L.L.C. is the abbreviation for Limited Liability Company. Creating an L.L.C. is one of the easiest ways to build a wall between your private assets and your company’s financial liability. It helps protect your assets if someone sues your company.
An L.L.C. offers you the protection you can’t get as a sole proprietorship or General partnership. An L.L.C. also has some tax advantages; the business itself is not responsible for taxes on its profit. Instead, the members of L.L.C. report their share of business profit and loss on their personal tax returns just the way taxes are reported for a general partnership; this is called “pass-through taxation.”
This means a lower tax rate on company profits along with asset protection and tax flexibility. The L.L.C. business structure has several other advantages:
Benefits of Having an LLC in Florida
- No Residency Required: Owners of an L.L.C. don’t have to be U.S. Citizens or permanent residents.
- Legal Protection: Owners of an L.L.C. are given limited liability for business debts.
- Enhanced Credibility: Partners, suppliers, and lenders may look more favorably on your business when you formed an L.L.C.
- Ownership Flexibility: There is no limit on the number of owners an L.L.C. can possess. Additional members can buy equity in the company.
- Less Record Making: With an L.L.C. no annual meeting or minutes books are required.
- Gain Access to Business Loans: When you form an L.L.C., your business will begin to build a credit history. This will aid your business access loans.
An LLC combines the assets protection of a corporation with the simplicity of a partnership, which makes it one of the most popular entity structures for small businesses. Forming an L.L.C. in Florida is a straightforward process that won’t cost you much money. To start, you need to file the Articles of Organization with the Florida Division of Corporations. The filing fee is $125.
How to Get an LLC in Florida Step By Step
Table of Contents
- STEP TWO: Hire a Florida LLC Registered Agent
- STEP THREE: Florida Articles of Organization, State Business License, and Initial List
- STEP FOUR: Craft Your Florida LLC Operating Agreement
- STEP FIVE: Apply for an EIN for your Florida LLC
- STEP SIX: Florida LLC Annual Requirements
- Step SEVEN: Florida State and Regulatory Licenses and Permits
- STEP EIGHT: Taxes Requirements in the State of Florida
- STEP NINE: Open a Florida LLC Bank Account
- STEP TEN: Obtain a Florida Business Phone Number
- Step ELEVEN: Hiring of Employees
STEP ONE: Choose a Name for Your Florida LLC
Before filing your Florida LLC’s Articles of Organization with the Secretary of State, it is expected that you search the state’s database to make sure your desired LLC name is available for use. Be sure to choose a name that complies with Florida naming requirements and is easily searchable by potential clients. You are expected to follow the naming guidelines below;
- Your name must include the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.).
- Your name cannot include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).
- Restricted words (e.g. Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.
Please note that under Florida law, an LLC name must contain the words “Limited Liability Company” or “Limited Liability Co.,” or end with the abbreviation “LLC” or “L.L.C.” Your LLC’s name must be distinguishable from the names of other business entities already on file with the Florida Department of Financial Institutions.
Names may be checked for availability at the Florida Department of Financial Institutions business name database. You may reserve a name for 120 days by filing a Name Reservation Application (Form 1) with the Florida Department of Financial Institutions. The reservation must be filed by postal mail.
STEP TWO: Hire a Florida LLC Registered Agent
The Florida Secretary of State requires you to list a Registered Agent in your LLC’s Articles of Organization. A Registered Agent is a person or a company designated to receive notices from the state sent to your LLC, as well as any legal mail (called Service of Process) in case your business is involved in a lawsuit.
A registered agent must be a resident of Florida or a corporation, such as a registered agent service, authorized to transact business in Florida. You may elect an individual within the company including yourself. Please note that your Registered Agent must have a physical street address located in the state and PO Boxes are not allowed where Service of Process and other documents can be received.
People who are Qualified to be Your LLC’s Florida Registered Agent are;
- For you to be your LLC’s Registered Agent.
- For your LLC to be its own Registered Agent.
- To list an office or position within your LLC as the Registered Agent.
- For a friend or family member to be your LLC’s Registered Agent.
- To hire a Commercial Registered Agent. Hiring a Commercial Registered Agent is a good idea if you want to keep your address off public records or if you don’t have an address in Florida.
STEP THREE: Florida Articles of Organization, State Business License, and Initial List
To register your LLC, you need to file the Articles of Organization with the State of Florida. This can be done online. When filing, you will need to state whether your LLC will be member-managed or manager-managed.
Method of Filing: You can form an LLC in Florida by mail or online; however, it is advisable to fill your LLC online since it has a faster approval time and the process is much easier.
Florida LLC approval: Your Florida LLC will be approved immediately when you file online, but it can take 5-10 minutes before your documents are available for download. After the process, you will see 3 documents available for download, and the document will be stamped and approved:
- Articles of Organization
- Initial List of Managers or Managing Members
- State Business License
Please note that if you’re expanding your existing LLC to the State of Florida, you will need to form a Foreign LLC.
State Filing Cost: $125, payable to the Florida Department of State. (Non-refundable)
New Filing Section
Division of Corporations
P.O. Box 6327
Tallahassee, FL 32314
STEP FOUR: Craft Your Florida LLC Operating Agreement
A Florida LLC Operating Agreement is a written contract among the partners of the business that clearly states who owns the LLC and how much of the LLC they own. Your Florida LLC’s Operating Agreement will also document how the LLC is managed, how profits will be shared, and how taxes are to be paid among other related issues.
Please note that an Operating Agreement should be put in place for both Single-Member LLCs and Multi-Member LLCs located. The fact is that having an Operating Agreement for your Florida LLC helps prove that the company is a separate legal entity from yourself.
This helps maintain the personal asset protection provided by your LLC and is very beneficial to have if you ever end up in court. Please note that an operating agreement is not mandatory in Florida, but it’s a good practice to have one.
STEP FIVE: Apply for an EIN for your Florida LLC
The next step you are expected to take is to apply for an EIN for your Florida LLC. An EIN (Employer Identification Number) is obtained from the IRS after your Florida LLC is approved by the Secretary of State. An EIN is also called an EIN Number, FEIN, Federal Employer Identification Number, or Federal Tax ID Number. They all mean the same thing.
You can liken your Florida LLC’s EIN Number to the company’s “social security number”. It helps identify your LLC to the IRS for tax and filing purposes. Please note that your Florida LLC’s EIN will also be used when you open an LLC bank account, register your LLC with the Department of Taxation, and process employee payroll (if applicable).
How is a Florida LLC Taxed?
A Florida LLC can be taxed 4 different ways with the IRS; 2 of which occur by default (they occur simply by obtaining your LLC’s EIN), and 2 require a special election to be made (a form must be filed after you obtain your LLC’s EIN). We recommend reading how is an LLC taxed before applying for an EIN for your LLC.
Please note that;
- An EIN is free ($0): The IRS will issue an EIN to your LLC at no cost.
- Husband and wife LLC: If you are forming a 2-Member LLC in Florida you can elect a special type of taxation called a Qualified Joint Venture. This allows a 2-Member LLC (owned by a husband and wife) to be treated as a Sole Proprietorship instead of a Partnership for tax purposes.
- EIN Responsible Party: This will be the IRS’s “contact person” when you apply for your Florida LLC’s EIN. If you have a Single-Member LLC, you will be the Responsible Party. If you have a Multi-Member LLC, any LLC Member can be the Responsible Party.
How to Apply for an EIN
There are 3 ways to apply for an EIN for your Florida LLC:
If you have an SSN or ITIN, you can apply for an EIN online. If you apply for an EIN online and you get an error message, you’ll need to apply for an EIN with Form SS-4 instead. If you don’t have an SSN or ITIN, you can still get an EIN for your LLC by following these instructions: how to get an EIN without an SSN or ITIN.
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
STEP SIX: Florida LLC Annual Requirements
In Florida, every domestic and foreign LLC transacting business in Florida must file an annual report with the Department of Financial Institutions. Fee: $138.75 (Nonrefundable)
Due Date: Florida’s deadline for filing the annual report is May 1st of each year. Your LLCs first annual report is due the next calendar year after your LLC was formed, so for an LLC formed in 2019, its first annual report can be filed anytime between January 1st, 2020, and May 1st, 2020, then before May 1st each subsequent year.
Late Filings: Florida charges a $400 penalty if you miss the May 1st filing deadline. In addition, failure to file your annual report by the third week of September will cause your LLC to be dissolved.
LLCs may face fines and even automatic dissolution when they miss one or more state filings. A quality registered agent service can help prevent this outcome by notifying you of upcoming filing deadlines and by submitting reports on your behalf.
Step SEVEN: Florida State and Regulatory Licenses and Permits
In Florida, to operate your LLC, you must comply with federal, state, and local government regulations. For example, restaurants likely need health permits, building permits, signage permits, etc. Fees for business licenses and permits will vary depending on what sort of license you are seeking to obtain. But know that you will be required to find out which of the permits and licenses you need;
Federal: Use the U.S. Small Business Administration (SBA) guide.
State: Apply for or learn more about licenses, permits, and registration with Florida’s Department of Regulatory Agencies.
Local: Contact your local county clerk and ask about local licenses and permits.
STEP EIGHT: Taxes Requirements in the State of Florida
Depending on the nature of your business, you may be required to register for one or more forms of state tax:
If you are selling a physical product, you’ll typically need to register for a seller’s permit through the Florida Department of Revenue website. This certificate allows a business to collect sales tax on taxable sales. Sales tax, also called “Sales and Use Tax,” is a tax levied by states, counties, and municipalities on business transactions involving the exchange of certain taxable goods or services.
If you have employees in Florida, you will need to register for Florida Re-employment Tax, a type of unemployment tax, through the Florida Department of Revenue. New employers pay an initial tax rate of .0270 (2.7%) on the first $7,000 of yearly wages paid to employees.
If your business falls within a specific industry, additional state taxes may apply.
FEDERAL LLC TAX REQUIREMENTS
Most LLCs will need to report their income to the IRS each year using:
- Form 1065 Partnership Return (most multi-member LLCs use this form)
- Form 1040 Schedule C (most single-member LLCs use this form)
Recommendation: You will need to speak with an accountant to determine all your Florida LLC’s tax reporting and filing requirements. If filed improperly, it can lead to penalties, fines, and interest. We recommend working with an accountant to make sure you properly meet your federal, state, and local tax obligations.
STEP NINE: Open a Florida LLC Bank Account
Once the IRS has issued an EIN Number to your Florida LLC, you can open a business checking account. It’s best practice to have a business checking account for your Florida LLC to maintain your liability protection. Using a personal bank account for your LLC is called “commingling of assets” and this can lead to personal liability issues if you end up in court.
Please note that having a separate business bank account for your Florida LLC also makes record-keeping easier for accounting and tax purposes. Since banks in Florida has their own rules and regulations, it is recommended to call a few places to determine the following:
- Minimum initial deposit
- Minimum balance requirements
- Monthly maintenance fees (if any)
Required Florida LLC paperwork: To open a business bank account for your Florida LLC, you’ll need to have the following:
- Articles of Organization (stamped and approved)
- State Business License
- Initial List of LLC Managers or Managing Members
- EIN Confirmation Letter from the IRS
- Photo ID (driver’s license and/or passport)
- Operating Agreement (it may not be needed, but it is good to bring anyway)
N.B: Call the bank ahead of time and double-check what documents are required.
LLC Members: If you have a Multi-Member Florida LLC, all Members that want to be on the bank account should be present when opening the account.
Debit card and credit cards: Most banks will provide a business debit card on the spot after the account is opened. If not, they’ll usually mail the debit card in 1 to 2 weeks.
Non-U.S. residents: If you are a non-US resident that has formed an LLC in Florida, you can still open a U.S. business bank account. You can find more information here: opening an LLC bank account for non-US residents.
STEP TEN: Obtain a Florida Business Phone Number
In Florida and of course, international best practices require that you obtain a business phone number for your company as against making use of your private number. You can get a local Florida telephone number or you can get a “1-800” number for your business.
There are many options to choose from when it comes to an official phone number, but just ensure that you choose a telecom company that will better serve your business.
Step ELEVEN: Hiring of Employees
Of course, registering an LLC means that you will need employees and to get it right as regards hiring employees, then you should ensure that you stay on the side of the law, here are some steps you should follow:
- Verify that new employees can work in the US
- Report employees as “new hires” to the State
- Provide workers’ compensation insurance for employees
- Withhold employee taxes
- Print compliance posters and place them in visible areas of your workspace
Forming an L.L.C. in Florida is not a daunting task. Even after forming it, there are still things you need to put in place before you commence operation. Please, note that the information in this article is provided only for general purposes and it is in no way a piece of legal advice. No lawyer-client relationship is established or should any such relationship be assumed. For legal advice, please consult a professional lawyer.