4 Reasons Behind the Booming Startup Community In Florida
By Space Coast Daily // December 3, 2021
The sunshine state of Florida is being touted as the next Silicon Valley of startups. According to recent Conbase data, companies in Florida have raised almost $1 billion in early-stage funding for 2021 – almost 3 times the amount raised in 2020.
There have also been many startup success stories like Hai Dinho, who went from college student to CEO of ‘Everyday Biz Solutions LLC’. On the other hand, cities like Orlando have also been in the headlines as the brewing hub of startups, making it the place to be if you are an entrepreneur launching a new business or thinking of relocating your startup.
So, what is behind the big rush to Florida for startups and budding entrepreneurs? Check out below a few of the reasons why startups are choosing Florida as their location right now.
The Income Tax Loophole Makes Florida An Attractive Spot For Risk Laden Startups
One of the most alluring reasons behind Florida being favored by startups is the lack of income tax requirements. Florida is one of the few states that do not charge income tax for individuals. Therefore startups registering as sole proprietors, partnerships, and S corporations are exempt from paying income tax.
The only exception is C-corporations. This will, however, depend on your choice of business structure and its suitability for your business. For instance, many startups tend to opt for corporations or sole proprietorships instead of incorporating as an LLC. For a Florida LLC formation, there is an additional filing fee of $125 and an annual report fee of $138.75.
The sunshine state of Florida is also known for its favorable business tax rates. While the corporate tax rate in Florida is 5.5 percent, the various exceptions often reduce this significantly- which can be attractive for cash-strapped startups. In fact, 99 percent of corporations do not pay tax in Florida according to a recent report.
The Tax Foundation also ranked Florida as the 4th most attractive state in its State Business Tax Climate Index for this year. There are also further reductions on the horizon for startups in Florida. In September, the state announced a 1 percentage point reduction for corporate income tax, which makes Florida’s corporate income tax 3.55 percent right now.
Florida’s Reputation For A Thriving Startup Community Promises Support For Entrepreneurs
The state of Florida is also known for its supportive startup ecosystem. Entrepreneurs have a long list of resources at their disposal and a thriving startup support community.
For instance, there is the Tampa Bay WaVe which focuses on helping tech startups launch and expand their businesses. There are also other startup communities like the Founders Institute and Nova SouthEastern. At regularly hosted “Meet The Startup Leaders” events, startup entrepreneurs get the chance to interact with other investors and accelerators.
In South Florida, there are events like the South Florida Aspiring Entrepreneurs, 4Geeks Academy, and Startup Grind Miami. For those seeking venture capital or funding,
The Florida Venture Capital Conference and Florida Investment Network can be invaluable. Finally, for events and resources aimed at startups, the state offers Biz to Biz Networking or early-stage consultancies like All-Star HR Consulting.
The Booming Infrastructure Support Means Greater Shipping Links
For a startup to have the best chance, it is not just about the right financial support but also the right infrastructural support. Along with a thriving labor market, Florida also rapidly established itself as one of the premier shipping ports and global hubs.
For a startup looking to have a global reach (and widen supply network), the advantages that such a developed infrastructural network can provide can easily define its path to success.
Access To Funding Can Be Easier For Startups In Florida
Another important point of consideration for startups: financing. Securing funding to execute their plans is critical to ensuring a startup’s success and a market where investors are willing to financially back startups is always seen as a good thing.
According to the U.S. News and World Report, Florida is fifth on the charts for venture capital funding. In fact, Miami has hit record levels of venture capital funding in the second quarter of 2021- an incredible $831 million in venture capital investments.
Last but certainly not least, entrepreneurs may also be able to capitalize on the lower cost of living in Florida to negotiate lower startup costs for their business. However, while commercial real estate prices have historically been below market, they have been rapidly rising.
Even with those rising costs, the advantages for startups in Florida are rapidly becoming clear. The local economy is quickly gaining attention and investors from high-profile investors and the local laws are aimed at encouraging startups making it all the more alluring for budding entrepreneurs.