Steps to Forming an LLC
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How to Form a Florida LLC
Forming an LLC in Florida will help protect your personal assets from lawsuits and judgments against your business. An LLC is a business structure that separates your business and personal assets. By not having your business in a separate business structure, you can be held personally liable for certain debts and lawsuits incurred by the company. Forming a Florida Limited Liability Company does not require an attorney and you can save a lot of money if you do it yourself with the six simple steps below.
How Much Does a Florida LLC Cost?
The filing fee for a Florida Limited Liability Company is $125, which includes the mandatory registered agent charge of $25 and a filing fee of $100. This does not include the cost of any additional optional services such as Certified Copies ($30 each) and Certificates of Status ($ 5 each).
Florida Annual Report and Annual Fees
The Florida Department of State, Division of Corporations requires all LLCs to file their annual report between January 1st and May 1st. The filing fee for a Florida LLC annual report is $138.75.
- Minimum Number – one or more
- Members/Managers- at least one is required to be listed in the Articles of Organization
- Residence Requirements – none specified
- Age Requirements – 18 years and older
In addition to forming your Florida LLC, you will need to check for Florida business licenses and permits.
Steps to Forming a Florida LLC
Step 1. Naming Requirements
Florida LLC Name Search
Before settling on a business name, you want to be sure nobody else is using it as each LLC must have a unique name. Here’s how to search available LLC names in Florida.
Your company name must end with the words Limited Liability Company or an abbreviation of these words (“LLC,” “L.L.C.,” “Limited,” “LTD.,” “LTD”.). Check out our article on naming your LLC for all of the requirements that you must follow when naming an LLC.
Now that you have the perfect name, you want to be sure nobody else is using it as each state requires a unique name per LLC or Corporation. To check if your name is being used, visit our list of Secretary of State offices to do a free Florida LLC name search.
Step 2. Choosing a Registered Agent
What is a Registered Agent?
A registered agent is the central point of contact for the LLC, that can be either an individual or business entity, that receives important legal documents, tax notices or communications with the state.
Registered Agent Requirements
The registered agent must have a physical presence in Florida but may be an individual resident, domestic or foreign corporation authorized to transact business in Florida. The registered agent must also have a physical street address in Florida and a Post Office Box is not acceptable. If the registered office includes a suite number, it must be included in the registered office address.
This physical address allows for the service of process should the LLC need to be served with a lawsuit.
Who can be a Registered Agent in Florida?
A registered agent in Florida can either be a resident of the state or a corporation authorized to do business in the state.
Provided you as the business owner have a physical presence in Florida, you can be the registered agent, however, there are some privacy benefits to having a third-party registered agent.
Check out our article on LLC Registered Agents for more details.
Step 3. Filing the Articles of Organization
The Articles of Organization is the paperwork used to form an LLC with the Florida Department of State, Division of Corporations. This is the most important step and many people believe that you need an attorney to file.
While we don’t discourage having an attorney, filing a Florida LLC can be done by most people, but you can save considerable money over an attorney and make sure everything is filed correctly by using a formation service such as ZenBusiness.
Step 4. Creating an Operating Agreement
An LLC operating agreement is not required in Florida but is typically a good idea, especially for an LLC owned by multiple people. The primary function of the operating agreement is to govern the relationship between the owners of the business, but also outlines who makes what decisions, how profits or losses are distributed and the operating procedures of the LLC.
Step 5. Getting an EIN
What is an EIN?
The Employer Identification Number (EIN), or Federal Employer Identification Number (FEIN), is used to identify a business entity. It is essentially a social security number for the company.
In addition to the EIN being an identifying number for the LLC it serves a few other purposes such as:
- Opening a business bank account
- Federal and State tax purposes
- The business account to pay payroll taxes for employees paid by the company
How to Register for an EIN for a Florida LLC
To file an EIN for your LLC, visit the Internal Revenue Service (IRS) or obtain the SS-4 form. They show the steps on how to apply, but here is a video on how to apply for an EIN for more details. In about five minutes, you will have your number free of charge. Be sure to wait until your LLC is approved before applying for your EIN as the name that is registered for the LLC must be the same as the EIN.
Step 6. Selecting the Tax Status of the LLC
One of the advantages of an LLC is the flexibility in taxation as there are four ways an LLC can be taxed, compared with two ways for a corporation.
- Single Member LLC – An LLC with one member automatically becomes a single-member LLC with the IRS. The owner simply files their Schedule C with their 1040 at the end of the year. Filing as a single-member LLC means the entity does not pay sales tax and goes to the owner which is called pass-through taxation. The owner pays self-employment taxes on the net profit of the LLC, which while simpler to handle taxes, may be more costly.
- Partnership LLC – An LLC with two or more members is automatically considered a Partnership with the IRS and will file Form 1065. Like the sole-proprietorship as a pass-through entity, the LLC taxed as a Partnership pays no income tax and profit and losses flow to each member’s Form 1040s via Schedule K-1 of Form 1065.
- C Corporation LLC – An LLC can elect to be taxed as a C Corporation by filing IRS Form 8832. The major difference as an LLC that is taxed as a C corporation is that now the LLC pays tax on the profits and losses and are not directly passed down to the members. Most, but not all will find filing as a C Corporation will cost more in taxes as now the LLC has double taxation where there is a tax on the profits and dividends.
- S Corporation LLC – To get S Corporation status, you will file Form 2553 with the IRS. What makes the S Corporation attractive unlike the sole proprietorship or partnership is that you can potentially shield some of the profits from being subject to self-employment taxes. Dividends aren’t typically subject to self-employment taxes which is a large potential savings. There will be more work in accounting an LLC that elected S Corporation status.
Each of the four ways for an LLC to be taxed in Florida can have a major impact on the taxes that are charged depending on the business and the member’s personal finances. It’s a very good idea to work with an accounting professional to see which one is most efficient for the business and members
Don't want to go it alone but don't want the expense of an attorney? Another alternative is to use an LLC formation service that will do the formation at a low cost.
ZenBusiness has a special offer right now to form an LLC for $49 plus the cost of the state fees.
Opening a separate LLC bank account is important as it establishes a clear division between your personal and business finances. Should the LLC be sued and you are using a personal bank account for your LLC’s finances, that would be considered a commingling of funds, which may make it difficult to maintain the liability protection of the LLC. To open a bank account for your LLC, you will need to bring the following with you to the bank: A bank resolution may be needed depending on the bank and the tax election of the LLC. A banking resolution is a formal document that provides authorization for who has access to the LLC bank account. Learn more about opening a bank account for an LLC If your business sells a taxable product or service you will also need to apply for Florida Sales Tax Permit. The sales tax permit can be obtained through the Florida Department of Revenue. There is a $5 fee to apply
Step 7. Open a bank account for your business
Step 8. Obtain a sales tax permit (not required for all businesses)
Opening a separate LLC bank account is important as it establishes a clear division between your personal and business finances. Should the LLC be sued and you are using a personal bank account for your LLC’s finances, that would be considered a commingling of funds, which may make it difficult to maintain the liability protection of the LLC.
To open a bank account for your LLC, you will need to bring the following with you to the bank:
A bank resolution may be needed depending on the bank and the tax election of the LLC. A banking resolution is a formal document that provides authorization for who has access to the LLC bank account.
Learn more about opening a bank account for an LLC
If your business sells a taxable product or service you will also need to apply for Florida Sales Tax Permit. The sales tax permit can be obtained through the Florida Department of Revenue. There is a $5 fee to apply