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ood news for budding entrepreneurs in Florida: The Sunshine State consistently ranks high as one of the best states for starting a business. Not sure how to go about the process? This guide on how to start a business in Florida can help get the ball rolling.
A few things before you get started
Starting a business is an exciting adventure, but there are a few things you'll want to take care of before you officially get started.
Determine your business idea
All businesses start with an idea or concept. What type of business do you want to operate? What products or services will it provide? If you aren't sure where to start, consider things you're good at and enjoy doing. You'll also want to make sure the idea will be profitable.
Conduct market research
To get some ideas, visit businesses similar to the one you plan to start. Buy a product or service from them to get a good look at your potential competitors and figure out how to set your business apart.
You'll also want to do some research on your target audience. Gathering feedback from ideal customers via interviews, surveys, or questionnaires can help you determine if there's any interest in your idea and if prospective customers are willing to buy.
Write your business plan
A business plan details who you are, what you do, and the products or services you provide. It also includes your goals, market research, and business costs.
Creating a business plan isn't a requirement for starting a business, but it's a useful road map for achieving your goals. Because it showcases key aspects of your business, such as your market analysis, organizational structure, and financial plan, it can also help you convince stakeholders and investors to work with you.
Consider how you'll get funding
Do you already have the money to start your business? If not, you'll need to consider how to get the money you need. Funding options can include applying for a loan, seeking investors, or brainstorming other potential sources of financing.
Choose a legal structure
How you choose to structure your business has a significant impact on many aspects of your organization. It affects your tax obligations, daily operations, ability to raise capital, and personal liability.
Understanding the different business entities
There are a few different business entities you can choose from.
With a sole proprietorship, you and your business—legally speaking—are essentially the same. You, the business owner, are personally and financially liable for your company.
Your business income gets taxed as your personal income. This means that you are personally liable for your debts and legal obligations, making it more challenging to raise capital compared to other business structures.
Limited liability partnership (LLP)
If you're starting a business with at least one other person—and you're going to share ownership—you may structure your business as a limited liability partnership. An LLP offers partners legal protection against the liabilities and actions of other partners, but all owners may still be personally liable for business debts. When it comes to taxes, all owners in a partnership must report their profits and losses on their personal tax returns.
Limited liability company (LLC)
A limited liability company, or LLC, creates a separate business entity and offers more legal protections than a sole proprietorship or partnership. A significant benefit of this structure is that you generally aren't personally liable for the debts and obligations of the business. LLCs in Florida can be taxed as a sole proprietorship, partnership, or corporation.
Like an LLC, a corporation turns your business into a separate entity, protecting your personal assets. However, a corporation also has shareholders, directors, and officers, and you have to meet other requirements, such as holding regular shareholder meetings.
There are two main types of corporations: S corporations and C corporations. An S corp offers certain tax advantages, including pass-through taxation, which means that tax liabilities are passed on to shareholders who report income, losses, deductions, and credits as individuals. However, only certain types of businesses and those with 100 shareholders or fewer are eligible.
A C corp has fewer legal restrictions and can make it easier to raise capital. However, it's subject to double taxation, meaning that both the individual and corporation are taxed on profits.
How to select the right legal structure for your business
When choosing a legal structure for your new Florida business, you'll want to consider the following:
- The amount of control you want over your business and its activities
- How much liability you're willing to take on
- How you want to take on tax liabilities
- How much access you need to investor financing and other types of external capital
Getting your EIN
Unless you're structuring your business as a sole proprietorship or an LLC without employees, you need an employer identification number or EIN.
You can get an EIN in one of several different ways. The quickest option is to apply online through the IRS website. You can also apply by fax or mail.
Name your business
Your new business will need a memorable and unique name. You'll also want to ensure another company isn't already using it. As you brainstorm potential ideas, run them through the Florida Department of State's database.
You can reserve a business name before officially registering your company if you submit a letter to the Secretary of State. There is no official form for this. If the name is available, the Secretary of State can reserve it for you for up to 120 days.
Understand Florida's tax obligations for businesses
Businesses in Florida have certain tax obligations. Below are some of the most common ones to prepare for.
State business taxes
Sole proprietors, partnerships, and S corporations are exempt from state income taxes in Florida. C corporations are subject to a 5.5% income tax.
Sales and use tax
Will your business sell taxable goods or services? If so, you must comply with Florida's sales and use tax regulations and file the appropriate tax forms.
If you work for yourself, you must pay a self-employment tax, which is 15.3%. If you have employees, you're responsible for a few employee taxes: FICA taxes (6.2% for Social Security and 1.45% for Medicare) and re-employment taxes (state unemployment tax or SUTA).
Select a registered agent
If you're forming an LLC or corporation in Florida, you'll need to appoint a registered agent to receive essential documents and correspondence on behalf of your business. You can appoint yourself.
How to register your business in Florida
You can register your business through the Florida Department of State's Division of Corporations website or an online legal service.
You'll need to provide:
- Your business name
- Your name
- Your business address
- Your registered agent's name and contact details
You'll also have to pay the required fees to register your business. Self-filing costs depend on how you structure your company.
Choose and register a DBA
If you plan to use another name for your business other than your own (if you're a sole proprietor) or the one you establish for your company, you'll need to register a DBA (doing business as) or fictitious name. To do so:
- Choose a name and make sure it doesn't already belong to an existing business
- Place an ad in a local newspaper using your intended DBA (you must do this before applying)
- Register your DBA online or by mail
Registering a DBA in Florida costs $50, and a certified copy of your registration is $30.
Obtain Florida business licenses and permits
Most businesses in Florida require licenses and permits to operate legally. Depending on the nature of your business, you may need several.
Determining the licenses/permits you need
Most cities and counties in Florida require all new businesses selling products or services to obtain a business tax receipt (general business license) to operate in their location. Check Open My Florida Business to see if you need other local licenses or permits.
Businesses that sell tangible products will also need a seller's permit from the Florida Department of Revenue. Depending on your business, you may also need to license your business with one of the following state agencies:
- The Florida Department of Business and Professional Regulation (DBPR)
- The Florida Department of Agriculture and Consumer Services (DACS)
- The Florida Department of Health (FDOH)
If your business or its activities falls within a federally-regulated industry, you may also need to obtain a federal business license.
How to get business licenses and permits in Florida
You can apply for your business tax receipt through your local city or county website. If necessary, visit the Florida Department of Revenue website for a seller's permit. If you need specific statewide licenses or permits, apply online through the appropriate state department website.
You can get federal licenses or permits online, too. Visit the appropriate federal department website to apply.
Set up your business finances in Florida
Managing your finances is an essential part of running a successful business.
Open a bank account for your business
Opening a business bank account is a must for any company. It keeps your business finances separate from your personal, and it can help your business appear more professional. It may provide additional benefits such as access to a business credit card or line of credit.
When choosing a business bank account, you want to be sure you're selecting the best fit for your needs. With Novo's business banking platform, you can easily apply for a business checking account in minutes. There are no monthly fees or minimum balance requirements. Novo makes managing your finances easier so you can focus on what matters most: running and growing your Florida business.
Fund your business
If you can't fund your new business yourself, you'll need to consider other options. Common solutions include:
- Asking friends and family
- Small business loans
- Small Business Administration (SBA) loans
- Angel investors
Additional considerations for starting a business in Florida
There are a few other things you'll want to consider before you officially start your new business in Florida.
Insuring your business
Workers' compensation insurance and unemployment insurance are necessary if your business has any employees. Florida doesn't require you to carry any other types of insurance, but insurance policies like general liability, commercial property, and product liability can help protect you financially. Consult an insurance professional to determine the best policies for your business.
Employees can help you run your business and meet the needs of your customers or clients. Consider the types of positions you need to fill and screen potential candidates to ensure you find the best people for your open roles.
Starting a business in Florida—or any state, for that matter—does require some time and effort. Fortunately, this entrepreneur-friendly state makes the process fairly straightforward. Make sure to follow all required steps, obtain the necessary licenses, and comply with all legal requirements.
Novo Platform Inc. strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.
Novo is a fintech, not a bank. Banking services provided by Middlesex Federal Savings, F.A.: Member FDIC.
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