A good number of new business owners prefer to form an LLC over a corporation, especially since an LLC is easier to manage and does not come with the complexities of a corporation. A Florida LLC is not expected to have more than one member and that member can also be the LLC’s manager.
A business owner who chooses to form an LLC for his business rather than being a sole proprietorship by default will be protecting his or her personal assets from the business’s liabilities.
What is a Single Member LLC?
A single-member limited liability company (SMLLC) is an LLC with just one voting member— the LLC owner. Multi-member LLCs are known to have more than one members, who vote on critical decisions and share ownership of the business.
However, whether they have a single owner or more, all LLCs come with liability protection. It simply entails that if your company is sued, or can’t pay its debts or federal tax, your personal assets—as against the money in your business bank account—can’t be tampered with.
A single-member LLC is a disregarded entity for tax purposes, but the member can choose to be taxed as a corporation. By default, LLCs themselves do not pay income taxes, only their members do.
Since Florida is one of those states with no income tax for individuals, have it in mind that LLC members will be expected to pay state income tax on their LLC earnings. A good number of states impose a separate tax or fee on LLCs for the privilege of doing business in the state; however, Florida is not one of those states.
Filing Requirements for Single Member LLC in Florida
If you intend to form a limited liability company (LLC) in the State of Florida, you will need to file various documents with the state. Here are filling requirements to note;
Table of Contents
- Requirements to form your Single Member LLC
- Business tax requirements as a single member LLC
- Requirements for hiring employees as a Single Member LLC
- Requirements for paying yourself as a Single Member LLC
- Sales and Use Tax requirements for Single Member LLCs
- Annual report requirements for single-member LLCs
Requirements to form your Single Member LLC
Note that to form a single member LLC, or convert your sole proprietorship to an SMLLC in the State of Florida, you will be expected to carry out the following:
- Register a business name
- Apply for an Employer Identification Number (EIN)
- Choose a registered agent—the person tasked with receiving all tax correspondence
- File articles of organization with the Florida Secretary of State
- Open a business bank account
- Comply with Florida’s compliance requirements—such as filing annual reports
- Complying with all hiring laws, if you’re an employer
Business tax requirements as a single member LLC
By default, a single-member LLC in the State of Florida is taxed as a sole proprietorship. It simply means that the IRS will treat your LLC as a disregarded entity.
Note that even though your LLC is legally a separate entity from your person, you and your small business are considered one and the same for income tax purposes and file the same income tax return. However, you can choose to elect to file for C corporation or S Corporation status. Then you would have to fill and submit a separate corporate income tax return.
Filing as a sole proprietor
Just as it was noted above, you are automatically considered a sole proprietor if you don’t elect another status. To file your tax returns, you will have to outline all business income on Schedule C of your personal tax return (IRS Form 1040) using your social security number.
Filing as a C corporation
To elect your LLC to be taxed as a C corporation, you will have to file IRS Form 8832 to confirm your tax status. When it comes to filing your tax returns, you will have to report all business income on IRS Form 1120.
Note that this income will be taxed at the corporate rate. Also, note that any dividends or salary you earn from your SMLLC will also be taxed as personal income on IRS Form 1040. Owing to that, single-member LLCs barely choose this path.
Filing as an S corporation
An S Corporation is a pass-through entity; however, you will be expected to pay your personal tax rate on all business income. To elect this tax status, you will have to File IRS Form 2553, then report all business income on IRS Form 1120S.
Howbeit, note that when you choose the tax status, the IRS doesn’t see you as a self-employed individual, and you won’t be expected to file self-employment tax like you normally would when filing as a sole prop.
Requirements for hiring employees as a Single Member LLC
A single-member LLC can hire and pay employees; however, you will be expected to withhold payroll taxes and pay them to the IRS. Payroll taxes include:
- Unemployment insurance
- Social security
Requirements for paying yourself as a Single Member LLC
Have it in mind that if you pay personal expenses directly with your business profits, you will pierce the corporate veil of your LLC. Note that to maintain liability protection and also keep your bookkeeping in order, you will have to pay yourself via distributions.
Single member LLC owners are expected to cut a check and record it on the books as an owner’s draw. Note that you won’t have to apply payroll taxes to this draw, especially since you are not considered an employee. However, if you intend to file your taxes as a sole proprietorship, you will have to pay self-employment tax to the IRS.
Sales and Use Tax requirements for Single Member LLCs
If your business will sell goods to customers in Florida, then you will be expected to collect and pay sales tax. Note that this entails registering your LLC with the Florida Department of Revenue and then making periodic sales tax payments for goods sold. Have in mind that this registration can be done online or by mail in Form DR-1.
Once you’ve registered, you will receive a Certificate of Registration (Form DR-11) and other documents. After that, on a periodic basis—monthly, quarterly, semiannually, or annually—you will have to submit sales tax returns to the DOR. You can do this on paper or electronically.
Annual report requirements for single-member LLCs
In the State of Florida, you will be expected to file an annual report for your LLC. Note that to complete the report, you only have to confirm preexisting information that had to do with your business address, your registered agent, and the people permitted to manage your LLC.
Also, note that you can make changes at this if need be. In the state of Florida, the annual report is due each year by May 1. The current filing fee for LLCs is $138.75. There is a hefty $400 penalty for reports filed late.
A Florida single-member LLC is a limited liability company where sole ownership of the company is bestowed on one individual or entity and there are no additional members. This sort of LLC in the state of Florida is formed exactly the same way as a multi-member LLC.
You only have to file a Florida LLC Articles of Organization with the Division of Corporations and remit the appropriate fee. You can genuinely do this online, by mail, fax, or in person. You will still also have to designate a Florida registered agent and file a Florida LLC Annual Report each year.