Starting a Business in Florida

If you dream of owning your own business, you’re starting the same way all business owners start: with a dream. However, wishes and dreams are not enough to sustain a business. If you want to be a successful business owner, you have to pre-plan your success, create a business plan, file the correct documents with the IRS and the Florida Department of Revenue and familiarize yourself with the laws for business owners in Florida. You also need to develop a brand story and marketing materials.

Business Plan Basics

Your business plan is basically a guide to help you create a successful business. However, you may need your business plan for other reasons as well. Banks and investors often require a business plan to approve your business for funding. Your business plan needs to be a written document describing your business and the operations of your business. You should also include how you plan to achieve specific goals for your business, your expected expenses and the profits you expect to make from your business.

  • Business Concept: What goods or services do you plan to sell?
  • Market Assessment: How will you sell your products or services? Who are your biggest competitors?
  • Financial Assessment: Will you make a profit? How much will people be willing to pay you for your products or services?
  • Self Assessment: Do you have the knowledge, skills and training to succeed?

Business Plan Components

Remember, your business plan is a roadmap to guide you through the next few years. So, project your plans three to five years ahead. Each year, you should reevaluate your business plan and make necessary changes according to where you and your business are at the time. However, you may need to adjust your plan periodically, and you should do this as soon as changes are necessary. Below is a list of sections you should include in your business plan and information you need to include under each.

  • Executive Summary: Where do you want to take your company in the next three to five years? How will you achieve those goals? Why will your plan be successful? Highlight strengths of your plan and areas you need to address to make it stronger, such as additional licenses or training you need in order to successfully reach your goals.
  • Company Description: Consider this an extension of your elevator pitch. Give information about potential investors. Make sure you give a very clear description of your business and what makes your business unique.
  • Market Analysis: Conduct research and use it in this section to showcase knowledge of your customers, industry, competitors, target market and pricing structure.
  • Organization and Management: Describe the organizational structure of your company. Give information to introduce the owners and management team members.
  • Service or Product Line: Provide information about your products. How you make them and what benefits you provide to clients and potential customers.
  • Marketing and Sales: Show how you plan to acquire new customers, promote your product or service you may name your business, “Mary’s Savvy Seams.”nd increase sales.
  • Funding Request: Provide information about your budget and funding needs, both current and future. Show how you plan to receive funds and how you intend to use any funds you receive. Also, include the types of funding you prefer.
  • Financial Projections: Summarize your past credit history, projected income, business expenses and other financial details. You should also include information about how you plan to repay loans you receive.

Use the information from your business plan to determine whether the IRS considers your company a business or whether it would instead be categorized as a hobby. You should do this before you file any articles of incorporation so you file the correct documents based on how the IRS will interpret your business. Improper filing or reporting could cause adverse action from the IRS. So, you need to ask yourself the questions below:

  • Does the amount of effort and time you plan to spend on the activity indicate an intention to make a profit?
  • Will you depend on the income to pay your bills?
  • Have you altered your business methods to increase your profits?
  • Do you have the knowledge needed to make the activity a successful business?
  • Have you made profits with the activity in the past?
  • Do you expect to make a profit?

If an activity is not for profit, losses from that activity may not be used to offset other income. If you have more expenses than income, the IRS considers that a loss. If you have losses for more than two years in a five-year period, you may face adverse action from the IRS. IRS limits on not-for-profit losses apply to individuals, partnerships, estates, trusts and S corporations. However, they do not apply to corporations.

Now that you have determined whether the IRS will see your business as a business, you need to think up a name for your new company. It should be unique and describe what your business does. For example, if you’re a seamstress named Mary, you may name your business “Mary’s Savvy Seams.” Next, you need to determine what type of company you want to form. To create a sole proprietorship or partnership, file a Fictitious Name (DBA) to operate under a business name other than your own name. If you want to incorporate, form a corporation or LLC (Limited Liability Company).

After you form your business, you need to register with the state and county for identification numbers, permits or licenses for the taxes that apply to your company. Most Florida businesses are responsible for unemployment, corporate income tax and sales and use tax. Additional taxes, such as communication tax, document stamp tax, fuel tax, pollutant tax and waste tax fees may also apply, depending on your business.

You also have to apply for a permit or license to operate your business. The cost and kind of permit or license you need varies according to the location of the business and the nature of the services you offer. If you do not have the required license or permit, the State of Florida may fine you or close your business.

Business types that require a license in Florida:

  • Architecture and Interior Design
  • Asbestos Contractors and Consultants
  • Athlete Agents
  • Auctioneers
  • Barbers
  • Boxing, Kick Boxing and Mixed Martial Arts
  • Building Code Administrators and Inspectors
  • Certified Public Accounting
  • Child Labor
  • Community Association Managers and Firms
  • Construction Industry
  • Cosmetology
  • Drugs, Devices and Cosmetics
  • Electrical Contractors
  • Bureau of Elevator Safety
  • Engineers
  • Employee Leasing Companies
  • Farm Labor
  • Florida Building Codes and Standards
  • Geologists
  • Harbor Pilots
  • Home Inspectors
  • Insurance Licenses
  • Labor Organizations
  • Landscape Architecture
  • Mold-Related Services
  • Real Estate
  • Talent Agencies
  • Veterinary Medicine

You also need to open a business bank account for the company. Even if you only have an online or at-home business, you are still required to register with the state and county and open a business account. In addition, your local government, such as your city or county, sometimes requires additional permits and licenses. Each city and county has its own unique regulations. However, below are the common licenses and permits you may need.

  • Alarm Permit
  • Building Permit
  • Business License and/or Tax Permit
  • Health Permit
  • Occupational Permit
  • Signage Permit
  • Zoning Permit

If your business falls in one of the categories below, you must also register with the Florida Division of Corporations.

  • Corporations
  • Nonprofits
  • Limited liability companies (LLC)
  • Partnerships

Now that you know what needs to be filed and how to register your Florida business, you should become familiar with the taxes you must pay. In Florida, you are responsible for paying:

  • Sales Tax and Use Tax: charged at a percentage rate depending on where you conduct your business.
  • Unemployment Tax: to assist employees who want to work but lose their jobs.
  • Corporate Income Tax: a tax that allows you to conduct business, earn income and offer your products and services in the state of Florida.

Employer Responsibilities

You should retain records from employee taxes for at least four years following the year in which the taxes are paid.  The list of information you need to keep on record includes:

  • Your employer identification number
  • Employees’ personal data
  • Tax deposits
  • Wages
  • Annuity payments
  • Pension payments

For additional items you should keep in your records, visit the IRS’s page on employment tax recordkeeping

Maintaining accurate records helps you:

  • Track the growth of your business over time
  • Determine what expenses are deductible
  • Prepare and support tax return items
  • Track payables and receivables

Required Employment Forms

Before your employee starts working, you must get a signed W-4 (withholding exemption certificate), from each employee. You will then send the W-4 to the IRS. In addition, you must report all withheld taxes and paid wages for each employee. Using Form W-2, you must submit all tax and wage information from the previous year to the IRS. You also need to forward Copy A of the Form W-2 to the Social Security Administration. You must mail this information before the last day of February or e-file them before the last day of March. You must send W-2s to each employee before Jan. 31 of the following year. Returned undelivered copies must be kept on file with the employees other tax information for four years.

You must also have new employees fill out a Form I-9, which proves the employee is eligible to work in the United States. You must have the I-9 completed by the employee within three days of the beginning of his or her employment. You must also keep a form I-9 on file for each employee, regardless if he or she is a citizen or non-citizen. You can download the form from the United States Citizenship and Immigration Services.

Required Reporting of New Hires

You are responsible for reporting new hire information to Florida’s Directory of New Hires. The information you must send regarding new employees includes their names, addresses and Social Security numbers. You must submit the information within 20 days of your new employee’s first day of employment. Visiting the Florida New Hire Reporting Center is the easiest way to report the required information.

Insurance Requirements

You must pay Florida unemployment compensation tax if you hire employees in Florida. The funds go to the UC Trust Fund, which assists employees while they look for replacement work after losing their jobs.

You may also be responsible for paying worker’s compensation insurance, which helps workers if they are injured while working. Worker’s compensation insurance is available through a Florida insurance agent representing commercial lines and through the Florida Workers’ Compensation Joint Underwriting Association. There is also a self-insured method you may operate under if you choose. The Florida Department of Financial Services offers information on worker’s compensation insurance on its website.

Create Business Best Practices

As you conduct your business, you will develop processes for completing critical business functions. As you develop processes, take an objective view and make sure to write them down so you can share these best practices with all employees. This will help you train new employees, and it lets people know what they are expected to do. It also helps with quality control so you know you aren’t overlooking critical tasks that can cause financial losses or even fines from agencies that govern your business.

Branding Your Florida Business

Branding your new business actually starts when you select your name. Each part of your business creates a story, which is your brand. Today, customers want you to tell them a story. They want to know the why behind what you do or the products you sell. Your customers will piece together things they see about your company on social media, their interactions with you and the information you share through marketing materials and even your company logo. So, you can’t just tell them your story; you have to show it to them in everything you do and say.

All new businesses must acquire new customers all the time in order to stay in business. So you need marketing material to give to potential customers. Two things all businesses should have are business cards and an elevator pitch in the form of a clever brochure or infographic. When creating these two important marketing materials, make sure they fit your company’s brand story.

Following these suggestions can help secure your success. However, if you need resources or support for your business, consider looking into an online lender. Check out what small business loans are available to you so you can stay ahead of your competitors.

Want to dig deeper?