Do you want to start a business in Florida as a foreigner? If YES, here is a detailed guide on how to start a profitable business in Florida. Florida is the southeastern-most U.S. state, with the Atlantic on one side and the Gulf of Mexico on the other. This state which has been nicknamed the Sunshine State boasts of hundreds of miles of beaches.
The sun and beaches are not the only favorable aspects of the city of Florida, as the state perennially ranks as one of the best states to do business in with its favorable business tax policies, world-class infrastructure, flexible enterprise zones, tax credits for R&D and abundance of major cities such as Miami, Jacksonville and Tampa.
The state’s economy relies mainly on tourism (because of the sun and beaches), agriculture, and transportation. Florida is also renowned for its amusement parks, orange crops, winter vegetables, the Kennedy Space Center, and as a popular destination for retirees because of the warm climate.
Florida is the third most populous state in the US, surpassing New York with over 19.7 million people, making it a good place to start a business.
Florida’s corporate business tax is one of the lowest in the nation, allowing you to invest more money into your business. Till date, Florida has the second-highest density of startup businesses in the U.S., with more than 100 startups per 1,000 total firms. Plenty of new entrepreneurs either flock to or crop up in the state, particularly Miami.
Starting a business in Florida as a foreigner is quite possible (many have already done it successfully), but there are rules to be followed when forming an entity that is legal for a foreigner to operate. We are going to show you the steps you need to follow when you want to start a business in Florida as a foreigner.
Steps to Starting a Business in Florida With No Money as a Foreigner
Decide on a Business Structure
Before starting a business anywhere, you have to first decide on the legal entity you want to set up your business as. You need to research very well into this aspect if you are trying to set up a business in a foreign land. In Florida, there are certain business structures that foreigners are allowed to build their business on. Let’s look at them.
Corporate Entities that Non-Residents Can Operate
Non-citizens can currently form two types of business entities in Florida. They include;
Corporation (C corp)
A Corporation is a business structure that provides liability protection to the owners. Its structure includes shareholders, directors and officers.
This business structure is complex, but it is highly favored by large companies and startups that intend to raise funding for their business. Some professions are required to choose what is known as a “Professional Corporation” or PC (doctors, lawyers, architects, etc.)
Limited Liability Company (LLC)
An LLC or “Limited Liability Company” is a separate entity that provides very easy management (doesn’t require directors or officers) and taxation. This newer entity has largely replaced the Corporation in popularity as it provides liability protection but with much less complexity (and taxation) than a Corporation.
Under Florida law, an LLC name must contain the words “Limited Company” or “Limited Liability Company,” or the abbreviations “L.C.” or “L.L.C.” The word “Limited” can be shortened to “Ltd.” and “Company” may be abbreviated as “Co.”
Your LLC’s name must be recognizably different from the names of other business entities already on file with the Florida Division of Corporations. Names may be checked for availability by searching the Department of State: Division of Corporations business name database. You may not reserve a name before organizing your LLC.
Many people recommend that foreigners should form S corporations instead because this business formation comes with a number of benefits. However, this type of business entity is only available to foreigners who are permanent residents and citizens.
Although foreigners are usually encouraged to form C corporations, it’s worth looking at the advantages of forming a business as an LLC.
The first and most appealing benefit is limited personal liability, which means that the owner(s) of the business are shielded from liability for any business obligations, debts, actions and decisions. If the LLC is sued, the owner(s) would generally only be responsible up to the amount they invested in the business.
An LLC also doesn’t have the same regulations imposed on it for recordkeeping that corporations are required to follow. The owners of an LLC, called members, have few restrictions on how the profits will be split between them. Although an LLC is an appealing business formation, many new business owners choose to form C corporations.
One of the main advantages of this business structure is the option to offer an unlimited number of stock shares, which can help the company grow more rapidly. This aspect of the formation often appeals to investors.
Foreigners starting businesses in Florida also appreciate the protection offered by the C Corporation structure, which prevents the IRS from being too heavily involved in their business. Although the IRS won’t be as involved, the trade-off is double taxation.
With thorough planning for the tax requirements, you can structure the financials of the company to avoid being double taxed and prevent major financial troubles. All LLCs organized outside of Florida must register with the Florida Secretary of State to do business in Florida.
Foreign LLCs must appoint a registered agent for service of process physically located in Florida. To register, file a Qualification of Foreign LLC with the Florida Department of State Division of Corporations. The completed application must be accompanied by a Certificate of Existence from the foreign LLC’s home state, dated no more than 90 days prior to the filing of the certificate. The filing fee is $125.
2. Pick a Business Name
The next step to take while starting a business in Florida as a foreigner is to choose a name for your business. You have to be careful here when picking your business as this singular act, if done wrongly can land you in a lot of legal troubles.
When choosing a name, make sure that the name of your business is unique, easy to understand and pronounce. You may need to practice saying it loud to see if it is catchy. To help you come up with a unique name, you may have to search Google, Bing and DuckDuckGo to make sure the name you chose is in the clear.
Do a trademark search with the US Patent and Trademark Office (USPTO). This will be a very good indicator if your name will have any conflicts. This will help you stay clear of names that are already patented.
You should also make sure your company name choice is available by searching the Florida Department of State Division of Corporations business name database. Note: Make sure to search variations of spelling, plurals and misspellings as the state may reject a name that is too similar.
Once you pick an appropriate name, you have to pay $50 to officially register it. Note that names cannot be reserved—they’re awarded on a first-come, first served basis, so if you have a good idea, submit it quickly.
3. Register Your DBA
This step is technically optional, but if you want to conduct business with a company that has a name other than your official personal one, you’ll want to invest in registering a fictitious name, or DBA (doing business as). For example, if your name is Jerry Khan and you want to open a barbershop, you may coin a business name out of your real name, like Jerry’s cuts. To make this happen, you need to register your DBA.
How to File a DBA in Florida
- DBAs in Florida can be registered through the sunbiz.org portal.
- Search your desired business name in the sunbiz.org fictitious name database.
- Register your name with the Florida Department of State Division of Corporations
4. Set Up Your Business to Pay Taxes
Most businesses pay federal, state, and local (and sometimes city) taxes, so you should find out which of the taxes your business is required to pay.
Federal business taxes are collected by the IRS. These taxes generally include: income tax, estimated taxes, self-employment taxes, employment taxes, and excise tax. You can review all the required taxes (for example, income tax is a requirement for all businesses except partnerships), notable exceptions, and necessary forms on the IRS website, or visit a local IRS office to get more information.
State business taxes are collected by Florida’s Department of Revenue. They generally include: sales and use tax, reemployment (formerly known as unemployment) tax, corporate income tax, and other taxes. You have to register to collect or remit taxes online, which you can do here.
Local business taxes are collected by local county tax collectors. Each county requires you to pay taxes to operate within them. City business taxes aren’t collected by every city, but some require you to pay taxes in order to operate within their limits. The municipal directory can point you in the right direction; then, contact your city officials for more information.
5. Get a Registered Agent
A Registered Agent is required for every Florida Corporation and LLC. The chosen registered agent must have a physical street address in Florida. While you can serve as your own registered agent, it will make your personal information visible to the public.
A professional Registered Agent who will provide their address and forward any important documents to you. This is convenient if you have to move, since you won’t have to file forms or pay fees, (just update your address with your agent). Note that you have to get a registered agent before you can complete filing your business structure.
6. Obtain a Business License, If Necessary
Before you begin starting a business in Florida, pay attention to the specific business licenses you may need. There are two main licensing agencies for “skilled trades”: The Department of Business and Professional Regulation (DBPR) and The Department of Agriculture and Consumer Services (DACS).
The DBPR provides licenses for a wide variety of professional services, including, but not limited to: architects, barbers, geologists, home inspectors, restaurants and food vendors, and veterinarians.
You have to keep in mind that just because you work in one of these industries mentioned above doesn’t mean you necessarily need a license. It depends on what you do, exactly. For example, a geologist working as a teacher or researcher without affecting the health or welfare of the public doesn’t need a license; one that performs professional “geological work” does.
The Florida Department of Business and Professional Regulation website has information regarding business licensing in Florida. It also has a list of types of businesses that require special licensing.
7. Prepare and submit Articles of Organization to the state of Florida
As you are moving on in the process of setting of your business in Florida, you must have generated a lot of papers and documents. All these documents and papers need to be brought together and properly notarized. After the documents are signed by the required persons, you need to submit it to the state of Florida.
8. Obtain your Federal Employer Identification Number (FEIN or “EIN”)
Your EIN is like your Social Security Number for your company. It’s required for Corporations and LLC’s and optional for DBA’s (if you don’t have any employees, then it’s required). However, if you are a DBA and don’t obtain an EIN, you will be forced to use your Social Security Number on many documents so it’s typically recommended you obtain the EIN to prevent identity theft.
To obtain an EIN you can apply online with the IRS or via IRS Form SS-4.
9. Open Company Accounts: Bank and Credit Cards
To keep business and personal expenses separate, you should open a separate account for your business. In addition, getting business credit cards is how you begin to build a company credit profile (corporation or LLC required) and your business can later qualify for larger loans and lines of credit.
To open the account, simply call your chosen bank and inquire on the steps to open a business bank account. Typically you’ll need your filed paperwork, your EIN and a company resolution authorizing your company to open the account (signed by the owners, members, officers or directors, etc.).
10. Ongoing Requirements For your Business
DBA: Your Fictitious Business Name should be valid for 5 years unless you change company name or other information listed on the FBN. At this point you’ll need to renew it with the county.
LLC: All Florida LLCs must file an Annual Report yearly to maintain “active” status. The first report is due in the year following formation. The report must be filed online between January 1st and May 1st. The fee for the annual report is $138.75. After May 1st, a $400 late fee is added to the annual report filing fee.
“Annual Report Reminder Notices” are sent to the LLC’s email address you provide when you submit this document for filing.
Corporation: Every year you’ll need to file the “Statement of Information” or Annual report which updates the state on your business address and other things. Florida corporations can efile. There is a $400 late fee for all for-profit corporations who do not make the May 1 deadline.
Franchise Taxes: Florida requires a franchise tax due on the last day of the month in April, June, and September, as well as on the last day of the tax year. This is calculated as a percentage of the company’s net income for that year.
11. Pick a Location
For most business people, picking a location is one of the first things they do, even before incorporating the business. But before you pick out a location, you must have to carry out thorough research so you don’t make a mistake. From Tallahassee to Miami, take your time and consider the pros and cons of each business location wisely. You may need to get a lot of advise especially from locals so as to know the peculiarities of where you want to start a business.
12. Fund Your Business
If you’re opening a business in this modern era, there are certain bases you need to cover regardless of whether you’re starting a business in Florida, Alaska, or most places in between. If you need a little extra capital to get started, there are many options out there.
Between crowdfunding, SBA loans, credit cards, and short-term loans, there are a few ways a new business owner can find the money they need to start up. Florida’s Small Business Development Center is a great place to start. They offer free financial advising for new entrepreneurs and can help you decide which funding options are right for you.
Keep in mind that not all small business loans will be available to a new business owner, but the Small Business Development Center can help guide you in the right direction. You need to find out first of all if these funds cater to foreigners, and if they do not, find out those that can cover you.
If a business loan is too much of a commitment for you, consider a business credit card with a 0% APR introductory rate. A 0% rate can act as an interest-free loan while you’re getting up and running, as long as you pay back what you owe before your introductory period ends.
Visa Requirement for a U.S./Florida Based Business
Many foreigners wonder whether they are required to obtain visas to form businesses in the united states. Although a visa isn’t a requirement to operate a business, it is a requirement to live in the United States, so it’s best to obtain one before you start your company. Foreigners have several visa options. The most popular option for an entrepreneur is the E-2 visa.
If you obtain an E-2 visa, the term is two years. After that term is up, you will need to apply to extend the status in two-year increments. In order to qualify for an E-2 visa, you must meet several requirements: You must show proof that you own 50 percent of your business or more (that you have a controlling share).
You must be a citizen of one of the countries under the Treaty of Navigation, Commerce or Friendship with the United States (for a full list of countries that fall under these treaties, visit the Department of State’s Treaty Countries website).
You must either be planning to invest or have already invested a large amount of capital in a business based in the United States. Currently, no dollar amount limit is set for an investment, but it’s more challenging to obtain this visa if the amount is less than $100,000. The investment amount must also be a large portion of what you have.