If you’re reading this article, it’s a safe bet that you’ve decided to start an LLC in Florida.
Starting a new Limited Liability Company (LLC) in Florida or forming an LLC in a different state is always an exciting time. So congratulations on your decision!
I’ll walk you through all of the steps and the whole process of forming an LLC in Florida, but first I’m going to provide an overview of what a Florida LLC is and what benefits you can enjoy as a Limited Liability Company to answer any questions you may have so that you can decide if an LLC is the right business entity type for your company in Florida.
(If you want to skip to the ‘how to form an LLC’ section, click here)
Table of Contents
What Is A Florida LLC?
A Florida LLC is a Limited Liability Company formed in the state of Florida that is governed by the laws, regulations and statutes of the state of Florida.
Why choose An LLC?
When you choose to form a Florida Limited Liability Company (LLC) instead of other business types like S corporations, C corporations, sole proprietorships or sole traders, you’ll enjoy three, distinct advantages.
1. Limited Liability And Asset Protection
The first benefit you’ll receive when you form a Florida LLC or Limited Liability Company is that as the business owner of an LLC in Florida, you can’t be personally held liable for the liabilities or debts of the company.
So in the event that your Florida Limited Liability Company is sued or goes bankrupt, the creditors of your Florida LLC can’t come after your personal assets as the business owner. This means that they can’t come after things like your house, your car or your personal accounts. Any financial recourse that the creditors of your Florida LLC is limited to ONLY the assets of the LLC.
It’s recently been graphically demonstrated to everyone that in the event of some unexpected catastrophe (like a worldwide viral pandemic), even a very successful and prepared business entity can fail. So small business owners value having any form of personal asset protection.
The second benefit you’ll enjoy as part of an LLC in Florida is the protection of your personal information.
During the past decade, hackers and scam artists have become so adept at their trades that they can steal your identity and rack up thousands of dollars worth of debt in your name using the most inconspicuous or seemingly irrelevant piece of personal information.
One of the disadvantages of using a sole trader or partnership business structure is your personal information will be registered with the Florida Division of Corporations and it will be listed on the Florida Department of State website. The only thing that anyone has to do to obtain your information after it’s listed on the Florida Department of State website is perform a simple search. So it’s pretty easy for your information to end up in the hands of people who have nefarious intent when you use these business structures.
Luckily when you start an LLC in Florida, your personal information can be kept off the public record quite easily.
To keep your information off the public record use an LLC formation service in Florida. These Florida LLC formation services register their own information to be uploaded to the website of the Florida Department of State instead of your own while still allowing you to maintain your status as the owner of your Florida LLC.
The two LLC formation services in the state of Florida that I recommend the most are Northwest Registered Agent and ZenBusiness. You can find my review guide about Northwest Registered Agent here, and my review guide on ZenBusiness here.
The last benefit you’ll enjoy from forming a Florida LLC is one that makes a lot of people make the decision to form a Florida LLC: the tax benefits.
If you choose to form a corporation, you’ll encounter a phenomenon known as “double taxation”.
Here’s how “double taxation” works. Any profits that the corporation makes are taxed at corporate rates and then the profits that are left after the corporate taxation are divided amongst the business owners as dividends which are taxed again through personal income taxes.
Because you have to pay taxes twice as a corporation in this manner, it’s referred to as “double taxation”.
You can avoid double taxation entirely as an LLC in Florida. The profits made by a Florida LLC are taxed at company rates rather than corporate rates and the dividends which are divided among members of the LLC are taxed as personal income. Therefore, you’re only taxed once as an LLC in Florida.
Only having to pay taxes once is not the only taxation benefit that your Florida LLC qualifies for. The 2017 Tax Cuts and Jobs Act granted LLCs a tax benefit called the Qualified Business Income Deduction (QBID). This gives LLCs a 20% tax benefit that other business structures aren’t granted.
How To Start An LLC In Florida
If you’ve read about what a Florida LLC is and what sort of benefits you can achieve by forming an LLC in Florida and you’re still confident that a Florida LLC is the right business structure for your company, read on to learn about the five steps needed to form an LLC in Florida.
IMPORTANT: If you feel like you need someone to guide you through all of the legal jargon and red tape involved in forming a Florida LLC (which is completely understandable) as well as filing the necessary paperwork on your behalf and keeping your information safe, there are many LLC formation services in the state of Florida.
LLC formation services in Florida can help you form your LLC in the state of Florida for as little as $0 plus state filing fees. (Although my most highly recommended LLC formation service is ZenBusiness which charges $49 plus the filing fee.)
If you feel like you’d benefit from an LLC formation service to assist you through the sea of red tape required to form an LLC in the state of Florida, you can read my guide on the best LLC formation service here: Best LLC Service
1. Obtain Articles Of Organization Form
The first step on the road to LLC formation in the state of Florida is to get your hands on an Articles of Organization application form which you can obtain from the Florida Division of Corporations.
You can get your Articles of Organization form here.
It’s a PDF file that you can print out and send by mail along with the filing fee (check or money order), or submit online here and pay the filing fee with a credit card or debit card.
Because the Articles of Organization form is the primary form you need to file to start your LLC in Florida, all of the other steps will relate to this one.
2. Choose Your Business Name
Once you have your Articles of Organization form, the next step is to choose a name for your Florida LLC.
But wait, you can’t just jot down whichever business name initially pops into your head. You’ll need to check that no other business in the state has the same name.
One of the state of Florida’s requirements for businesses is that every business in the state must have a name that is unique. This means that you can’t choose a name if another business is already using it.
Lucky for you, it’s pretty simple to determine whether the name you’ve chosen is unique. You can search through the Florida State Division of Corporation’s business name database here.
If you find that the name you’ve chosen has been taken by another business in the state, don’t fret. Business entities can add prefixes and suffixes to their name such as “Limited”, “L.C.”, “L.L.C.”, “Limited Company”, “Ltd.” or “Limited Liability Company”, much as you would add numbers to the end of an online screen name if your original name choice wasn’t available.
If you don’t like the name that you’ve registered with the state or think the name would sound silly in advertisements, you could always use a trade name, fictitious name or DBA (Doing Business As) name. You can file registration for a fictitious name through the Florida State Division of Corporations and either submit the form through the mail along with a $50 filing fee payment or submit the registration online by paying the filing fee with a credit card or debit card.
3. Choose A Florida Registered Agent
One of the Florida Division of Corporations requirements for LLCs in the state is that every LLC in Florida, along with choosing a unique business name, must also have what is known as a “registered agent”. So choosing a registered agent for your LLC is the next step.
What is a registered agent? A registered agent is a statutory, legal agent in the state that is available during business hours to accept mail and legal documents from official government offices (like the Florida Division of Corporations) on behalf of your LLC during business hours.
You have two options when it comes to choosing a registered agent: you can choose to take on the role yourself or appoint a registered agent service.
If you take on the role of registered agent for your LLC yourself while also running your LLC, you risk missing important documents or service of process because it’s hard to run your LLC as well as make yourself available to accept mail during the same business hours that your LLC operates under. You’ll also have to register your personal information with the Florida Division of Corporations so your name and address will be listed on the public record of the state making you vulnerable to hackers and scam artists.
You’ll have to spend a lot of time doing this and you could potentially miss important legal notifications that could lead to lawsuits against your LLC. The upside is that you won’t have to pay any fees if you do the job yourself.
If you go with a registered agent service your information will remain safe and off the public record and you’ll be sure to receive all of your mail and legal notices as well as any important document or file that a government agency may send you. The only real downside is that registered agent services typically cost between $99-$299 per state per year.
Given the fact that you could put your entire LLC at risk if you choose to take on the registered agent role yourself, your information will be vulnerable to scam artists and hackers and you could miss a service of process and lose a court case as a result without even knowing about it, I always advise that anyone starting a new LLC hire a registered agent service.
If keeping your personal information off the public record and safe from hackers and scammers is important to you, click here to read my guide about the best Florida registered agent.
4. Choose Your LLC Address
The next step is to choose an address for your LLC. Every LLC in Florida must submit a business address to display on the public record via the Florida Division of Corporations website.
If you aren’t using a registered agent service you’ll have to use the mailing or street address of your LLC. If your LLC doesn’t have a physical street address or mailing address, then you’ll have to use your personal home or office address.
If you’ve chosen to use an LLC formation service then they will submit their name and address to the Florida Division of Corporation in your stead. This keeps your personal information off the public record and ensures that the address on the Florida Division of Corporations website can’t be linked directly back to your home address.
5. Sign And File Your Articles Of Organization
Once you’re sure that you’ve filled out all of the information correctly on your Articles of Organization form, the last step is to sign and file the Articles of Organization.
You can sign and file the Articles of Organization application yourself if you’re not using an LLC formation service and are comfortable with having your personal information on the Florida Division of Corporations website. If you use an LLC formation service, they will sign and file the Articles of Organization on behalf of your business.
You can mail in your Articles of Organization along with the $125 filing fee payment(check or money order) to:
The Centre of Tallahassee
2415 N. Monroe Street, Suite 810
Tallahassee, FL, 32303
You can also submit your Articles application online along with the filing fee here.
The Division of Corporations will reach out to you via mail or email to let you know when they’ve completed the registration filing process. Filing can take between 5-20 days. If you’d like to get through the registration filing process a bit faster, some LLC formation services offer expedited filing which can get results in about 72 hours.
Other LLC Activities
Once you’ve filed your Articles of Organization and formed your LLC, there are some other activities you must commit to so that your business remains in good standing, but aren’t actually part of the LLC formation process.
You’ll need to file an annual report document for your LLC, obtain a Certificate of Good Standing, file for a business license and meet the Florida state business licensing requirements and pay state taxes every year.
If this sounds like a lot of hassle that you don’t really want to deal with, you could look into a Florida PEO company to file documents for your company and take some of the paperwork burden off your back, as well as sign up for online legal services for your business.
Florida LLC Fee Summary
Whether you choose to form your LLC on your own or decide to hire an LLC formation service, you’re going to encounter some fees. Here are the LLC formation fees you can expect when you file:
Articles of Organization Filing Fee: $125
Name Reservation Filing Fee: $35
Registered Agent Fee: $99-$299
Annual Report Filing Fee: $138.75
State Corporate Income Tax Rate: 4.458%
After Starting Your Florida LLC
You’ve taken a big step by choosing an LLC as your business type and then forming an LLC, so take time to celebrate. Have a beer or a glass of wine, go out to dinner or take a weekend vacation. But don’t relax for too long because there are still a few steps you need to take before your business is able to function properly as an LLC.
Step 1. Create An Operating Agreement
If your business were to be compared to an animal, the LLC would be the animal’s skin or exoskeleton while the LLC Operating Agreement would be its nervous system telling it how to function and how to react. While LLCs in Florida aren’t required to file an Operating Agreement with the Division of Corporations, it’s still an important document that every LLC should consider drafting.
You can think of the LLC Operating Agreement as a sort of contract between the LLC members that also provides a detailed description of how the business should run. The Operating Agreement also identifies each of the LLC members before going on to provide a business guide for the structural, managerial, financial and operational aspects of your business.
Your LLC Operating Agreement should describe the ownership percentages of each of the LLC members and list which members should make high-level decisions. An Operating Agreement should provide an outline for the roles of the LLC members and describe the relationships between members. Not only should the Operating Agreement define the ownership percentages of the LLC members, it should also define their shares of profits and losses.
Furthermore, the Operating Agreement should describe what events take place when members leave or join the business. By using this model for your Operating Agreement, it won’t just provide information about how the LLC members should run your business, but it also provides information about what should happen when a disagreement between members arises.
It’s probably pretty obvious by now that the Operating Agreement is absolutely VITAL to the successful operation of your business. All of the items detailed in your Operating Agreement define how your business will be run.
Your LLC is required to operate according to the rules laid out in your Operating Agreement, so if you get the Agreement wrong your business growth could be stifled, there won’t be any room for growth or adaptation and your LLC members may not be properly compensated due to faulty decision-making and the poor business structures that are outlined in your Agreement. But, if you get the Agreement right, you will see your business grow and flourish without the constraints of a faulty Agreement.
If you have questions or concerns about drawing up the best Operating Agreement for your business to ensure business success as well as define the roles and compensation of your LLC members (which is a legitimate concern), there are many different LLC formation services in Florida to choose from who will draft and file the Operating Agreement for you.
You can download a free and editable operating agreement on Northwest Registered Agent’s website here: Free Operating Agreement Template
Step 2. Apply For An Employer Identification Number
You’re going to need an Employer Identification Number (EIN) if you intend to hire employees or open a bank account specifically for your business entity. The EIN qualifies your business to apply for certain permits and licenses and allows you to handle the employee payroll. You don’t actually have to hire employees in order to obtain an EIN – it’s simply an identification number for businesses.
An EIN is a number that identifies a business entity in much the same way that a Social Security Number identifies an individual. It’s fairly easy to apply for an EIN and you can do so through the Internal Revenue Service (IRS).
Many LLC formation services will apply for an EIN on behalf of your business as part of their service which eliminates the guesswork involved in applying for an EIN.
Of course you can also apply for an EIN yourself. You’ll have to go to the IRS’s website – Monday-Friday between 7am and 10pm to submit the application for an EIN for your business.
Step 3. Open A Business Bank Account
You’re almost finished creating the business foundation for your LLC. The last step you need to take before jumping into the crazy world of LLC ownership is to open a bank account that is specifically for your business.
Many people overlook this step when they create an LLC, but it’s very important.
A lot of people choose to conduct business through their own personal bank accounts, and then have to try to decipher which transactions were business ones and which were personal ones when tax season rolls around. You may think that it’s easier to conduct business this way but there are two very important reasons you shouldn’t.
First it will be very clear that every transaction made on your business account is, in fact, a business transaction. It’s easy to think that you will be able to tell the difference between a business and personal transaction on your personal account, but at the end of the year (which is typically several months after the transactions were made) it’s likely that it will be a lot harder to remember which transactions were which in order to calculate tax returns. Filing taxes is made unnecessarily complicated by doing business through your personal account.
Second, conducting business transactions through your personal bank account leaves you vulnerable to things like personal lawsuits, regardless of the personal information protection you get from owning an LLC.
If you value the hard work you put into your business and don’t want to lose it due to lawsuits or identity theft or you just don’t want to go through unnecessary hardship when tax season rolls around, just go ahead and open a business bank account when you form your LLC.
In order to open a business bank account, you typically need a bank kit. This kit includes things like a certified copy of your Articles of Organization, Certificate of Formation and EIN.
Most LLC formation services in Florida include creating a bank kit for your business as part of their service which is handy because it saves you the work of sourcing and collating the paperwork yourself.
When you make the decision to form an LLC, you make the decision to take control of your business journey. It’s a very important step, so congratulations!
If you’ve chosen not to use an LLC formation service (whose rates are as low as $0 plus state filing fees), these are the five steps you need to complete to successfully form your LLC in Florida and gain good standing with the Florida Division of Corporations.
- Obtain the Articles of Organization form
- Name your LLC
- Choose your Registered Agent
- Choose your LLC address
- Sign and file your Articles of Organization
It can be overwhelming at times to wade through the red tape and legal jargon and understand all of the legal requirements for LLCs set by the Florida Division of Corporations. However, when you form your Florida LLC on your own without the use of an LLC formation service, you’ll gain a sense of accomplishment. It’s a rewarding experience and it’s just one of many along your Florida business journey.
Congratulations on your decision, and good luck with your Florida LLC journey!