United States of America, being largest economy, is also termed as house of Innovative Ideas and creation of new technologies, that have revolutionized the world in technological, economic and social sectors. It is due to favorable laws and unending opportunities to new entrepreneurs to kick-start their journey of entrepreneurship. In Florida, Miami has got an excellent reputation for making business. It is the preferred jurisdiction for example for the Latin America entrepreneurs.
The US offers multiple business incentives to the new businesses and entrepreneurs.
One of such, is the concept of Limited Liability Company, the formation of which, every USA state offers with different benefits and privileges. LLC’s are famous because of their structure by which, the members are absolved of their responsibility from debts and lawsuits; hence are very popular among the small and medium businessmen and new comers.
All come with certain privileges, but the State of Florida offers flexible, reasonable and business oriented option for formation and functioning of Limited Liability Company; specifically, the exemption of State Income Taxes, which helps entrepreneurs to save a lot of money in terms of taxes as compared to other states. As Florida is home to about 2.5 small businessmen and offers flexible taxation regime and exemptions, it is favorable and best choice for entrepreneurs.
FLORIDA LAWS APPLICABLE TO SET UP YOUR LIMITED LIABILITY COMPANY
CHAPTER 605 FLORIDA REVISED LIMITED LIABILITY COMPANY ACT primarily deals with the incorporation and functioning of the Limited Liability Companies. It is a basic statute which deals with all legal formalities required for envisaging Articles of incorporation, appointment of agent, service of notices, filling requirements, amendments in the articles, closure of the LLC and matters regarding the taxes.
The process of formation and functionality of LLC in Miami Florida is described below in detail.
STEP BY STEP GUIDE FOR SETTING UP LLC IN FLORIDA
CHOOSING BUSINESS NAME
The first step before formation of LLC in Florida is to choose a unique business name which differs from other business names and offers a unique approach to your business. The chosen business name must end with “Limited Liability Company”.
APPOINTING BUSINESS AGENT
Before going forward, any business that operates in Florida must have registered agent for correspondence of acceptance of documents. The agent must be resident of Florida. Even if the member/founder wishes himself to act as agent, he can do so as well.
OBTAINING LICENSE TO OPERATE
The next step is obtaining license for business. Several businesses e.g Real Estate, Agriculture and other allied businesses need license. Each has different licensing authority. It also includes the businesses selling taxable goods. So, the members/funders are required to obtain relevant license for carrying out particular business. Although, formation of LLC is not barred if the license is yet not issue, but it is desirable and convenient to obtain license before proceeding to file the LLC.
APPLICATION FORMS
Limited Liability Company can be set up in Florida either through filling application form (Articles of Incorporation/organization) or by filing electronic filling through Sunbiz account after payment of prescribed formation fee. In case of, application form filled and printed, the same shall be mailed to Division of Corporations Florida.
The requirements are:
- LLC’s name along with place of business
- Registered Agent’s Name, Signature with Address
- If required, The name and Address of Manager
- Effective date, if different from filling date
- Signature of Member completing the form
- A fee of $125 to be paid through checks payable in favor of Florida Department of State and through Credit cards
- LLC already formed in another state, can also file in Florida by filling out Qualification of Foreign LLC form, with, If the application is being filed by applicant from different state, a certificate of good standing from home state is also required
IS OPERATING AGREEMENT REQUIRED?
Well in state of Florida, Operating Agreement is not required. However, for ease of operating LLC and your business, an agreement can be filed with it as well.
WHAT TO DO WHEN YOU HIRE EMPLOYEES IN YOUR LLC?
When any employer is hired to work with your LLC, the information of hiring is to be reported to Florida Department of Revenue. And along with, also are required to have a worker’s insurance as well.
TAXES FOR IN FLORIDA
There are two ways of taxes which the founders can choose to pay. Either the LLC can be taxed through:
- Pass through Entity or
- Corporation.
In case of Pass Through Entity, each member of LLC will file taxes on basis of earnings and loses in their personal tax statements. The businesses shall not file separate tax forms.
Whereas, in case of Corporation, LLC will be subject to Federal Corporate Taxes and shall file separate business taxes as a corporation.
There is comprehensive Corporate Income regime in place for corporations and LLC’s conducting businesses and earning income thereof. Whether it is single member LLC or Partnership, the Corporation/LLC shall file annual corporate Income Tax Returns through form Form F-1120ES.
Corporate income tax in State of Florida is computed using federal taxable income, and after modifying and making certain adjustments, additions, and exemptions. The base rate stands at Florida’s corporate income tax rate goes to 3.535 percent, from 5.5 percent. And the tax exemptions are granted in shape of credits to the taxpayers that can be used for paying salaries etc.
Florida is one of those few states that only requires Federal Taxes and exemptions from the state income taxes. The Federal Taxes are described below in detail.
For state income taxes, the members are required to file e-annual report.
The purpose is to update the business information of the LLC. The report becomes due from January and May 1 each year. In case of failure to file report by third Friday in September, the LLC would cease to exist. Although there are no state taxes, yet there is annual e-filling fee of report of $138.75.
LLC’s are also subject to pay 15.3% in self-employment taxes for covering social security and Medicare obligations. The taxes would be deducted by the LLC and their share be deposited.
To cover state unemployment insurance, new Florida employers must pay a 2.7 percent payroll tax, which applies to the first $7,000 in earnings. Depending on the amount of benefits their employees claim and their overall salary, established firms will pay a lower or higher rate.
EIN (EMPLOYER IDENTIFICATION NUMBER)
EIN will be required to be obtained, for it would be required for opening a Business Bank Account and Credit Card, to apply for business loans and for filling annual tax statements.
Once the LLC has been formed, the EIN number can be obtained by filling out SS4 form and submitting to Internal Revenue Service. After necessary checks and approvals, the IRS department would notify you of completion of process.
With completion of all processes, you are set to go and operate your business under the hood of the LLC.
Damalion helps you register your LLC and open your business in Miami. If you are interested in starting selling your products and services in the USA, please contact your Damalion expert now.
