Many business owners are opting to form a Florida LLC due to the many advantages. It is a particularly good business structure for start-ups or small to medium-size businesses. In order to start an LLC, it is of key importance to understand the legal requirements and state regulations.
What is an LLC?
The abbreviation LLC stands for Limited Liability Company. It is a type of business structure where the owners or members are not held personally liable for the debt of the business. The feature of an LLC is similar to those of a Corporation, however, it must not be confused as such. An LLC is more flexible and provides more protection than a Corporation and is easier to set up.
What is the cost of setting up an LLC in Florida?
Starting an LLC in Florida requires Articles of Organization to be filed with the Florida Division of Corporation. The cost of this is $125 and includes the registered agent designation. This can be done online (MyFlorida Sunbiz), in person or through the mail.
Do LLCs pay taxes in Florida?
An LLC in the state of Florida does not require to pay state income tax, unless the LLC elected to be taxed as a corporation. The income from the business flows through to its owner/s or members and is reported on their federal income tax returns. In other words, the owners are not liable to pay personal state income tax from the profits of the business that passes through to them.
Is Florida a good state to form an LLC?
In Florida the owners of an LLC can decide whether it is more beneficial to the business to be taxed as a corporation or a partnership. The state Business Tax Climate Issue 2011, ranked Florida as the 5th most favorable state to start a business due to its advantageous tax climate. The state also boasts some of the best transportation infrastructure in the country and is rich with a diverse culture.
What are the advantages of setting up an LLC in Florida
Starting an LLC in Florida provides a lot of flexibility. In some states the minimum requirement for members setting up an LLC is two, but in Florida it can be set up with only one owner. The business also has a great deal of flexibility when structuring the management. Managers can be appointed even if they do not form part of the membership of the LLC.
Another advantage is the pass-through taxation where members report the earnings and losses of the LLC on their personal income tax returns. The LLC is not liable for state taxation and therefore the double taxation rule does not apply.
Unlike corporations, LLCs in Florida have fewer regulations. It is not required to keep corporate minutes, but it is advisable to hold annual meetings for the members and to record vital business decisions pertaining to the operation of the business.
How long does it take to set up an LLC in Florida?
It usually takes between 3-5 days to set up an LLC in Florida, but this depends on the time it takes the state to process the documentation and could take longer.
What should I do before forming an LLC?
An LLC in Florida requires a registered agent to be appointed. The agent can be a business or individual that permanently resides in Florida and has an address in the state of Florida. The agent is essentially the go-between the State and the LLC and will receive all the legal and tax documentation on behalf of the LLC.
Once an agent has been appointed, the Articles of Organization can be filed to obtain the necessary legal documentation for the business to operate. An Employer Identification Number (EIN), must be obtained. This is a 9 digit number issued by the Internal Revenue System (IRS) to identify and track the taxation of the business.
Do I need to renew my Florida LLC yearly?
In Florida it is required to submit an annual report for the LLC that can be submitted online every year. The fee is $138.75 and the address of the registered agent must be updated if it has changed.
What else do I need to know?
It is not required to appoint a lawyer or professional business to prepare and file the paperwork for the LLC, however, it can uncomplicate the process. Other business owners that recently formed an LLC or required legal assistance can provide recommendations for a lawyer or professional business.