Latest News on Florida LLC Incorporation: Tax Laws and Benefits
By Space Coast Daily // November 30, 2021
Florida consistently remains among the top states for doing business in the U.S. This is largely due to a favorable business climate, streamlined regulations, and a competitive cost. Additionally, Florida’s tax laws encourage business ownership.
With over 2.8 million small businesses in Florida, these comprise 99.8% of the state’s businesses. According to the yearly statistics from Florida’s Division of Corporations, there were 524,734 business filings in 2020, and the total number of LLCs in the state in August 2021 was close to 2 million.
Here is the latest news about LLC incorporation from the state of Florida:
Advantages of Forming an LLC
LLC stands for a Limited Liability Company, a business structure that offers more protection and privacy than traditional corporations. One of several benefits offered by an LLC is personal liability protection since it separates liabilities and debt from the owners, but it also includes some of the most important characteristics of a corporation and several tax benefits of a sole proprietorship or partnership. This means that LLC formation provides flexibility to its members.
Latest Developments in Florida LLCs
An LLC can only come into existence if it meets the state’s legal requirements. Meaning it must be formed and maintained according to the LLC laws of the state.
Currently, Florida is a great state to form a new LLC in because of various incentives it offers, including having the lowest income tax rate in the country. Additionally, the state has several advantageous growth prospects.
Taxation and Flexibility
On the state level, an LLC in Florida is free from taxation. Members of a Florida LLC can also decide on its tax treatment on the federal taxation level. For tax purposes, LLCs are treated as disregarded entities by the IRS, and members can decide how they prefer to be taxed, as a corporation or partnership. Also, each LLC decides how the profits are distributed among the members. Currently, Florida ranks 4th in the State Business Tax Climate Index, following Wyoming, South Dakota, and Alaska.
In Florida, LLCs have no restrictions on the number of members or their management structure. The same doesn’t apply to corporations. The state also allows single-member LLCs and companies owned by foreigners or corporate entities.
The Florida LLC Act also allows LLCs to either be managed by owners or chosen managers who aren’t members.
Protection from Personal Liability
LLCs are like corporations because they shield their owners from personal liability from business debts. Only if the owner uses personal assets as a guarantee can they lose them if the company fails or faces a lawsuit.
For some years, Florida experienced a difficult business climate but since 2007, the state made an extraordinary economic turnaround, including higher employment rates. The state’s economy hit a historic milestone when the state’s GDP reached $1 trillion in 2018. This prosperity is projected to continue with the expected population growth over the next decade.
As the 3rd most populous state with the 4th largest state economy, Florida continues to seek ways to support the small business community that provides 44% of its total GDP.
International trade is another area that impacts Florida’s economy favorably, and this is thanks to small and medium-sized businesses. The state has 19 commercial service airports and 15 seaports. Together with its abundant resources, Florida has the ideal position for international trade.
Forming an LLC in Florida
It is more practical for most businesses to form an LLC in the state that the business is run. However, an LLC can be formed in any state where the business appoints a registered agent. Florida’s pro-business laws and low corporate income taxes have made it a popular state with LLC registrations.
Suggested resource: Wyoming Trust & LLC Attorney gives advice on the fastest way to start an LLC in Florida. The firm’s experts offer advice on business planning and proper asset protection.
Besides choosing a location for the business, a very important step is choosing a name for the LLC. As in most states, in Florida, the name of the LLC must be unique and must include the phrase “limited liability company” or any of its abbreviations.
The business name must also not refer to a government agency or other professional words used in other industries. In Florida, it is easy to conduct a name search for free with the Florida Secretary of State. Also, it is recommended that the business owner also purchases the appropriate URL for the business website.
Every LLC must have a registered agent from the state of Florida to receive important mail like tax forms, legal documents, and notice of lawsuits. The registered agent ensures these are forwarded to the business owners and that the business remains compliant. Their contact information is registered with the business formation documents.
Florida does not require an operating agreement for LLCs, but this is an important legal document. In the operating agreement, the owners state the details of ownership, operating, and overall procedures of the LLC. Placing the details in the agreement ensures all the members are aware of them, preventing future conflicts.