Starting A Business In Florida – A 7 Step Guide

So you’ve decided to start a business in Florida. Maybe you have a product you want to sell. Or, perhaps you’ve found a niche service you are really good at doing. Up until now, you’ve been selling your product out of your garage or providing your service on the side of your regular job. Recently there has been more demand for the products you sell. Or, perhaps you are beginning to attract more clients interested in your services.

Your side gig or hobby is beginning to consume more of your time. You are investing more money and effort into meeting that demand. What was once a simple hobby is now becoming more complex and expensive.

As your “project” has grown it has started to take on a life of its own and your motivation for being involved may have changed. Instead of thinking of it simply as a hobby, or something fun to do, you are now thinking about expanding, becoming larger or making a greater profit. You are starting to think of it in terms of it being a business.

Whatever your motivation, as your new business grows, operating it will become more complex. What was once simply a “thing” you did to make a little extra income, or a hobby to occupy your time, with very little risk, has become larger, more complex, riskier operation; exposing you, your family, and anyone working with you, to more legal and tax liability.

It may be time to recognize your success and upgrade that side job or hobby into a more formal business. Starting a business in Florida can be incredibly exciting and rewarding. But, it can also be incredibly challenging to work through the process.

Image of business man walking up steps to start a business.

Are you ready to start a business in Florida? You will need to do more than just register with the Florida Department of Corporations. To successfully open your new business, on a strong legal foundation, there are a lot of background decisions that need to be made.

7 Steps to Starting a Business in Florida

What follows is a basic 7 step overview of what you need to know to start a business in Florida. This is not intended to be a comprehensive guide. That would require far more space than is practical. It is intended, however, to be a resource that points you in the right direction. It will provide you with enough specific information for you to begin the process and understand the decisions that need to be made.

Starting a business in Florida is a rather straight forward process. But, starting a business the right way requires a lot of decisions to be made during the process. Depending on the type of business the start up process can get a bit complex and at times it can be confusing.  Starting a business is a serious undertaking. A lot of decisions, that will impact the business’s future will have to be made early on in the process.

Some decisions can have serious legal and tax implications. Working with an experienced small business attorney early on in the process will help ensure that the best decisions for your specific situation are being made.

STEP 1: Create a business plan — this is an extremely important step. A business plan is a strategic document you use to define:

  • What your business is going to do.
  • How your business is going to do it.
  • The products and services you are going to sell.
  • Where your business will operate.
  • Who will operate the business.
  • If there will be investors.
  • Your target customers and how to reach them.
  • Who your competition is.
  • Your financial and revenue goals.
  • A time line for estimated profitability.
  • How will the business be controlled and by whom.
  • Your management team and their responsibilities.
  • If and how you intend to market the business.
  • If you need special licensing or permits.

A business plan is not required to start a business in Florida. However, the information contained in a business plan will help you work through the following steps to starting a business outlined in this guide.

But, if you are going to be looking for funding, either through bringing in investors, or by securing a small business loan, a business plan will most likely be required. If you are unsure how to create a business plan the U.S. Small Business Administration has some resources to help get you started.

STEP 2: Decide on a type of business ownership — the form of ownership, business structure (or “entity type”) you choose will decide the rules, regulations, and legalities that define your company, together with how you will pay taxes. The type of company structure you choose will in a large part be dependent the number and type of owners that will be involved in the business. There are a variety of different types of company structures you can choose from. The most commonly used are:

  • Sole Proprietorship – this is the most common form of business ownership. A sole proprietorship is owned and operated by a single individual. If you are taking money for a product or service you are considered a sole proprietor. Technically, it is not a legal business entity. But, it is still a form of business ownership. The sole proprietor must still be licensed and under certain circumstances register with the Florida Department of State.
  • Partnership – Similar to a sole proprietorship except two or more individuals are equally responsible for the business and share its liabilities and profits.
  • “Limited Liability Company” or LLC — this is the most popular form of business ownership, the easiest to set up and run, and the simplest to manage. It’s what we generally recommend to small business owners.
  • “S-Corporation” — this is slightly more complex than an LLC, and has more of a management and compliance overhead. This is offset by having a more tax-advantageous set up, but you can take advantage of that by having an LLC treated as an S Corp for tax purposes.
  • “B Corporation” – also known as a benefit corporation is a for profit entity whose purpose is to create a public benefit.
  • “C Corporation” — this is the most complex type of business entity and is generally only recommended for larger businesses. There’s a lot of administrative overhead, and they have to pay corporate tax.
  • Professional Association – This is actually a category of entities that provide services that require licensing from a professional body; such as doctors, nurses, lawyers, accountants, and architects. Entities such as; LLP (Limited Liability Partnerships, PLLC (Professional Limited Liability Company, and Professional Corporations (PC) are professional organization business structures.

Each form of business ownership has its own purpose and set of pros and cons. If you are confused about which would be best for your or your business’s situation, you are not alone.  To get more information about types of business ownership checkout our page on how to choose a business ownership type – (Coming Soon).

Once you have decided on the company structure that is right for your business, you will need to go through the process of actually forming the company using the structure you chose. The process is similar but different for each business structure. (A Guide for this is coming soon)

Image of a whiteboard drawing of different company structures.

STEP 3: Name your business — I know it seems a bit odd that naming your business would be the third step. But, technically speaking, whether you choose to be a Corporation, Partnership or a Limited Liability Company will impact the companies “official” name. This will be your business’s legal name that is used on all official state and federal documents and applications. It must be unique. It cannot infringe on another company’s name. Depending on the purpose of the business you may spend a lot of time, effort and money coming up with a marketable name that describes your products and services. There are a few important considerations to keep in mind as you work through the process.

  • Understand the Florida State rules for naming your business — there are some rules on what you can, and can’t call your business in Florida.
  • Don’t use a name that is the same as, or substantially similar to another Florida business name. Once you register your business with the Florida Department of State your legal name will be reserved and no other business will be able to use it.
  • Don’t infringe on any copyright, trademarks, or service marks — calling your business The Alternative to Disney probably isn’t a good idea!

Most businesses build a brand around their legal name. Often those businesses will trademark or service mark their names as a way to protect their brand. It is highly recommended that you have a state and federal name and trademark search done to make sure that you are not infringing any other company’s established trademarks.

If you are planning to market your new business using any other name than its official name you will need to register a fictitious name, also known as a DBA (Doing Business As) name.

STEP 4: Register your business in Florida – All businesses in Florida are registered by filing official documents with the Secretary of State. For LLCs that’s “Articles of Organization,” for corporations, it’s a “Certificate of Incorporation.” These are important legal documents that detail the key legal facts about your business. You will also need to:

  • Provide the contact details, addresses, and other information of the key people involved in your business — these could be members, managers, owners, and others.
  • File official documents with the Florida Secretary of State — this officially creates your business. The documents you will be required to file will depend on the type of business structure you chose in Step 2.
  • Decide if you want to assign a separate “Registered Agent” for your Florida business — Registered Agents receive formal documents on your behalf. You can act as your own Registered Agent.

Just because your company is registered does not mean it is properly formed.

Registering a business in Florida means you have met the “MINIMUM” requirements for your business to be formally recognized as a company. It does not mean your company is properly and completely formed. Contrary to what many online business registrations services would like you to believe registering a business is not the same as forming a company.

When you register a company in Florida, you are simply telling the Florida Department of Corporations that the company exists, why it exists, who the owners and officers are, where business is being conducted, and how to get in touch with those responsible for the company if there are any legal matters that need to be addressed. Just because the company is registered does not mean the company has been properly formed.

Registering your company is only one step in the business formation process. None the less it is a critical step. It is critical because it is the step that enables the company to legally operate in Florida. All the paperwork for your company can be in order; you could have an awesome founders’ agreement, or a great shareholders agreement, but if your company is not registered, or the registration is out of date the company cannot legally operate.

Screenshot of warning message at Florida Department of Corporations

The above is a snippet of a screen shot from the Florida Department of States website warning about business registrations and advising an attorney should review the paperwork. There are similar warning related to registering corporations and partnerships.

STEP 5: Register for taxes and fees – Depending on your business, the products and services you sell, the city, county you are located in and whether or not you have employees there are a number of different taxes and fees you will have to pay.

  • File with the IRS for a Federal Employer identification Number (FEIN or EIN). Even if you do not have any employees or plan on hiring any employees you will need to do this. An EIN is like a social security number but for your company. Most banks will not allow you to open an account in the name of your company without it.
  • Inquire and if required register with the Florida Department of Revenue. Whether or not you will have to collect states sales and use taxes is dependent on your business activity. Not all businesses have to. But, you should inquire to make sure.
  • If you have employees you will have to file and pay Reemployment Tax (previously known as Unemployment Tax).
  • Contact the County Tax Collector’s office for the county where your business is located. Again, depending on the business activity you may be required to collect county taxes.
  • Contact the City Clerk’s office for the city your business is located in. You may be required to pay city taxes and fees, and possibly register to collect city sales and use taxes.

Nobody likes paying taxes. But, don’t avoid finding out what your tax obligations are. Issues regarding taxes can get overwhelming and could fast track your company to dissolution. In some cases unpaid business taxes can attach to your personal finances. Don’t let this happen. Be aware of what your obligations are.

STEP 6: Get the proper licensing and permits – Depending on the business activity; you may need to obtain special licenses and permits, from city, county, state and federal licensing and permitting agencies.

  • Is what your business does regulated? If you are not sure, here is a comprehensive list of regulated industries in Florida
  • The Department of Business & Professional Regulation (DBPR) and the Department of Agriculture and Consumer Services (DACS) are the two primary licensing agency in Florida. Here is a list of services that require a DBPR license
  • You may also need to be licensed by the county as well. You’ll want to inquire at your local County Tax Collector’s office.
  • Some cities also require businesses to obtain business tax licenses. You’ll need to inquire at the local city clerks. We looked but there does not seem to be a publicly available list of city clerks.
  • For special permits you may need to contact the local city or county planning and zoning departments.
  • If you need federal permits or licenses then the Small Business Administration has you covered

STEP 7: Open a bank account for your business – Keep your personal and business funds separate. Intermingling funds has all sorts of serious legal and negative tax implications. Just don’t do it. It’s a bad idea.<[p>

Image of an open sign in a business' window.

Now that you have successfully started your business you will need to maintain licenses, permits and registration to keep it active and legally allowed to operate in Florida.

STEP 8: Run and maintain your business – This last step isn’t really a step in the process of starting a business in Florida, but a word of caution. Make sure your license and permits stay up to date. Make sure your company registration stays up-to-date as well by filing the required yearly reports and forms with Sunbiz.org, Maintain the proper documentation for your company. Corporate maintenance, properly reporting, maintaining all the proper documentation, and licensing is very important.

If corporate records are not properly maintained you and your company could find yourselves in legal jeopardy, if a legal issue was ever to occur. Moreover, if the company is audited by the IRS and company records have not been properly maintained, they could choose to deny the validity of the business entity.

Protect yourself and your business. Keep up with your corporate maintenance.

Do You Need a formal company structure
to start a business in Florida?

The short answer is no. You can run your business as a sole proprietor. However, as a sole proprietor you are 100% responsible for all the business’ activities; good and bad. Your business income will be taxed at personal tax rates. If something happens and a business related lawsuit is filed, your personal assets could be seized. Same with taxes; if you get behind on business related taxes your personal assets could be seized.

You still have to be licensed and get the correct permits to operate your business. If you have employees you still have to file for an EIN.

Running your business as a sole proprietor may seem easier in the beginning but when you consider the potential liability exposure it’s really a lot more risky. Once the formal business structure is in place, and as long as the business entity is properly maintained your business activities are separated from your personal activities providing strong liability protection.

You probably need to formalize your business and choose a company structure if the following are true:

  • You are doing the activity for commercial reasons and are creating income from the business. It doesn’t matter if you’re making a profit, simply that you are taking money.
  • You are carrying out the activity in a businesslike way — that is, it’s not an ad hoc, piecemeal approach.
  • You carry out the activity on a regular basis.

Essentially, if it’s an activity where you make money, you will need to report it on your taxes, and protect yourself from liability. To do that, you will need to set up a formal business structure.

Why Start a Business in Florida?

With its ideal location, amazing culture, and access to some of the biggest transport hubs in the world, Florida is an ideal place to start your business. As home to Miami, Tampa, and Orlando, Florida is both a major tourist destination and a major contributor to the US economy. One of the biggest advantages is that Florida has gone out of its way to be one of the most business friendly states in the country.

We simply think Florida is the best place to start a business. But, we live here so we are a bit biased. Here are a few facts about the Sunshine State, you may or may not already know, that we think makes Florida an ideal place to start a business of any size.

  1. With nearly 300,000 people moving here every year it is the second fastest growing state in the country. Add that, to the 20 million residents that already live here and the 113 million tourists that travel here every year and Florida is simply a huge potential consumer base that is rapidly growing.
  2. That consumer base is extremely diverse
  3. With its business friendly tax code, incentives for creating jobs, and a favorable investment capitol environment, Florida is considered to be one of the most business friendly states in the country.
  4. Highly talented and educated workforce.
  5. With over 66 airports, 16 seaports, over 50,000 miles of highway, and nearly 3000 miles of railroad tracks Florida has a well-developed robust transportation infrastructure.
  6. Location, location, location. Florida’s geographic location makes it a trade gateway for the entire Western Hemisphere, with nearly $100 Billion in exports.
  7. It is estimated that over 200 countries buy Florida made goods and services.
  8. Florida is considered one of the top communication and data hubs in the world.

You might say, hey that’s great for larger industry but I’m looking to start a small business, a family business. Well, all those factors have a positive impact on the Florida business environment, creating a robust entrepreneurial economic climate.

Moreover, Florida has a lot to offer businesses of all sizes, even small new businesses. In addition to it being one of the most tax friendly states in the country, it also provides dozens of small business developments centers, business incubators and accelerators spread throughout the state all focused on supporting and nurturing new local businesses.

Here area few statistics that may be a bit more relevant to those of you considering starting a small business in Florida.

  1. There are 2.2 million small businesses in Florida.
  2. Nearly two-fifths of the Florida labor forces is employed by small businesses; that’s over 3 million people.
  3. Of the 400 thousand small businesses that have employees the majority have less than 100 employees.

For more Florida small business related statistics, check out the SBA’s Small Business Profile for Florida.

What You Need to Know Before You
Start a Business In Florida?

Before going ahead and starting your business, here’s what you need to be aware of:

  • Be confident this is something you really want to do — running a business can be tough. It’s not a commitment to take lightly!  But it’s also extremely rewarding.
  • Do your research — it’s important to understand the various different types of businesses, your tax liabilities, rules, and regulations.
  • Put together a business plan — understand all the key factors that go into running a successful business — what you’re going to do, how you’re going to sell, where your customers are going to come from, your revenues, profits, and operations.
  • Engage an attorney — if you’re not certain of how to do everything yourself, we can help. We’ve got years of experience in successfully creating businesses, and we’d be delighted to work with you to bring your dream to life.

We know this is a lot of information to take in all at once. We hope after reading it you have a much better understanding of the steps that need to be taken and decisions that need to be made to open a business in Florida.

Do you have a question regarding,
or need help with Starting a business in Florida?

Call (407) 259-2426
Or

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Orlando, FL 32801
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About

Walsh Banks Law is a boutique law firm located in Orlando, Florida. We specialize in business law, real estate law and commercial litigation.