The Sunshine State is an excellent place to do business. Florida boasts the lowest income tax and the second lowest total tax burden in the nation. It also is home to several business hubs, which draw in skilled talent and new entrepreneurs.
Businesses large and small can thrive in the state, but it’s small businesses that truly shine. Florida is home to more than 2.5 million small businesses, which make up 99.8% of all businesses in the state.
If you’re looking to join the ranks of Florida entrepreneurs, you may be wondering how to start a business in Florida. This guide will help you walk through the process of starting a Florida company from start to finish.
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Decide on a business idea
First and foremost, you’ll need to decide what kind of business you want to start. Chances are you already have something in mind, but if not, here are some things to consider:
- What are you talented or naturally skilled at? Could this talent make you well suited to a certain type of business?
- What business does your community need? Have you talked to people to find out?
- What are you interested in? Can you combine any of your passions with a business idea?
- Is this going to be a full time business, or more of a side hustle?
These are questions to ask yourself when deciding on a business idea. Once you have decided, move on to the next step.
Plan your Florida business
Now it’s time to start planning. This means coming up with a business plan, naming your business, researching locations, and more. There’s a lot to cover here, so let’s break it down:
Select a business name
Next, you will need to select a name for your new company. You want to find a name that is relevant for your business, and memorable for your customers.
Beyond choosing a good name, you must choose a name that fits all the Florida business name rules. This means selecting a name that is not already taken and is distinguishable from all other registered Florida businesses. You can conduct an online business name search to determine whether or not a business name is available in Florida.
The name you choose must meet other naming requirements, as well. This includes:
- LLC names must contain “limited liability company”, “LLC”, “L.L.C.” or another approved abbreviation
- Corporation names must contain “corporation”, “incorporated”, “inc”, or another approved abbreviation
- Names with financial terms like “bank” or “trust” may require additional paperwork/written permission to use
- Other rules may apply
When you have found a name that fits your needs and is available, you can move on to actually registering it. Or, you can reserve the business name temporarily, which gives you some time to think about it before registering. The fee for this is $25 to $52.50, depending on the type of business.
Florida trade names
Florida does allow for the use of “fictitious names”, otherwise known as trade names or Doing Business As (DBA) names. These are essentially secondary names that you can add to your existing business, allowing you to legally do business under multiple names. This provides more flexibility for branding and marketing purposes. You can learn more here.
Register a domain name
Once you choose a name, you should immediately register a domain name for your new business. In most cases, getting a .com domain name is ideal, but there are many other extensions (.biz, .net, etc.) that are worth considering.
You can use a tool like Namechk to search for an available domain name and find a great deal on the registration cost. You may find that your desired names are taken, so you may need to get creative.
Complete market research
Once you have an idea, you’ll want to do some market research. You want to gain a better understanding of who your customers – and competitors – are. You can achieve this by conducting online research, running focus groups, sending out surveys, and more. There are also companies that can help you complete market research, for a fee.
Select a business location
Unless you plan to run a remote/virtual business, you will need to find a physical location for your company. Research commercial property in your area, and take note of typical costs. For customer-facing businesses (retail and some services), location is very important, so take your time in selecting the right area for your business.
Create a business plan
You will now need to create a detailed business plan for your new venture. This plan is helpful for your own purposes, and will also be necessary in order to obtain funding from a bank. A good business plan should contain these elements:
- Finances: How much funding does the business need to get started? How many sales does it need each month to break even on expenses?
- Product: What do you plan to sell? Is it a product or a service? What problem does your business solve, and how is it distinct from your competitors?
- Marketing: How will you drive sales? What marketing and sales efforts do you plan to employ? How much money will you set aside to fund marketing efforts?
- Staff & Partnerships: How many people will you need to hire, and what skill sets do they need to have? Will you have any partnerships or arrangements with other local businesses?
If you need help, you can find business plan templates online that will help walk you through the steps you need to take to draft a detailed business plan. If you plan to seek funding, you may also wish to call your bank to see what they require in terms of business plans.
Decide on a business structure
Before you form your business as a legal entity, you will need to decide which business structure you will use. There are a few different types of businesses, each with its own pros and cons.
Sole proprietorship
Sole props are single-person operations. Examples include freelancers, gig economy workers and consultants. A sole proprietorship business is very easy and inexpensive to form, and tax reporting is also fairly simple. As a sole proprietor, your business taxes are reported as part of your personal tax return.
The downsides to a sole prop are that you cannot hire employees, and you don’t have the legal liability shield that something like an LLC or corporation would provide. 100% of the debts and liability of a sole proprietorship go to the sole owner: you.
Partnership
A general partnership is an unincorporated business structure similar to a sole proprietorship, except with two active owners/participants. Partnerships do not have liability protection.
Limited Liability Company (LLC)
A limited liability company, or LLC, is a popular choice for business owners because it provides liability protection to the owners. It separates the business from the owners, which means the personal assets of owners will not be at risk if the company gets sued or goes into bankruptcy.
LLCs are also a bit easier to form than corporations. Even so, there is definitely more work involved with an LLC than there is with a sole proprietorship.
Corporation
A corporation is owned by its shareholders and is a separate entity. There are a few different types of corporations (C-corp, S-corp, etc), with the main differences being the way they are treated tax-wise.
Corporations are more regulated than LLCs, which makes them more attractive to outside investors. For this reason, most large companies are corporations. The downside is that it takes more effort, and more paperwork, to form a corporation.
Nonprofit
A nonprofit is a legal entity that is set up with charitable status, meaning that its goal is not to make a profit, but rather to address a certain cause. Nonprofits are funded by donations, rather than investors, and are subject to many regulations. They are exempt from most forms of taxation, although tax returns must still be filed.
Register your business in Florida
Next, it’s time to actually register your business with the state of Florida. This is handled by the Florida Division of Corporations (SubBiz.org), and the process can be done online or through the mail.
You have two options to form a new FL business: Do it yourself, or use a business formation service. Services like Northwest Registered Agent, ZenBusiness, and Bizee are all great options that provide low-cost services.
These companies basically help walk you through the business registration process. This ensures that everything is handled accurately and efficiently, and helps avoid costly mistakes.
If you decide to do the work on your own, you will need to complete various steps:
- Choose a name for your business
- Choosing a Registered Agent for your business. This agent is responsible for receiving legal documents, including notice of lawsuits, on behalf of your company.
- Filing formation documents with the state of Florida
- Applying for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS)
- Applying for other necessary permits or licenses
This is the overall process, but the specifics will vary depending on the type of business you are forming. Here’s a breakdown of specific steps for each major business entity type.
Form a Florida sole proprietorship
Follow these steps:
- Decide if you will operate under your legal name, or use a trade name
- If you use a name other than your own, you will need to register a trade name (the cost is $50 per trade name)
- Apply for a business license and/or other necessary permits from local governments (city/county)
Form a Florida LLC
Follow these steps:
- Name your LLC
- Choose a Florida Registered Agent (or use a service such as Northwest Registered Agent)
- File the LLC Articles of Organization online, and pay the $125 filing fee. The form can also be filed by mail
- Draft an LLC operating agreement
- Apply for an EIN with the IRS
Form a Florida corporation
Follow these steps:
- Name your corporation
- Choose a Florida Registered Agent (or use a service)
- Hold an organizational meeting and appoint directors
- File the Articles of Incorporation online, and pay the $70 filing fee. The form can also be filed by mail
- Apply for an EIN with the IRS
Our picks of the best registered agent services
Apply for business licenses and permits
Registering your business and forming an LLC or corporation is an important part of starting your business – but in order to operate legally, you will likely also need to obtain certain permits and/or business licenses.
The specifics vary depending on the type of business you are running, as well as your location. For example, restaurants will need health permits, bars will need liquor licenses, and medical service providers will need various professional licenses and federal permits. You will need to research the specifics that relate to your business type.
There are different requirements at each level of government:
- Local: Cities and counties may require certain business licenses or permits. Contact your county clerk for details.
- State: Florida may require certain permits or licenses. Check the Florida Department of Business and Professional Licensing for details.
- Federal: Federal permits/licenses may be required for certain regulated industries, such as construction, medicine and legal services. Check the Small Business Administration (SBA) guide for more details.
At this time, you should also apply for an Employer Identification Number (EIN). An EIN is a federal tax ID that is required to hire employees. You can apply for an EIN online with the IRS – the application is free and quick.
Secure funding
For most businesses, some startup funding will be necessary in order to get started. In step #2, you should have calculated your funding needs while drafting a business plan. Use this information to determine how much funding you need to raise.
For bootstrapped companies, you may be able to get by with your own personal savings, or some seed investments from friends and family. If your funding needs are small, this is likely your best route.
If your business plan indicates that substantial funding is needed, you will likely need to apply for a loan and/or a grant.
- Small business loans are offered by banks, credit unions and other lenders. They can range from as little as a few thousand to hundreds of thousands. Specifics will depend on your business, as well as your personal creditworthiness. Most small business loans are issued in a lump sum, and paid back on a monthly basis, with interest.
- Small business grants are offered by government agencies and some nonprofits. They are essentially business loans that don’t need to be paid back – but they usually have substantial fine print. It’s worth looking into, however, as there may be grants available, particularly for businesses serving an important social need, or for underprivileged entrepreneurs starting their first business.
Set up your business finances
Beyond securing funding, there are other routine tasks that you need to take care of to get your business’ finances in order. This includes:
- Opening a business checking account. You should have a separate business bank account that you use solely for business purposes. You can open this account at most banks, credit unions and financial institutions. Call ahead to see what documents will be required to open this account.
- Open a business credit card or line of credit. This is not strictly necessary, but most businesses can benefit from having a business credit card, and/or a business line of credit. This can be used for day-to-day expenses and purchases, and may also earn you some rewards.
- Set up your accounting system. As a business owner, you will need to keep very detailed records about all revenue and expenses. To do this, you’ll want to set up the proper foundation from day one. This could be investing in an account software such as QuickBooks or Xero, hiring a bookkeeper, or at the very least establishing a spreadsheet to track everything. If you do not have any accounting experience, it’s wise to hire a professional to help.
- Purchase business insurance. Most businesses should have some form of liability insurance, and potentially other forms of business insurance as well. Insurance policies can help protect your equipment and buildings from costly damage, and help shield your company from liability if a worker or customer is injured or otherwise harmed. Speak with a local business insurance provider to get started.
Create a business website
In this day and age, having a solid web presence for your business is very important. And social media profiles, while important, are no replacement for an actual website. You will want to build a professional business website that you can use to drum up business, inform your customers, and stay connected with your clientele.
The simplest way to build a website is to use a website builder from a web hosting provider. When you register a new domain name, look for a provider that also offers web hosting and a site builder, so that you can purchase everything at once and get your site set up quickly.
Our picks of the best website builders
Hire employees
Unless you plan to operate a solo business (with you as the only worker), you will likely need to hire employees. To do this, you will need a federal employer identification number (EIN), which is a free tax ID number issued by the Internal Revenue Service (IRS).
When a business hires a new employee, the business must report the new hire to the Florida Department of Revenue. Businesses must also pay reemployment tax (unemployment tax) to support the state’s unemployment insurance programs.
At this point, you also should look into setting up your payroll system – whether you handle it yourself, or use a payroll service. Payroll can be complex, so it’s wise to use a service if you are not familiar with running payroll yourself.
Run and grow your business
Now it’s time to get down to business and engage with the day-to-day activities that are sure to bring your business success. This means marketing your products and services, maintaining good relationships with your return customers, and setting yourself apart from the competition.
Florida business FAQs
Still have questions about running a business in Florida? Here are some answers to frequently asked questions.
What are some business resources in Florida?
Business owners in Florida have a variety of resources at their disposal. A great place to start is the Florida Small Business Development Center (Florida SBDC). This resource provides free business advisor services, webinars and training, and many other useful resources. The Division of Library and Information Services also maintains a list of useful resources for FL small businesses.
What is the minimum wage in Florida?
The Florida minimum wage is currently $10 per hour, as of September 2021. The minimum wage will increase by $1 on September 30th of each year, through 2026.
September 2021 minimum wage: $10 per hour
September 2022 minimum wage: $11 per hour
September 2023 minimum wage: $12 per hour
September 2024 minimum wage: $13 per hour
September 2025 minimum wage: $14 per hour
September 2026 minimum wage: $15 per hour
Florida also has a tipped minimum wage, which applies to most employees that earn tips. The minimum cash-tipped wage is currently $5.63 per hour.
Keep in mind that individual cities and counties are able to impose their own minimum wage laws. Check with your local city/county governments to ensure that you are compliant with all local laws.
What business taxes does Florida have?
There are a variety of taxes that FL businesses must pay. Florida has a state sales tax rate of 6% on most transactions, which applies to the sale of taxable goods and services. Additionally, local jurisdictions (cities/counties) may apply their own sales tax rates on top of the 6% FL sales tax. Use taxes may also apply in situations where a business uses a product or service that was purchased without paying tax.
Other business taxes that may apply to your company include FL corporate income tax, reemployment tax (unemployment tax), and federal withholding tax, among others. Check with the Florida Department of Revenue for details.
How do I dissolve an LLC or Corporation in Florida?
If you end up needing to close your business, you will need to dissolve it. To do this, you must close down all your tax accounts with the state of Florida, and file any outstanding tax returns. You must also file the Articles of Dissolution with the state in order to formally close your Florida LLC, or the Articles of Dissolution for Corporations if you are closing a corporation.
Closing a Florida business can be complex, so you may wish to hire a certified public accountant (CPA) for help with this process.
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