How to start a business in Florida

Starting a small business in Florida can be an exciting and fruitful venture. The Sunshine State offers a large population of potential customers and a diverse economy to keep traffic coming through your doors. Existing business owners and those researching how to start a new business in Florida have many options for what type of business they’ll run, who they’ll serve and where they’ll set up shop.

Major cities like Miami and Orlando are popular among entrepreneurs looking to make their mark on the world. Still, even if you plan to go ultra-niche and tuck yourself away in a smaller town, the possibilities for your small business are endless.

But first, getting your Florida business off the ground requires some basic business knowledge and an understanding of the formalities of setting up a legal entity. Here, we’ve compiled a step-by-step guide with all the critical information you need to get started.

What are the steps to opening a business in the state of Florida?

1. Develop your business idea

You may already have a solid idea for your Florida business. But if you still need one, this is the place to start. Consider your interests and hobbies and take a look at other businesses that are performing well in similar industries. It’s tempting to start a unique business thinking you’ll corner the market — but note that it can be tricky to generate profit with untested models. If nobody else is doing it, there could be a good reason!

Discuss your business idea with your friends, family, and most importantly, your significant other. Starting a business in Florida (or any state) is one thing, but you’ll need to make sure it’s sustainable and affords you a positive work-life balance.

• Research your business idea to find examples of others running successful enterprises in the same niche or industry.

• Consider your ideal audience and think about how your small business will serve their needs and desires.

• Think about your business location and whether the demographics can support your business.

• Seek feedback from people you trust and be open to constructive criticism.

The more appealing you can make your business, the more customers will want to do business with you. Getting appropriate and honest feedback in the beginning stages is essential to your success.

2. Create your small business plan

You’ve probably heard of a business plan and how it can act as a road map to continued success throughout the life of your business — it’s true! A well-crafted business plan covers all of the details about your enterprise and guides your path toward sustainable profits. You can also use your business plan to secure funding from banks and third-party lending outfits, as well as to find partners to help you run your business on a day-to-day basis.

You’ll have the best chance of meeting your goals if your plan tells the full story of your business, your projected milestones and objectives, and how you plan to achieve them. For this reason, extensive financial details, structural details (the hierarchy of your business) and marketing strategies should be the main points to cover.

Here’s what you’ll need to include to create a robust business plan:

3. Secure necessary funding

Purchasing inventory, leasing commercial space and outfitting a storefront in the state of Florida all require dedicated capital. If your business needs extra funds to get off the ground, you’ll need to consider funding options carefully to determine how to start a business in Florida with the right amount of cash.

Capital lending solutions are designed specifically to help new small businesses with startup costs, and third-party providers such as Heartland offer services that meet your business needs where you are now so that you can grow. This means that whether your business needs $5,000 or $5 million, you can access the funds necessary to get set up and prepare your business for its first few customers.

You may also consider crowdfunding options or personal investment, but one way or another, your business will need cash to operate. Understanding how to start a business in Florida with the right funding is crucial because it can alleviate the initial stress and provide more peace of mind as you run your business.

4. Choose your business name

Sometimes, the perfect business name just jumps out at you. But even when that happens, it’s important to consider how your business name will be perceived in your local community. Can customers find it easily via online search? Does it stand out enough to be easily remembered? Does it represent a certain value or solution, or carry geographical or historical meaning to those from your town?

Once you've settled on a business name, the next step is to find out if it’s available by searching on the Florida Department of State Division of Corporations website. You can search for free, and if your name is available, you can form an LLC or other business entity using that name.

Now, it's time to purchase a domain name for your business. The cost for an LLC is $25, $35 for a corporation or $52.50 for a limited partnership. You can also choose to register a fictitious name for $50 if you wish to use a name different from your business’s legal name. Fictitious names are common for companies that plan to expand into other services as their business grows.

Reserve your website domain name

Now is a good time to purchase a domain name that reflects your business name. For most businesses, maintaining a website with accurate information is essential to bringing in new customers who are searching for your products or services online. You may also wish to set up social media accounts with your business name so that you can boost your online presence and create digital brand awareness.

5. Identify your business structure and business entity type

Choosing the right business structure is key to your success. Your business structure determines how you’ll be taxed by the Internal Revenue Service (IRS), how your business will operate and the specific professional regulations that your business will need to meet to remain compliant.

General partnership

If you and another individual wish to start a Florida business together, you can form a general partnership. Unlike other business structures, general partnerships don’t require any state filings the way that LLCs or corporations do, but they also don’t offer any limited liability protection. This means that personal assets under the ownership of the partners, such as personal residences or vehicles, aren’t protected if the business were to be sued or if a bank were to take collection measures on unpaid debts.

General partnerships often use the last names of the owners (for example, Smith & Johnson Removal Services) but they can instead register and use a fictitious name if desired. As far as the IRS goes, there aren’t any required tax forms, so all of the profit earned by the business is taxed as personal income.

Sole proprietorship

A sole proprietorship is an unincorporated business owned by a single individual in Florida. This type of business is similar to self-employment where the owner can either use their legal name or register a fictitious name or DBA to operate in their local municipality.

Similar to general partnerships, sole proprietorships don’t offer liability protection, so the business cannot own any assets separate from the owner’s personal assets — it’s all just personal. Any financial difficulties would be the responsibility of the owner and not the business, as it isn’t a registered legal entity. As such, any profit earned in a sole proprietorship is taxed as personal income.

Limited liability company (LLC)

A limited liability company, or LLC, is an extremely popular business entity type for small business owners learning how to start a business in Florida. A significant benefit of forming your LLC is that Florida LLCs have limited liability protection for the owners. This means that the business can purchase assets that are separate from the owner’s assets and that the owner’s assets are protected if the business becomes involved in a legal suit, accumulates debt or fails outright.

LLCs offer pass-through taxation, which means that all profits generated by business activities are divided among the owners and taxed as personal income. Note that it’s a Limited Liability Company, not a Limited Liability Corporation, as LLCs are not the same as registered corporations. If you own and operate your LLC by yourself, you’ll need to file Form 1040 with the IRS, while LLCs with multiple members will need to file Form 1065.

Subchapter "S" corporation (S Corp)

A Subchapter "S" Corporation or, more commonly, an S Corp, is a kind of business in Florida that is acknowledged as a registered corporation. It allows for limited liability protection and the issuance of only one type of stock with a maximum of 100 total shareholders.

S Corps have more flexibility than C Corps and can choose how they are taxed. They may opt for pass-through taxation like an LLC, for example, where all profits are reported as personal income tax by the owners in order to avoid double taxation. To elect S Corp status, the corporation must file Form 2553 "Election by a Small Business Corporation" with the Internal Revenue Service.

Subchapter "C" corporation (C Corp)

C Corps are typically formed by larger Florida companies that issue stock and trade their shares publicly on a stock exchange such as the National Association of Securities Dealers Automated Quotations (Nasdaq) or the New York Stock Exchange (NYSE).

C Corps have limited liability protection to protect their owners and can be owned by whoever stock is issued to, including investors, other businesses and the general public. However, there are several requirements they must comply with, such as electing a board of directors and holding annual meetings.

C Corps also face double taxation, which means that they are required to file annual corporate tax returns for any earned profit. After this profit is taxed at a corporate level, it is then distributed to the shareholders who must claim their dividends as personal income on their personal income tax returns. As per the Florida Department of Revenue, C Corps are required to file Form 1120 to remain compliant with the Internal Revenue Service.

Nonprofit organization

Nonprofit organizations are similar to the other entity types. They also have limited liability protection. However, nonprofit organizations differ in that they are not created to generate profits for their owners or shareholders in the way that an LLC or C Corp is intended to do. Instead, nonprofits are dedicated to designing, building or changing something for the public interest or for a specific group or public cause. All profit that is earned by nonprofits must be reinvested into the company in an effort to further its mission for the public good.

It is worth noting that nonprofit organizations are exempt from federal taxes on any profits earned from activities related to their goals or purposes. Nevertheless, strict record-keeping is essential to avoid IRS penalties, and there is a lot of paperwork to be filed, including the mandatory Form 990 "Return of Organization Exempt from Income Tax."

6. Register your small business in Florida

To register a small business in Florida, you will have to choose a registered agent, file the articles of organization (also known as the articles of incorporation) and pay the state filing fee for registering a legal business entity. The filing fee to register as a Florida LLC or corporation is $125.

What is a registered agent?

A registered agent is an individual or entity designated to receive legal notices and other official documents on behalf of a business. In Florida, a registered agent must have a physical address within the state of Florida (you cannot use a P.O. box for the registered agent’s address) and be available during regular business hours to receive any legal correspondence. Business owners can choose to be their own registered agents or they can hire a third-party service.

What are articles of organization?

The state of Florida requires certain legal documents for forming a legal business entity. These documents, known as articles of organization or articles of incorporation, establish your business within the state and provide information about your enterprise, its purpose and the legal obligations of the owners.

When filing articles of organization in Florida, the document must contain certain specific information that will be reviewed and approved by the Florida Secretary of State’s office.

Florida business owners can find filing options and information and file their articles of organization on the Florida Secretary of State’s website.

7. Apply for an Employer Identification Number (EIN)

If your business plans to open business bank accounts and credit cards, hire employees or operate as a corporation in Florida, you’ll need to apply for and obtain a Federal Employer Identification Number (EIN). An EIN is a unique federal tax identification number that is used by the IRS to identify your business. If you have an EIN, you don’t have to provide your social security number and can therefore better protect your personal identity.

Obtaining an EIN can help you establish business credit for your company so you can apply for loans faster, build trust with your vendors and avoid tax penalties in the event that you were supposed to get an EIN but didn’t.

Obtaining an EIN is free, and you can get one immediately if you apply online via the Internal Revenue Service website.

8. Open your small business bank account

Once you have your EIN, you can visit your local bank to set up a separate business account and business credit card so that your personal finances can be kept separate from your business transactions. This is an essential step to take if you want to save yourself from potential financial complications as your business grows. If you plan to hire employees for your Florida business, a separate business bank account for payroll transactions is a must in order to pay your new hires easily.

9. Obtain your business licenses and permits

In the state of Florida, businesses are required to follow certain rules to maintain compliance. Although the state doesn’t require a general business license, there’s a good chance that you’ll need one to comply with your local regulations. You may also require additional permits depending on what your business does or how it operates.

Since the licensing requirements and prices may vary based on your business type and location, it’s best to check with your local government website for more information on how to apply for the appropriate licenses and permits.

10. Understand your Florida business taxes

Florida doesn’t have a state personal income tax, so business owners in Florida are only obligated to pay federal income tax on their profits, as well as corporate taxes if they are registered as a C Corp or an S Corp with double taxation. But there are other taxes to be aware of.

Sales and use tax

Florida business owners are required to pay a sales tax on physical products sold, which can range from 6% to 8.5% depending on the county. Some specific services are also subject to sales tax, including communications services, the rental or lease of commercial real estate property and non-residential cleaning services, to name a few examples. Use tax is also applicable to businesses that purchase products that are sold outside of the state of Florida from retailers or distributors that do not charge Florida sales tax.

Corporate income tax

Florida imposes a corporate income tax on businesses that file as corporations. The tax rate is 5.5% of net income for most corporations, but there are some exceptions for certain types of corporations — including those that practice religious, scientific or educational activities, as well as chambers of commerce, social clubs and more.

There are other taxes and fees that businesses may be subject to in Florida, such as the unemployment tax and the gross receipts tax. If you’re a business owner in Florida, it’s important to consult with a licensed tax professional to ensure that your business is in compliance with all applicable tax laws and regulations.

What is a fictitious name or DBA?

In Florida, a fictitious name or DBA (doing business as) refers to a name that a business can choose to operate under instead of using its legally registered name. This can be useful for businesses that want to rebrand or use a name that better reflects the services they offer. For example, a sole proprietorship or general partnership that uses the owner’s name as their business name can file a DBA to operate under a different name that better represents their business activities.

Frequently asked questions

Ready to start your new business in The Sunshine State?

Now that you understand the ins and outs of forming a company in Florida, you can start your business with confidence. (We encourage you to bookmark this page so you can come back whenever you have a question, though. After all, entrepreneurship is an ongoing journey!)

As you’re working hard toward becoming a successful business owner in Florida, we hope you’ll check out the Start-Up Path for Entrepreneurs. Designed to complement the information found in this article, it features interactive worksheets, planning tools and other content focused on everything from marketing to profitability.

The best part? It’s totally free, and you can reference time and again as your business grows or changes.

We know entrepreneurship can be a demanding pursuit. As you’re knocking out tasks, you may enjoy on-the-go advice from our podcast, The Entrepreneur’s Studio. Get motivated and inspired with stories from fashion design visionary Rebecca Minkoff, celebrity chef Aarón Sánchez, former Shark Tank contestant Lindsey Laurain and so many more.

Hey, you’ve got this! And at Heartland, we’re here to assist you anytime — now and in the future.

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Heartland is the point of sale, payments and payroll solution of choice for entrepreneurs that need human-centered technology to sell more, keep customers coming back and spend less time in the back office. Nearly 1,000,000 businesses trust us to guide them through market changes and technology challenges, so they can stay competitive and focus on building remarkable businesses instead of managing the daily grind. Learn more at heartland.us