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Starting a Limited Liability Company (LLC) in Florida can kickstart an exciting journey for aspiring entrepreneurs. This guide helps form an LLC in the Sunshine State, with step-by-step instructions from choosing a business name to understanding the financial aspects. Whether you're a seasoned business pro or new to entrepreneurship, understanding how to start an LLC is crucial.
As we dive into the specifics of starting a business, remember, establishing an LLC goes beyond paperwork—it's about building a strong and profitable business.
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How to start an LLC in Florida in 7 steps
01. Pick your business name
When starting a business in Florida, the first step is to choose a name for your LLC. This is not just a creative process, it also has legal implications so it's important to choose carefully. Your business name should be unique and should not be the same as or too similar to other names on record with the Florida Secretary of State. Make sure your chosen name ends with "LLC," "L.L.C.," or "Limited Liability Company" to comply with state requirements.
Be inspired: Best LLC names
Here's some tips on how to create a business name that is unique and compliant:
Use the Florida Secretary of State's online database to search for name availability.
Avoid restricted words that could confuse your LLC with a government agency (e.g., FBI, Treasury).
Also consider your domain availability if you plan to also focus on building a website.
Tip: If you're having trouble coming up with a unique name for your business, consider using a business name generator.
02. Choose your registered agent
Every LLC in Florida must have a registered agent, an individual or company that agrees to accept legal papers on behalf of your LLC. Your registered agent must be available during regular business hours and have a physical address in Florida. They must be reliable and able to handle confidential business and financial documents. They must also meet all legal requirements set by the state of Florida for such a role.
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03. Obtain state business permits
Depending on the nature of your business, you may need specific permits or licenses to operate legally in Florida. These could range from general business licenses to industry-specific permits.
To obtain the necessary permits in order to register your business, follow these steps:
Check with local and state agencies to determine what permits you need based on the business you plan to start.
Fill out all required paperwork accurately and submit to the appropriate authorities.
Pay any associated fees for obtaining your permits.
For example, if you want to start a plumbing business in Florida you must be a licensed contractor or apprentice working under a licensed contractor. Licenses are issued by the Florida Department of Business and Professional Regulations. The two types of plumbing licenses are: Certified Plumbing Contractor, Registered Plumbing Contractor.
If you want to work as a plumber anywhere in the state you'll need to be a Certified Plumbing Contractor and this involves passing the State of Florida’s licensing examination. As a Registered Plumbing contractor you can work only in the country where you passed your local region's plumbing competency exam for licensing. These vary by county.
To become ether a certified or registered plumbing contractor in Florida you must be at least 18 years of age with a high school diploma or GED. You must complete a recognized college or vocational school training program, or gain experience working under a licensed contractor. This must be followed by verifiable experience in plumbing and passing a trade knowledge exam plus a business exam. Then secure general liability insurance in the amount of $100,000 with $25,000 property damage coverage. You must also have an FICO credit core of above 660. The final step is a criminal background check.
Learn more: How to get a business license
04. File Articles of Organization
Articles of Organization is a critical document that officially creates your LLC in Florida. You'll file this with the Florida Division of Corporations, either online or by mail, along with the required filing fee.
Filing involves these key actions:
Gather your business information: You'll need details like your LLC's name, registered agent information and management structure.
Fill out the form: This is the specific form used for filing an LLC's Articles of Organization in Florida.
Submit and pay fees: Complete the submission process by paying the necessary fee. This is $125 to file an LLC, an extra $30 if you want a certified copy of the Articles of Organization and an extra $5 for a certificate of status.
05. Draft your LLC operating agreement
While not legally required in Florida, creating an operating agreement is highly recommended for any LLC. This internal document outlines ownership structures, member roles and operational procedures for this type of business.
Here’s why an operating agreement is important:
Clarifies business rules and guidelines: It sets clear expectations for members regarding operations and conflict resolution.
Protects LLC status: Helps maintain limited liability status by proving that your LLC is a separate business entity.
Prevents misunderstandings: Reduces potential disputes among members by detailing policies and procedures for how the business should be run.
06. Apply for an EIN and pay relevant taxes
An Employer Identification Number (EIN) is like a social security number for your LLC. It’s necessary for hiring employees, opening bank accounts and filing taxes.
Securing an EIN involves:
Applying online or via mail: The IRS provides free EIN registration through their website or via mail submission.
Understanding your business tax obligations: Learn about state-specific taxes that apply to your LLC, such as franchise tax or sales tax. In Florida for an LLC owner this means a 15.3% self-employed tax (12.4% social security, 2.9% Medicare). For more information, visit the Florida Department of Revenue.
07. Organize annual reports
Florida requires all LLCs to file an annual report with the Division of Corporations. This report keeps your business information up-to-date with the state and includes details such as addresses and management structure changes.
To ensure you’re compliant with this make sure to:
Know due dates: Your Florida Annual Report is required each year by the third Friday in September.
Maintain proper records: Keep accurate records throughout the year to simplify report preparation when due dates approach.
Submit and pay required fees: Complete the submission process by paying the $138.75 filing fee.
How much does it cost to start an LLC in Florida
Starting an LLC in Florida involves various costs that you need to plan for. Here's a breakdown of the expenses you can expect during the process:
Filing fee for Articles of Organization: To register your LLC with the state, you'll need to pay a filing fee. This is a mandatory cost and is typically around $125.
Registered agent fee: If you choose to hire a professional registered agent, they will charge a fee for their services. This can range from $50 to several hundred dollars annually.
Business permits and licenses: The cost for permits and licenses varies depending on your business type and location. It's important to check with local and state agencies to determine what you need and how much it will cost.
Operating agreement: If you decide to have your operating agreement drafted by an attorney, this will incur additional costs. However, many online sources offer templates that can be less expensive or even free.
Employer Identification Number (EIN): Obtaining an EIN from the IRS is free of charge.
Annual report filing fee: Each year, your LLC will need to file an annual report with the state of Florida, which comes with a filing fee of about $138.75.
Additional costs may include:
Legal or financial consulting fees: If you seek professional advice during the formation process, these services will add to your startup costs.
Domain registration and website creation: Establishing an online presence via a website is crucial in today's market. Costs here include domain registration and potentially hiring a web designer or using a website builder like Wix.
Business insurance: Depending on your industry, you might need various types of insurance to protect your LLC.
Learn more: Cost to start an LLC
Who can start an LLC in Florida
In Florida, the eligibility criteria for starting an LLC are quite inclusive, allowing a wide range of individuals and entities to establish a business. Here's who can start an LLC in the Sunshine State:
Age requirement
You must be 18 years or older to form an LLC in Florida. There are no residency or citizenship requirements, so both U.S. residents and non-residents can start an LLC.
Legal entities
Other business entities, such as corporations or other LLCs, can also form an LLC in Florida. This is often done for strategic business structuring.
Foreign nationals
Non-U.S. citizens are permitted to create an LLC in Florida. However, they may need to comply with additional regulations at the federal level, particularly for tax purposes.
Benefits of starting an LLC in Florida
Setting up an LLC in Florida offers a range of benefits that attract many business owners. These advantages cover legal protection and tax advantages, making it a popular choice among entrepreneurs.
Limited personal liability
As the name suggests, an LLC provides limited liability protection. This means your personal assets are typically protected if your business faces lawsuits or debts.
Pass-through taxation
LLCs often benefit from pass-through taxation, where the business profits pass through to the owners' personal tax returns, avoiding the double taxation that corporations can face.
Flexibility in management
Unlike corporations, LLCs have a flexible management structure. You can manage your LLC as a member-managed or manager-managed entity.
Ease of formation and maintenance
Compared to other business entities, forming and maintaining an LLC in Florida is relatively straightforward with fewer formalities and requirements.
Credibility with customers and partners
Having 'LLC' after your business name can enhance credibility with potential customers, suppliers and financial institutions.
Potential disadvantages of starting an LLC in Florida
When considering setting up an LLC in Florida, it's key to weigh the pros and cons. Understanding the potential challenges helps you decide if an LLC suits your business needs. Here are some hurdles you may encounter with an LLC in Florida:
Limited growth potential
An LLC may not be suitable for businesses that plan to go public or seek investments from venture capitalists as it does not allow for the issuance of shares.
Self-employment taxes
Members of an LLC may be subject to self-employment taxes on their share of the profits since they are considered self-employed.
Annual fees and reports
Florida requires annual reports and fees which can be seen as a disadvantage compared to states that do not have such requirements.
Unlike corporations, LLCs are unable to offer stock options,which may make them less attractive to investors. And due to their limited liability, banks may be more hesitant to offer loans. Additionally, unlike sole proprietorships and general partnerships, LLCs need to pay registration and renewal fees and are required to have a registered agent.
Shylene D’Addario, VP and associate general counsel at LegalZoom
Why start an LLC over another business entity in Florida?
Choosing the right business structure is crucial. In Florida, forming an LLC is often preferred because of its multiple advantages. But it's important to compare it with other types of business structures to understand why an LLC might be the best choice for you.
Here's how an LLC compared against other business entities:
Sole proprietorship: Unlike a sole proprietorship, an LLC provides personal asset protection, separating your personal liabilities from those of your business.
Partnership: An LLC offers more protection for each member compared to a partnership, where each partner can be personally liable for the debts of the business.
Corporation: While corporations also provide limited liability protection, they’re also subject to double taxation (taxes on both corporate profits and shareholder dividends). An LLC avoids this with pass-through taxation.
LLCs also offer these unique advantages:
Operational flexibility: Corporations are required to have a formal structure with directors and officers, while an LLC can be managed by its members or managers, providing greater flexibility.
Fewer record-keeping requirements: An LLC has less stringent requirements for record-keeping and reporting compared to a corporation.
Profit distribution flexibility: Profits in an LLC can be distributed in any manner agreed upon by the members, unlike corporations that distribute profits according to the number and type of shares held.
You've formed your LLC in Florida, now what?
After completing your LLC formation in Florida, it's time to start building and expanding your business. It's vital to take a few key steps to ensure your LLC runs smoothly and complies with state regulations. Here are the next steps to consider once your LLC is formed:
Open a business bank account
To keep your personal and business finances separate, open a bank account solely for your LLC. This will simplify accounting and tax filing and help maintain your liability protection.
Obtain necessary insurance
Depending on your type of business, you may need various insurance policies, such as general liability, professional liability, or property insurance. Insurance can protect your business from unforeseen events.
Understand your tax obligations
Familiarize yourself with federal, state and local tax requirements. Consider hiring an accountant to help navigate complex tax laws and ensure you're taking advantage of all available deductions.
Additionally, focus on these areas to manage and grow your LLC:
Develop a strong brand identity: Create a logo with a logo maker, build a brand voice and create a professional website to present a cohesive image to customers.
Implement a good accounting system: Good financial management is essential for any business. Set up an accounting system that allows you to track expenses, profits and financial growth accurately.
For more information on how to start an LLC by state
How to start an LLC in Florida FAQ
How long does it take to form an LLC in Florida?
The time it takes can vary, but typically, once the Articles of Organization are filed, it can take 2-5 business days for the state to process your LLC formation.