Are you thinking about opening a business? Starting your own business in Florida can be a complicated and daunting process but being a business owner can also be extremely rewarding.
While the necessary steps for starting a business can be extensive, an experienced Florida business formation lawyer can assist you.
The attorneys at BrewerLong regularly assist clients as they are forming their companies.
We can continue to serve your business as you seek a commercial space, negotiate a commercial lease agreement, handle employment law matters, and even if you need to consider dissolving your business.
In the meantime, we want to say more about how to start a business in Florida.
Develop a Business Plan
The first part of starting a business in Florida involves developing a business plan. As you develop your business plan, you will want to consider many of the following:
- Type of service or product your business will provide;
- How your business will provide that service or product;
- Where your business will be located;
- Type of commercial space you plan to rent;
- Who will run the business;
- Whether you will have investors;
- Whether you need a license or permit to run your business;
- Financial goals of the business;
- Estimated timeline for profitability;
- Who your target customers might be;
- Who your likely competition will be;
- How many employees you plan to hire;
- Tasks for employees; and
- Marketing for the company.
Decide on a Business Structure
There are many different types of business structures from which you can choose. The U.S. Small Business Administration (SBA) provides helpful information about each available type of business structure, as well as the pros and cons for each. The following are different types of business structures:
This is the easiest type of business to form, and as the SBA underscores, it gives the owner complete control of the business.
One of the reasons that a sole proprietorship is the easiest type of business to form is because you can automatically have a sole proprietorship if you are engaged in business activities and if you do not specifically form another type of business.
Like other businesses, sole proprietors are able to obtain a trade name. However, there are drawbacks to a sole proprietorship.
Most significantly, the individual and the business are not separate—the business owner is personally liable for all business debts. To be clear, the assets and liability of the individual business owner and the business itself are not separate from one another.
Accordingly, the business owner of a sole proprietorship is personally liable for business debts. Typically, a person chooses a sole proprietorship if she or he is just getting started and wants to “test out” the business before formalizing it through another type of business structure.
There are two different kinds of partnerships: limited partnerships (also known as LPs) and limited liability partnerships (also known as LLPs). Both types of partnerships are similar to one another except for one major difference.
In a limited partnership, there is one “general partner with unlimited liability,” who also tends to have more control over the business. The other partner(s) have limited liability and tend to have less control over the business.
Limited liability partnerships are businesses in which all partners have limited liability. In a partnership, profits pass through to the partners’ personal income taxes, and limited liability partners are not required to pay self-employment taxes on the profits. Limited liability partners are not personally responsible for debts of the business.
There are different types of corporations, including a “C corp,” an “S corp,” and a “B corp.” C corps are the type of corporation that most people are thinking about when they are imagining a corporation.
Owners are protected from personal liability most strongly in a C corp, but there are relatively high financial costs, as well as “extensive record-keeping, operational processes, and reporting.”
Corporations are separate entities from the individual business owners, but unlike partnerships, profits made by a corporation are taxed. In some situations, the profits actually get taxed twice. First, the profits are taxed when they are made, and then they are taxed again when they are paid out as dividends to individual shareholders.
An “S corp” is a particular type of corporation designed to prevent the “double taxation” we just mentioned but forming one of these can be particularly complicated. A “B corp” is a particular type of for-profit corporation. In terms of taxes, it works just like a “C corp,” but it has a different purpose than a “C Corp.”
In short, as the SBA clarifies, a “B corp” is “driven by both mission and profit.”
Limited liability company, or LLC
An LLC is a common type of business structure that has features of both a partnership and a corporation. In most cases, individual owners are protected from personal liability, and profits are passed through to the owners’ personal income without corporate taxes. At the same time, owners of an LLC do have to pay self-employment tax.
Give Your Business a Name and Establish It Legally
Florida law has specific requirements for naming corporations, LLCs, and partnerships. In short, you will need to check with the Florida Division of Corporations to determine whether there is an entity that already has the name of your planned business.
You will also need to do a trademark search to ensure that the name you have in mind for your business has not been trademarked. Then, you will need to establish your business as a legal entity. An experienced Florida business lawyer can help with these complicated steps.
Register Your Company in Florida
To register your business, you will need to provide specific information to the Florida Department of State. The particular type of documents you need to submit depend upon the type of business structure you have chosen.
Determine Whether You Need a Permit or License
If you need any type of permit or license, you will need to get it before you officially open your business. Your business lawyer can speak with you in more detail about ensuring that you have the property permit or license. Of course, some businesses do not require permits or licenses at all.
Get to Work on the Finances: Taxes, Hiring Employees, Creating Accounts
There are many financial matters that need to be considered when you are forming a business, including but not limited to the following:
- Obtain a Federal Employer Identification Number;
- Register with the Florida Department of Revenue;
- Determine county taxes;
- Determine whether you are required to pay sales/use taxes;
- Hire employees;
- Create employment contracts if necessary;
- File reemployment tax;
- Open separate account(s) for your business (i.e., do not commingle your personal and business finances); and
- Set up a payroll system.