The requirements for forming an LLC in Florida are surprisingly simple.
- Florida is home to 2.5 million small businesses
- The LLC is the state's most popular business structure
- LLCs offer legal protection and tax flexibility
- Starting an LLC requires five simple steps
Florida has 2.5 million small businesses, as the state offers tremendous tourism, agriculture, and science sector opportunities. When starting a business in Florida, you might want to create an LLC, or limited liability company, because of its benefits.
In short, an LLC is a business structure that protects its owners from personal responsibility for liabilities and debts. These organizations combine elements of partnerships and corporations, which is perhaps why they're Florida's most popular business structure.
While forming an LLC might sound like significant work, the process is actually pretty simple and can be broken down into five easy steps. Here's some information on what's required for a Florida LLC.
Step 1: Name the company
The first thing you'll do when creating an LLC in Florida is come up with a name for the company. There are some basic requirements when selecting a name, as it must include the phrase “limited liability company” or the abbreviation LLC.
The name can't use words that could confuse it for a government agency, like treasury or state department, and restricted words such as bank or university could require additional paperwork.
You must also ensure the business name is available in Florida and isn't currently in use. There are name databases that can help you determine whether your chosen name is already in use.
Giving your business the right name is critical to its success, so take proper care when completing this step.
Step 2: Choose a registered agent
Once you have a name, you must appoint a Florida registered agent. This individual or entity is responsible for receiving the company's tax forms, legal documents, and government correspondence. Basically, the registered agent becomes the business's contact person for the state.
The registered agent must be a full-time Florida resident or a corporation legally operating in the state. Typically, the person starting the LLC will become its registered agent, but it is possible to appoint a third party if necessary.
Step 3: File your articles of organization
Before the LLC becomes official, you'll need to file Form LLC-1 Articles of Organization with the Florida Division of Corporations. Filing these documents will cost you $125 and require details including the LLC's name and place of business, the registered agent's information, the name and addresses of all LLC members, and the effective date of the LLC. These documents should also state if the LLC is member-managed or manager-managed.
Member-managed arrangements occur when there are only a few members and they wish to run the business themselves. A manager-managed LLC could be an option if there are a larger number of members and/or when members don't want to be involved in the company's day-to-day operations.
You can file your articles of organization online via the Florida Department of State Sunbiz website or through the mail. It typically takes about a week to finalize the process when you file your papers online and two weeks when you mail the documents to the government.
Once the state approves your filing, you can download and store the documents with the rest of your business records. You can also correct mistakes and reapply if you receive a rejection letter.
Step 4: Create an operating agreement
Although you don't necessarily need an operating agreement to start an LLC in Florida, it's highly recommended. This paperwork creates a legal document that outlines company ownership and its operating procedures.
As a result, this contract puts all owners on the same page and creates protocols if there's a future disagreement.
Items your operating agreement should address include the LLC's purpose and services, the names and addresses of all members, what each member is contributing to the LLC, and each member's ownership stake.
The document should also incorporate other information such as the process for admitting new members, the procedure for electing a manager, the LLC's meeting schedule and voting process, and any dissolution terms deemed necessary.
Essentially, the operating agreement becomes a reference point for many business decisions the LLC could face.
Putting this document together can be a bit confusing, but it's worth the effort because of the clarity and protection it offers.
Step 5: Select a tax method
LLCs can be taxed as a pass-through entity or corporation.
The company isn't responsible for filing separate tax forms if you wish to be taxed as a pass-through entity. Instead, each LLC member reports business earnings on their personal tax returns.
LLCs taxed as corporations must pay federal corporate taxes and file their business taxes separately from members' personal income tax.
Federally, all LLC members must pay 15.3% self-employment tax, and you'll have to withhold social security and Medicare for your employees.
Every Florida business that is taxed as a corporation or has employees or multiple owners must apply for an EIN, or employer identification number. You'll also need this number if you wish to apply for business loans or credit cards or open a business bank account.
Your EIN is used to track your business's tax reporting and essentially functions as a social security number unique to the company.
Learning your responsibilities when starting an LLC
Keeping up with the requirements related to Florida LLC creation can be overwhelming, especially if you're trying to get your business off the ground at the same time. Fortunately, assistance is available through some Florida attorneys, who can put an operating agreement together for you and file all the necessary paperwork with the state. The result is a streamlined LLC creation that's free from errors and completed quickly.
PeytonBolin offers LLC creation packages in Florida. Our experienced attorneys will put your LLC documents together from start to finish, giving you one less thing to worry about as you start your company. Contact PeytonBolin to learn more about our Florida LLC creation and operating agreement services.