Maybe you’re running a side-business and want to take it to the next level by forming an LLC (limited liability company).
Or, you’ve decided to form an LLC for a new business. Either way, when starting an LLC in Florida, there are several necessary steps to follow.
To find out if the business name you’re considering is available, you can visit the Division of Corporation website of the Florida Department of State. After breathing a sigh of relief that the name is up for grabs, filing the registered agent and articles of organization are the next steps.
You’re almost to the finish line. The final steps are obtaining an EIN (employer identification number) from the IRS and preparing an LLC operating agreement.
The above is a high-level plan. Now let’s zoom in on the details in between.
Here’s everything you should know to form an LLC in Florida.
Table of contents
- Step 1: Choose a name for your LLC
- Step 2: Hire a registered agent
- Step 3: File the Florida LLC articles of organization
- Step 4: Obtain an EIN (Employer Identification Number) from the IRS
- Step 5: Create an LLC operating agreement
- Step 6: Open a bank account for a business in Florida
Step 1: Choose a name for your LLC
The local Department of State imposes several must-follow requirements for naming a registered business.
The business name must end with Limited Liability Company, Limited Company, LLC, or L.L.C. Abbreviations are allowed such as “Limited” to “Ltd.” or “Company” to “Co.”
For example, the new business name is Peachtree Design Limited Liability Company. The following are how the name can be written out:
- Peachtree Design Limited Liability Company
- Peachtree Design Limited Liability Co.
- Peachtree Design Ltd. Liability Co.
- Peachtree Design L.L.C.
- Peachtree Design LLC
The next requirement is that the business name cannot be too similar to one on file with the Florida Division of Corporations. It will be checked upon filing the articles of organization.
Another consideration is the names of businesses in other states. While the name may not be taken in Florida, it may be a registered brand name in another state. It’s more of a consideration if planning to do business across state lines on a regional or national level.
Let’s take the example above. Suppose Peachtree Design LLC is available in Florida, but the same name is taken in South Carolina. In that case, it’s worth taking a closer look, especially if the same products or services are offered. If the other business finds out, it could take legal action for unfair competition.
The final consideration is trademarking.
Upon registration by the Florida Division of Corporations, your selected LLC name becomes a formal legal name of your business. However, this differs from having the legal right to use that name to sell products or services. Confusing huh?
That’s because a legal business name isn’t the same as a trademarked product name. For example, Nestle is a company business name. But the product name Nesquik is a trademark name registered by Nestle. Thus preventing others from using it.
If you want to establish a similar arrangement, conduct a simple search for a trademark on the USPTO website. Then look into the process of registering a trademark should you need to.
Step 2: Hire a registered agent
Every corporation, LLC, or limited partnership registered in Florida has to list a registered agent on a respective form and pay a $25 filing fee.
A registered agent is an authorized representative (a person or business entity) that will receive service of process on behalf of the business. An example of this could be from a lawsuit or summons.
The designated entity or person must have an active Florida filing or registration. The address associated with the registered agent must be a street address (a P.O. box is not accepted).
The business entity cannot serve as the registered agent, but an individual associated with a business is acceptable. For example, the CEO (Leah York) of Peachtree Design LLC could be the registered agent.
A business set up outside of Florida (foreign entity or foreign LLC) but that does business in Florida must also have a registered agent.
You can choose to serve as your own registered agent in Florida. Or hire a registered agent service for $50 and $300 per year.
Step 3: File the Florida LLC articles of organization
The articles of organization is a legal document containing important information about the formed business entity. This document officially registers the LLC as a legal entity with the state separate from its owners (members).
The information needed to complete this document includes the following:
- LLC name
- Principal place of business
- Mailing address if different from the principal place of business
- Name and address of a registered agent
- Any statements about the business purpose, etc. limited to 240 characters
- Email address
- Name and address of the person(s) authorized to manage the LLC
The filing fee for the articles of organization is $125, which includes the registered agent filing ($25). You can pay it via debit card (Visa or MasterCard), credit card (Visa, MasterCard, American Express, or Discover), or prepaid Sunbiz e-file account.
There’s an option to include a certified copy of the articles of the organization ($30) and a certificate of the status report ($5). The certificate of the status report shows that the LLC is active, paid initial filing fees, and filed the annual report after the first year. Neither are necessary, but some banks and governmental agencies require them.
It will take between two and five business days after submitting your articles of organization for them to be approved by the state. You’ll receive an email confirmation of approval once examined and approved by the Florida Division of Corporations.
If you mailed the articles of the organization, your confirmation would arrive in the mail after approval.
Step 4: Secure an EIN (Employer Identification Number) from the IRS
An EIN is a unique, nine-digit number that identifies your business for tax purposes. Unless your LLC is excluded from obtaining one, you’ll need to apply for it on the IRS website.
There’s no cost to file the EIN with the IRS. But you must complete the filing in one sitting. You’ll receive the EIN immediately after completing the application. It can be downloaded and saved to your computer. The name of this document is CP 575.
With the EIN, a small business owner can now apply for a business license, open a business bank account, and pay applicable business and payroll taxes.
Step 5: Prepare an LLC operating agreement
Preparing an LLC operating agreement is the final step of company formation.
This document outlines the rules and structure for your newly-minted business. California, New York, Missouri, Maine, and Delaware are the only states that require written operating agreements upon LLC formation.
Florida doesn’t request one. But it’s highly encouraged to draft an operating agreement if you have several LLC members on board.
If an operating agreement is absent, then the business owner defers to the state’s default LLC rules. Important items to include in the LLC operating agreement are equity structure, voting rights, and dissolution provisions.
While LLC operating agreement templates are available online for free or cheap, it’s better to hire an attorney to draft a custom operating agreement. By doing so, you’ll ensure all relevant clauses are included.
The cost to have an attorney draft the LLC operating agreement can range from $350 to $5,000, depending on the number of members.
Open a Florida business bank account
Upon the formation of an LLC, you need to set up a separate business bank account. Numerous banks in Florida offer affordable bank accounts for LLCs. Each bank is slightly different in what it requires to open an account. The standard requirements are:
- Social security number
- Articles of organization
- Business name or DBA (doing business as) name
One of the main reasons for opening a business bank account is to show that you keep your personal and business funds separate. This factor comes into play if your business is ever sued. If personal and business activities are mixed, then you could jeopardize limited liability protection.
Florida LLC taxes, costs, and fees
Remember, an LLC is not a tax classification. It’s a business entity structure. Respectively, you need to specify to the authorities your preferred taxation method. LLCs can be taxed as C corporations, S corporations, partnerships, or sole proprietorships.
A single-member LLC is automatically taxed as a sole proprietorship. The income and expenses of the business are reported on Schedule C of your federal tax return. You can, however, elect to be taxed as an S-corporation by filing an IRS Form 2553. The election must be made within 75 days of incorporation to take effect in the first year.
A multi-member LLC is automatically taxed like a general partnership. The partnership tax return is completed on Form 1065, and the relevant financial information from this return is used on your personal income tax return.
A multi-member LLC can choose to be taxed as a C Corporation or S Corporation. The LLC will file Form 8832 to be taxed as a C Corporation. To elect S Corporation status, the LLC will then file Form 2553 after filing Form 8832. The relevant financial information is then reported on your personal income tax return.
Florida LLC annual costs
LLCs registered in Florida have to file an annual report to the state and pay a $138.75 filing fee (including credit card processing fee). The report can be filed between January 1st and May 1st of the subsequent year after establishment.
Failure to file an annual report on time results in a $400 late filing fee.
Additionally, LLC owners also face other recurring costs such as business or professional license renewals, plus state and country business taxes.
On the flip side, Florida doesn’t impose any annual state-wide franchise taxes for the privilege of doing business in the state.
Articles of organization and registered agent – $125
|Annual Report – $138.75|
Other less common filings such as change of registered agent – $25 to $100
Business tax return for C Corporations (1120), S Corporations (1120-S), and Partnerships (1065) – cost depends on size and complexity
Business tax receipt or certificate of use at county or city level – cost depends on location but generally ranges from $20 to $500
Florida business permits and licenses
All Florida-based businesses must request a business tax receipt from a local city/county authority. The business tax receipt is a certificate showing that you have paid a nominal local fee for operating in the state.
Regulated businesses in Florida must obtain respective licenses and permits from the local city council. The application requirements differ from county to county, so check with your local authority for details.
Separately, ensure that you’re filing local taxes on time. The business tax receipts and certificate of use filings are due annually at the city and county levels on September 30.
The renewals generally start after July 1. There are penalties if renewed after September 30.
Pros and cons of registering an LLC in Florida
Making the leap and starting your own business has several benefits. Before you do, though, it never hurts to look at the pros and cons.
- Simple LLC registration process
- Fully online filings and extensive library of resources
- Personal liability protection
- Affordable annual maintenance costs
- No minimum annual taxes imposed on LLCs
- Limitations on ownership structure
- Annual report required
- Hefty late filing fees for all business procedures
An LLC is a relatively new business structure, so case law is limited to provide a framework for disputes.
Florida LLC formation FAQs
Below are the most frequently asked questions about forming an LLC in Florida.