:
Do LLCs pay taxes in Florida?
In an LLC, the profits and losses of the business are passed through to the members, who report them on their personal tax returns. This avoids Florida’s 5.5% corporate tax rate. Florida is a state with no personal income tax, so these profits are not taxed at the state level. There is a 6% sales tax in the state.
Does Florida require a seller’s permit?
There is no statewide requirement for any business license in Florida, including a seller’s permit. A business instead will need to obtain business tax receipts, which serve the same purpose, at the level of county or city government. Almost every county in Florida requires this, as well as some cities.
Can I reserve a name for my LLC in Florida?
Florida does not offer an option to reserve your name. When your LLC is registered, the name is associated with your startup and not available to anyone else, but until then it will be open to being used. If you want to ensure you can use a name, you will need to file Articles of Organization as quickly as possible.
How much does an LLC cost in Florida?
The fee to file Articles of Organization in Florida and register an LLC is $125. There may be other costs associated, like a registered agent service, depending on how you choose to proceed. You will also need to pay for business licenses, which can vary by industry and location.
Does an LLC need a DBA in Florida?
Most LLCs operate under the same name which they register in their Articles of Organization. If you want to go by a different name in public, the LLC will need a fictitious business name or DBA. Florida requires you to register this name, which must be unique, and advertise the fictitious name in the relevant county newspapers.
Do LLCs in Florida need workers’ compensation insurance?
Most industries in Florida require any employer to purchase workers’ compensation coverage when they have their fourth employee hired. For an LLC, this count of employees includes any members. This coverage ensures that employees are compensated in the event of an illness, injury, or death that results from job activity.
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