Starting an LLC in Florida provides notable tax advantages that give your business an early boost. The biggest problem is adhering to the various (sometimes confusing) requirements. Don’t panic, our guide will show you how to set up the business of your dreams without fuss.
Why Starting an LLC in Florida Is Worth It
Starting an LLC in Florida is worth it for many reasons. You’ll receive access to limited liability protection, which means you don’t get held responsible if your business suffers a loss—your personal assets such as your car and house stay protected. Other business structures like sole proprietorships and partnerships don’t have this additional legal protection.
Most importantly, Florida ranks fifth for having a favorable tax climate for businesses—there isn’t a state income tax, so an LLC will be one of the least tax-burdened businesses in the US. There are no capital gains or death taxes either, and LLCs are subject to what’s known as “pass-through taxation” in general, meaning a business’s net income passes through to the owner’s tax return.
The tax benefits don’t stop there, either. Growing LLC companies can save money on taxes by electing the highly desirable “S corp” tax status. You’ll be eligible for this if your business earns enough net profit to pay what’s considered a reasonable salary and at least $10,000 in distributions annually. You’ll also need to have 100 shareholders or less and issue only one class of stock.
There’s compelling flexibility, too. For instance, there’s no restriction on the number of owners allowed for LLCs, and there’s considerably more freedom to structure your business and make decisions how you want. There’s also extra flexibility available in terms of profit distributions—LLCs can distribute profits to their owners however they like.
Starting an LLC is a risk, whatever your approach—but all of these benefits add up and give you the best shot at seeing early success.
The Investment Needed To Start an LLC in Florida
You’ll incur several fees on the cost side of things, and it’s vital to know the specific charges before you get started. Florida doesn’t offer a name reservation service before the central LLC registration, and you instead register what’s known as a “fictitious” name. If you don’t want to start your business under your legal name, you can choose to use a DBA (Doing Business As) name. Here you need to register and pay a $50 filing fee, which is valid for five years.
There’s also the requirement to draft and file articles of organization that lay out the basic information about your business. You can file your papers with the Division of Corporations for $100. It’s worth appointing a registered agent authorized to receive service of process and other legal documents—a third-party registered agent service costs between $50 to $500 yearly. You need to pay a mandatory registration fee of $25 in addition to that.
The final cost is for annual reports, which are needed to maintain an active status in the state. You need to file these yearly reports online, and the fee is $138.75 (at the time of writing). If you have an LLC registered in another state and have plans to develop your business in Florida, you’ll need to register as a foreign LLC; it costs $125. There may be supplementary fees for business permits, but this does depend on your location.
So how long does it take to do all of that? On average, you’re looking at somewhere between 14 to 21 days to set up an LLC in Florida, although it may well be quicker if you choose to do it in the slower times of the year. It’s generally best to start your LLC at the beginning of the year as it gives you the most time to achieve profitability and eases the overall paperwork burden—of course, this is a popular time, so expect it to take longer if that’s when you begin.
Investing in a solid business formation service makes starting an LLC more straightforward. We recommend LegalZoom, which made our list of the best business formation services. It’s a complete service that can help with annual reports, provides a practical compliance calendar, and lets you quickly create articles of amendment. You can start an LLC for $79 plus state filing fees.
6 Steps To Start an LLC in Florida
Here are six steps to start an LLC in Florida and make your dreams a reality.
#1 – Name Your LLC
The first step is to name your LLC. The name must be different from the other businesses on file with the Division of Corporations. Be aware you can’t reserve a name before creating your LLC, so you’ll need to move quickly.
Be sure to check if the business name you like is available as a web domain—you can buy the URL to stop others from using it. If you’re stuck on names altogether, plenty of business name generators are available.
Ideally, your business name will be memorable and distinctive enough to stand apart from the competition. Don’t forget to see if the name you like is available to use across social media channels; for example, Twitter usernames always look better when they closely match your business’s exact name.
Take some time to think through the name, and once done, move on to step two.
#2 – Get a Registered Agent
All LLCs in Florida will need to have an agent for service of process—this is an entity that can accept legal papers and tax notices for you. The legal forms include court documents, official state correspondences, and annual report notices. The agent must have a street address located in Florida if they want to act as a business entity or even as an individual resident.
If you’re struggling to know where to start here, don’t fret. LegalZoom can become your registered agent in a few clicks and is available every day of the week on a nine-to-five basis. The service will help you avoid penalties for not having an agent, and you receive alerts whenever important mail on your behalf comes in. You’ll also receive $1 million in identity theft protection and credit monitoring through Experian.
That’s not all either; as part of the package, you get unlimited cloud storage for your business documents and dedicated emails about annual report deadlines through the “Compliance Calendar.” The service even helps you switch your agent by dealing with the paperwork and will cover any fees applicable in the state of Florida. It costs $299 a year and saves a lot of headaches.
#3 – File Your Articles of Organization
The “articles of organization” are essentially the key document you need to file to register an LLC in Florida officially, and they can confuse those just getting started.
The document needs to be filed with Florida’s Division of Corporations and must include the following:
- The mail address and street of the LLC’s central office.
- The name, address, and personal signature of your RA (Registered Agent).
- The names and addresses of your company’s managers.
- The effective date of the business and a signature of a member or other authorized representative.
The fee is $125 and can be filed online or by mail. From there, the secretary of state will review your articles and, in some cases, can reject them, although this is typically down to issues with the LLC’s suggested name more than anything else. The processing time in Florida is often anywhere between two to 14 business days, although this can vary.
The process is relatively simple overall, but be sure not to rush it. LegalZoom recommends taking these key steps:
LegalZoom‘s service gives you access to a network of attorneys for independent consultations should you need them, so if you’re stuck, seek out the professionals for some extra peace of mind.
#4 – Create Your Operating Agreement
It’s worth knowing that you’re not required to have an operating agreement in Florida. That said, we recommended that you get one anyway because it serves as the internal document that will determine how the LLC runs.
In other words, the operating agreement lays out the responsibilities of both your members and managers and includes their individual rights. Having an operating agreement can help you preserve your limited liability, and without one, Florida’s laws will decide how your company operates, so it’s all but essential.
LegalZoom can help here and will generate an operating agreement for your new LLC in Florida for $99. You’ll also have access to a “Peace of Mind Review” to check for any missing info and other discrepancies that could slow down the creation of your business.
LegalZoom’s second-tier service, called “Rush,” goes even further. For $199, you’ll get expedited processing of your paperwork and the delivery of your final document in two to three business days after processing gets finished. If you’re not satisfied with the final result, you can get a complete refund within the first 60 days.
#5 – Get an EIN
If your LLC has more than a single member, you need to get an EIN (Employer Identification Number). The IRS (Internal Revenue Service) uses the number to identify and tax businesses when required and is fundamentally a Social Security number for a company. EINs are free but only when you apply directly with the IRS—you’ll need to fill out the forms online.
Banks typically ask for your federal tax ID before opening a business bank account or line of credit and having one can help protect against identity theft. While you can do this yourself for free, it does require the successful completion of an application form and is yet another document to fill out.
LegalZoom can take care of this for you, and you only need to answer a few questions. The service will submit your EIN application to the IRS electronically, and if it’s approved, you’ll get the final paperwork in the mail. The $79 cost includes lifetime customer support and a 100% satisfaction guarantee, so it’s worth considering if you need some expert advice along the way.
#6 – File Your Annual Reports
This final step is a bonus, but you’ll need to file an annual report to maintain your active LLC status the year after you form the company. You can file the annual report online between January 1st and May 1st, 2023. The filing deadline is 11:59 PM EST. There’s a $400 late fee if the report isn’t filed by 11:59 PM EST on May 1st, so it pays to stay organized.
Or, if you simply want to make things more painless, LegalZoom can sort it out for $55 in addition to the filing fees. A second-level service—with expedited processing of your paperwork and delivery of your filed document in two to three business days—is available for $75 plus the state filing fees. Sample templates are available to see exactly how to present the documents.
LegalZoom also allows you to ask an attorney for legal advice or call an agent Monday to Friday if you have any doubts during the process.
There you have it. That’s how to set up an LLC in Florida.
While the process may have more steps than you anticipated, getting help from a professional business formation service can make it more manageable. Be sure to calculate your expected total setup costs before starting, and secure some time for the initial setup period, as this helps to make things that little bit smoother.
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