Choose A Business Name
In Florida, a sole proprietor may use his or her own given name or may use an assumed name or trade name. It is always a good idea to choose a name that is not too similar to another registered business because of common and federal law trademark protections. To make sure your business name is available, run a search in the following government databases:
What Is The Florida Business Tax Application
DR-1 Florida Business Tax Application, also known as the DR-1, is a form that must be filled out by the owners of different business entities in order to register, file, and pay Florida taxes, surcharges, and fees. If you are planning to engage in any activity in Florida, you must fill out this form before you begin.
How Do I Start A Sole Proprietorship Llc In Florida
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Your Personal Assets Are At Risk
Some sole proprietors dont realize that their personal assets could be at risk if the business goes into debt since there is no legal divide between the individual and the business. In other words, if your business goes under, everything from your home to your car anything registered in your name can be seized to discharge the liabilities, which can be unlimited. This is also true for lawsuits over damages resulting from an accident or negligence while conducting business.
These 10 Steps Can Help You Start Your Florida Business
There are many good reasons to start a business in Florida. The states government keeps regulatory requirements and business taxes low. There are no personal income, capital gains or death taxes. The states higher education institutions work closely with the business community to build programs that assist Floridas industries. While Florida is a great place to start a business, the process can be tricky and time consuming, so weve put together a list of the 10 of the most common steps for new businesses in Florida. While these are the most common steps to take, if you are considering opening a new business, you should consult your legal and financial advisors to guide you through the process.
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My Partner And I Have A Partnership Should We Register The Name Of The Partnership As A Fictitious Name Or Should We File A Partnership Registration Statement Under The Revised Uniform Partnership Act
- Partnerships may register with the Department of State under Part II of Chapter 620, F.S. Under this statute, filing is not required. However, a partnership should file under the partnership act or the Fictitious Name Registration Act.
- You should review both statutes to determine which fits your needs the most.
Florida Fictitious Name Registration
To file a fictitious name registration:
NOTE:
- Registration of a fictitious name is not required to form a corporation, limited liability company or limited partnership.
- A Fictitious Name Registration does not satisfy Workers Compensation Exemption requirements.
- A Fictitious Name Registration is not required for an individuals legal name, or for the name of a corporation, limited liability company or limited partnership.
Answers to common questions about e-filing a Florida Fictitious Name Registration are listed below.
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File A Trade Name And Advertise The Business
If you are using a business name that is not your own name, you must register that name with the Florida Secretary of State, Department of Corporations. You can submit the information by mail, in person, or online. There is a processing fee.
What’s more, Section 50.011 of the Florida Statutes requires that you advertise the business, at least once, in a local newspaper in the county where the sole proprietorship has its principal place of business. Contact the local newspaper for advertising rates.
What Are The Advantages And Disadvantages Of Sole Proprietorship In Florida
Recognize the pros and cons of sole proprietorship. A Florida sole proprietorship is the least complicated business structure that you can choose for your business. However, it is not without its disadvantages. Before starting a sole proprietorship, it is important to recognize the advantages and disadvantages of this business structure.
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Identify Your Registered Agent
Next, you need to identify and obtain a registered agent. A registered agent is a person or entity that can accept public service of any court documents on behalf of your startup. If you designate an individual, that person should reside in the Florida. If you select an entity, then that business must be authorized to transact business in Florida. You can search for registered agents in Florida online. You will need to list your chosen registered agent on your formation forms, discussed below.
What Licenses Do I Need To Start A Business In Florida
EINs must be obtained and used by every corporation. License: The next step is to apply for a license from the county to operate your business. The majority of Florida counties require a business license/occupational license or a business tax receipt to allow for the legal operation of a business there.
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How To Pay Taxes
Since taxes dont come out of the business owners pay like they would for an employee, the sole proprietor will pay an estimated amount quarterly. As a general rule, if a self-employed person expects to incur over $1,000 in taxes for the year, they will need to pay quarterly. While the business owner could wait to pay their taxes in the last quarter, there is the potential for an underpayment penalty from their state and IRS from underpaying the taxes.
There are a few ways to avoid an estimated tax underpayment penalty by either
Owing less than $1,000 in taxes for the current year or
Pay estimated tax payments that total at least 90% of the total tax liability for the current year or 100% the total tax liability for the prior year, whichever amount is lower.
As a new business filing for the first year, since there was no tax liability from the previous year, a sole proprietor may be able to wait until the end of the year to pay these taxes.
Whichever route you go, its important to continually set aside a portion of the profits from the business to pay taxes, rather than try to scramble to come up with the funds as the penalties and fines can be substantial for underpayment.
Does A Sole Proprietor Need An Ein
The EIN or Employer Identification Number is a unique identifying number with the Internal Revenue Service for a business. A sole proprietor is not required to have an EIN unless they have employees. A sole proprietorship without employees will simply use the owners social security number .
Some sole proprietors will get an EIN even if they are not required to as some of their clients will require the business to supply an identifying number which will be used to issue a 1099 at the end of the year. They could choose to use their SSN, but dont want to share it for privacy reasons.
Applying for an EIN for a sole proprietorship with the IRS takes about 5 minutes and there is no cost.
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How To Register A Business In Florida That Started In Another State
If you founded a startup in a state other than Florida, but youd like to conduct business in Florida, youll have to register as a foreign LLC or a foreign corporation. Registering as a foreign entity authorizes you to conduct business in Florida.
Lets circle back to the meaning of a foreign entity. When you register an LLC, for example, your LLC is referred to as a domestic LLC in the state where you conduct business. However, when you want to conduct business in another state other than where you originally formed your business, your LLC is referred to as a “foreign LLC.”
To register your startup as a foreign LLC in Florida, youll complete and file an Application by a Foreign Limited Liability Company for Authorization to Transact Business in Florida, along with a filing fee of $125. Suppose you would like to register as a foreign corporation. In that case, youll file a similarly named form Application by a Foreign Corporation for Authorization to Transact Business along with a filing fee of $70.
If you operate your startup in Florida prior to receiving authorization to conduct business as a foreign business, you will be liable for the fees you should have paid had you applied as a foreign entity. Additionally, the state can levy an additional civil penalties between $500 and $1,000 for each year you conduct business without authorization.
Why Is Registration Required
The Fictitious Name Act requires any person to register their fictitious name or dba name with the Florida Department of State prior to conducting business in Florida.
Registration of a fictitious name under the Fictitious Name Act allows:
- An individual or business to operate under a name other than their legal name.
- The public to search Sunbiz to determine what individual or business is operating under the fictitious name.
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How To Open A Sole Proprietorship In Florida
The first step in opening a Florida sole proprietorship business is to choose the name of the company. You can find a domain name here. Make sure your business is registered under a trade name and advertise it. Licences and permits must be obtained. In some cases, you may need to obtain an employer identification number. In the case of new hires, submit a report. You should open an account at a bank. Insurance is a must.
Do I Need Documentation For A Sole Proprietorship
Owners of sole proprietorships must pay all debts and taxes incurred by their businesses. In order to get a business up and running, setting up a sole proprietorship is the least expensive and easiest option. In most cases, you do not need to file any forms or documents other than a business name that differs from yours.
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Determine Any Other Tax Or Regulatory Requirements
If your business will have employees, you will need an employer identification number from the U.S. Internal Revenue Service. You can apply for an EIN online or by phone. Note that your business may obtain an EIN even if you have no employees. Having an EIN can make it easier to open a bank account. The State of Florida has additional requirements if you hire employees.
Florida also has business tax requirements. Consider reviewing the New Business Start-up Kit available from the Florida Department of Revenue.
Create A Business Plan
You may not have to submit a business plan to the State of Florida as part of the business registration process. However, a business plan is still a recommended box to tick while starting a small business in Florida. A business plan is a great way to keep yourself organized, stay focused on your goals, and understand how your enterprise can grow into the future. If you need to apply for a bank loan, the loan officer will likely want to see a business plan.
A business plan is a document that outlines:
- Company description
- Logistics and operations plan
- Financial plan
It can be helpful to look at some business plan examples for inspiration. When youre ready to get going, start with a business plan template as your foundation.
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Sole Proprietorship In Florida
What is a sole proprietorship?
Sole proprietorship is the simplest business structure in Florida. Its an unincorporated business owned by just one person, requiring the least amount of administrative work and the lowest startup fees. Since youre the only owner, you keep all the profits. A drawback can be that sole proprietors are required to file their business income as part of the personal income tax, which could mean that you end up paying more taxes than you would under some of the other business structures. Additionally, because your business and personal assets are lumped together, a sole proprietorship provides no protection from liabilities such as lawsuits or debts.
Is a sole proprietorship right for you?
If youre interested in starting a small business in Florida, a sole proprietorship might be right for you. This structure is best for individual producers or service professionals who dont intend to hire employees or drastically expand their operation. Common examples of sole proprietors include accountants, artisans, musicians, and consultants. This may also be ideal for you if youre looking for an affordable way to start a business in Florida, since the cost of registration is quite low.
Register a fictitious name
Get an Employer Identification Number
To Set Apart Properties
Setting apart assets is vital in company. By segregating your establishment possessions right into private LLCs, you put them out of the reach of your firms individuals or lenders who may intend to sue you.
A great deal of people improperly assume that if theyre running as an llc or a corporation, then their assets are safe, however thats not always true.
If you resemble the majority of entrepreneurs, your service is your biggest possession. Youre doomed if you shed the capability to operate.
Your service may be protected from your individual creditors, as well as you may be secured from your organizations financial institutions however, what protects your business enterprise from its own lenders?
If your LLC obtains filed a claim against, whatever inside it can be seized and also sold off. Even worse, the courts can put a lien on your firm and after that do a property freeze, which indicates that you have zero accessibility to your operating funding, you can not create checks or get funds from clients.
But waittheres more.
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Are There Any Exemptions From Registration
Yes, when the applicant is:
- A licensed attorney who is forming a business in order to practice law in the state of Florida.
- Registered with the Department of Business and Professional Regulation, and their licensing board does not require a fictitious name registration.
- A legal business entity already filed or registered with this office, whose status is active and not transacting business under any other name.
- A federally chartered corporation that is not transacting business under any other name.
Contact the Fictitious Name Registration Section at 850.245.6058 if you feel you may be qualified for an exemption not listed.
Sole Proprietorships And Partnerships
To create a Sole Proprietorship or a Partnership you will need to obtain a fictitious name then get a business license with the county you work in. You may then get a Florida Tax ID number from the Department of Revenue.
Florida Incorporation Service offers the filing of a DBA/Fictitious name with the Florida Department of State. We will provide contact information to the county to obtain your business license and to obtain the Resale Certificate with the Florida Department of Revenue when we email you the DBA confirmation.
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What Is An Llc How To Transfer Sole Proprietorship To Llc Florida
Limited liability business are fairly new kind of establishment entities, but widely known and practised around the world.
This sort of organization enables the firm to have the same limited liability as a corporation while approving flexibility with procedures.
Essentially, an LLC is the best cocktail of a corporation and a partnership. Not just do LLCs enjoy particular tax obligation advantages, but they likewise often tend to obtain increased trustworthiness and also regulation advantages.
Why is an LLC better?
Open A Bank Account For Your Sole Proprietorship
Even with a new business, it is advisable to maintain business finances separate from any personal bank account. This makes accounting and tax filing much easier. When opening a bank account for your business, the bank likely requires either your Social Security number or EIN as well as a copy of your business name filing.
Registering a sole proprietorship in the State of Florida is a simple, straightforward process. First, select an available business name. Second, register your business name with the State of Florida. Third, obtain any licenses required to operate your business. Fourth, comply with any other tax or regulatory requirements. Finally, open a bank account for your sole proprietorship. Following these steps will ensure that your business operates smoothly from day one.
This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.
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Advantages And Disadvantages Of Sole Proprietorships
Starting a business as a sole proprietor is very popular because you can get started without paperwork. Thus, they can be a great option for people looking for the cheapest and simplest way to start a business.
However, sole proprietorships also have some disadvantages that need to be considered. Since a sole proprietorship does not create a separate business entity, they leave the business owner with unlimited liability risk. If a lawsuit is filed against the business or the business has debts that cannot be paid, the owner can be held personally liable. This means that the business and individual who owns the business are viewed as the same and that the owners personal assets can be seized or used to resolve lawsuits or repay debts. This is one of the key differences when comparing an LLC vs a sole proprietorship.
Recommended Content:For a full breakdown, check out our guide on the advantages and disadvantages of sole proprietorships. This guide details the 4 main advantages and disadvantages that new business owners should be aware of when operating as a sole proprietor.
