Florida has one of the most business-friendly tax policies for small businesses. Compared to other states, taxes are softer in this part of the country. In this article, we bring you the most relevant information to consider if you want to open a business in the Sunshine State.

Corporate Tax in Florida

Only C-Corps are required to pay state income taxes in Florida, and no other business entity has this requirement. Corporations operating or owning businesses in Florida must file Form F-1120 every year, even if they have no taxes due.  The taxable base for determining the amount owed is based on a formula which considers payroll, property, and sales. Non-business income is added together and a $50,000 exemption is subtracted to determine the net income of a small business.  The corporate income tax rate in Florida varies depending on when the company began its operations. The state also offers several business tax incentives that can reduce the amount owed, some of which include: 
  • Capital Investment Tax Credit
  • Community Contribution Tax Credit
  • Rural Job Tax Credit
  • Among others.
 

Florida S-Corporation Taxes

S-Corporations in Florida are unique because they are not subject to federal income taxes. Instead, these taxes are passed on to shareholders, who will pay the tax based on individual income tax rates. In Florida, S-Corp business owners are not required to pay state income taxes, and the S-Corp itself won’t pay state taxes. Additionally, S-Corp shareholders will not have to pay state income taxes as it is a pass-through entity.  

Taxes for LLCs in Florida

Limited Liability Companies (LLCs) in Florida also function as pass-through entities. This means that owners don’t have to pay federal income taxes on their small business income. LLCs have options for how to pay local business taxes; as a disregarded entity, an incorporated LLC, or a partnership. In Florida, single-member LLCs do not have to file a separate corporate tax return. Note that: 
  • If the LLC is directly or indirectly owned by a corporation, the single-member LLC owner will use their LLC tax return. 
  • If a corporation owns the single-member LLC, it must also file a Florida corporate income tax return.
Incorporated LLCs may have to pay state income taxes, which rarely happens. If so, the state income tax would be 3.3% or 5.5%. To file income taxes as an incorporated LLC, a Florida corporate income/franchise tax return must be completed. LLCs classified as corporations must file Form F-1065 if one or more of their owners are corporations. Owners of this type of LLC must also file a corporate income tax return.

Multistate Companies

If your company operates in multiple states, you may face unusual tax circumstances. Florida, due to its size and location, may be especially susceptible to these scenarios.  Some of these scenarios include: 
  • Working in another state but living in Florida 
  • Living in two different states during the same fiscal year 
  • Working in Florida but living in another state 
It is important to note that Florida does not have a reciprocity agreement with other states in terms of state taxes. This situation can affect how taxes are filed. It is vital to consider these circumstances when filing taxes and seek professional advice to ensure all tax obligations are met. At Voraus, we can help you better understand tax requirements and how they may affect your company. Don't risk facing unnecessary fines or penalties, contact us today for a consultation