Florida is one of the more business-friendly states in the nation. With an incredible climate, sandy beaches, and a thriving tourist economy, this state enables entrepreneurs to start a successful business in a range of industries. Small business owners can benefit from no personal income taxes, supportive government incentives, and a growing economy.
If you plan to start a business in Florida, choosing how to structure it is vital to maximizing your earning potential. By forming an S corporation (S corp) in Florida, you can set your business up to save a significant amount come tax season. This guide will walk you through the process of forming a Florida S corp and provide tips to help you keep it compliant year after year.
Want to form an S corp elsewhere? Check out our other How to Start an S Corp guides to learn more.
We recommend using a professional formation service like Tailor Brands to get your S corp up and running in no time.
Factors to Consider Before Starting an S Corp in Florida
Before forming a Florida S corp, you have to consider the following factors:
- Is an S corporation the best strategy for your business?
- S corporation restrictions
- Are S corp tax advantages right for you?
Is an S Corporation the Best Strategy for Your Business?
For help with choosing the right structure for your business, visit our Choosing a Business Structure guide.
S Corporation Restrictions
S corps have several restrictions, such as being limited to one class of stock and 100 shareholders. Read our What Is an S Corporation guide for full details.
Are S Corp Tax Advantages Right for You?
An S corporation is a tax designation that can be elected by a limited liability company (LLC) or corporation. With an S corp, business owners are considered employees of the company and must receive a reasonable salary. Since all S corps technically have employees, the s corp must run payroll.
In order to benefit from a Florida S corp tax designation, your business needs to make enough money to offset payroll expenses. Furthermore, S corps are beneficial for business owners who take large distributions in addition to their salary.
How to Form a Florida S Corp
There are two main ways to start an S corp:
- By forming an LLC and electing S corp tax status from the Internal Revenue Service (IRS) when you request your employee identification number (EIN)
- By forming a corporation and electing S corp status from the IRS
We recommend forming an LLC because it’s simpler and more cost-effective.
Recommended: If you have an existing LLC, visit our How to Convert an LLC to S Corp guide.
Steps for Forming an LLC and Electing S Corp Status in Florida
Starting a Florida LLC and electing S corp tax status is easy. You can use our guides to start an LLC with the S corp status yourself, or you can hire a service provider like Tailor Brands to guide you through this process.
There are five basic steps to start an LLC and elect S corp status:
Step 1: Name Your LLC
Step 2: Choose a Registered Agent
Step 3: File the Articles of Organization
Step 4: Create an Operating Agreement
Step 5: Get an EIN and File Form 2553 to Elect S Corp Tax Status
Step 1: Name Your LLC
Choosing a company name is the first and most important step in starting your LLC in Florida.
Be sure to choose a name that complies with Florida naming requirements and is easily searchable by potential clients.
1. Follow the naming guidelines for a Florida LLC:
Your name must include the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.).
Your name cannot contain language implying that the LLC is organized for an unlawful purpose or one not stated in its Articles of Organization.
Your name cannot contain language implying that the LLC is connected with a state or federal government agency or corporation.
Certain restricted words (e.g. Bank, Attorney, University) may require additional paperwork and a licensed individual to be part of your LLC.
Your name must be distinguishable from any existing business in the state, except for certain fictitious name registrations, general partnership registrations, and limited liability partnership statements. Do a Florida LLC name search to determine if your name is unique.
You can also read the Florida state statute about LLC naming guidelines for more information.
2. Is the name available in Florida? You can use the Florida Secretary of State’s business entity search on the state’s SunBiz website to see if your desired LLC name is available.
3. Is the URL available? We recommend checking to see if your business name is available as a web domain. Even if you don't plan to create a business website today, you may want to buy the URL in order to prevent others from acquiring it.
Find a Domain Now
Step 2: Choose Your Florida Registered Agent
You must elect a registered agent for your Florida LLC.
An LLC registered agent will accept legal documents and tax notices on your LLC's behalf. You will list your registered agent when you file your LLC's Articles of Organization.
Many business owners choose to hire a registered agent service. Many of these services will form your LLC for a small fee and include the first year of registered agent services for free.
Florida Registered Agent Consent to Appointment
Registered agents in Florida must consent to their appointment by signing the Articles of Organization in written or electronic form.
Step 3: File the Florida LLC Articles of Organization
The Florida Articles of Organization is used to officially register an LLC.
Step 4: Create an LLC Operating Agreement
An LLC operating agreement is a legal document that outlines the ownership and member duties of your LLC.
For more information, read our Florida LLC Operating Agreement guide.
Our operating agreement tool is a free resource for business owners.
Step 5: Get an EIN and Complete Form 2553 on the IRS Website
An EIN is a number that is used by the US Internal Revenue Service (IRS) to identify and tax businesses. It is essentially a Social Security number for a business.
EINs are free when you apply directly with the IRS.
Elect S Corp Tax Status
During the online EIN application, the IRS will provide a link to Form 2553, the Election By a Small Business form.
Visit our Form 2553 Instructions guide for detailed help with completing the form.
This is the form to elect S corp tax status for your LLC:
Ready to start saving on your taxes?
We recommend using a formation service to start your Florida S corp for you, so you can focus on the things that matter most — growing your business.
Keep Your Florida S Corp Compliant
After starting your Florida business and electing the S corp tax designation, you must obey Florida state and local laws to keep it in good standing. All Florida businesses must file an annual report each year and pay state-specific taxes.
Florida S Corp Annual Report
All Florida LLCs taxed as S corps must file an annual report with the Florida Division of Corporations. These reports ensure the state has updated information about your business. Even if nothing changes from one year to the next, you must still file an annual report for your S corp.
Annual reports are due before the third Friday in September each year, and you can file online at the Florida Division of Corporations website. Failure to file will result in the dissolution of your business.
Visit our step-by-step Florida Annual Report guide for more information.
Florida S Corp Taxes
S corporations benefit from pass-through taxation, meaning the business’s profits pass-through to S corp owners’ individual tax returns. S corp owners make money from their reasonable salary and distributions, and Florida S corp owners can expect to pay the following taxes:
Federal Self-Employment Taxes
Self-employment taxes cover social security and medicare. The self-employment tax rate is 15.3%, and money you take as salary will be subjected to the self-employment tax. However, distributions are not subjected to this tax.
Federal Income Taxes
Your federal income taxes will depend on your tax bracket, and the cutoffs for individual tax brackets as well as the percent owed will change each year. Both your salary and distributions are subjected to federal income tax.
Florida Income Taxes
Florida has no state income tax. This means Florida business owners must pay federal income taxes, but don’t owe additional tax on their income to the state.
Florida is one of only nine states with no income tax. Some states have an income tax rate of more than 8% so Florida’s 0% rate likely contributes to its position as a rapidly growing, US economic hub.
Florida Sales and Use Tax
Florida has a state sales tax rate of 6%. Many Florida counties also levy a county tax known as a discretionary sales surtax — a sales tax in addition to the state tax rate. If your business sells taxable goods or services, you must register as a sales and use tax dealer with the Florida Department of Revenue.
You can pay this tax online, and your filing frequency will depend on how much you collect in annual sales taxes. Visit the Florida Department of Revenue website for more information.
Additional State Taxes
The Florida Department of Revenue also oversees the collection of various state-specific taxes your business may have to pay, depending on its location, industry, and number of employees. Here are a few examples of these additional taxes:
- Communications Services Tax
- Gross Receipts Tax on Utility Services
- Lead-Acid Battery Fee
- New Tire Fee
- Severance Taxes
To learn more, visit the Florida Department of Revenue website. This site’s Florida Business Tax Application tool and tax guides and tutorials will help you determine which taxes your business must pay each year.
Florida Local Taxes
The local laws and ordinances in Miami may differ from those in Tampa. Regardless of where you live in Florida, we recommend you check with your local jurisdiction to ensure your business obtains all required local permits and follows local regulations.
Start a Florida S Corp FAQ
What is an S corp?
An S corporation (S corp) is a tax designation that an LLC or a corporation can elect.
Are taxes for LLCs and S corps the same?
No. The default taxes for an LLC and taxes for an S corp are not the same.
With an S corp, owners pay personal income tax and self-employment tax on a predetermined salary. They may then withdraw any remaining profits from the business as a “distribution,” which isn’t subject to self-employment tax.
With an LLC, all company profits pass through to the owners’ personal tax returns, and then the owners must pay personal income tax and self-employment tax on the entire amount.
What is a reasonable salary for an S corp?
S corp owners are required to earn a “reasonable” salary, which basically means a fair market rate based on the individual’s qualifications as well as their duties and responsibilities at the company. The purpose of this requirement is to prevent S corp owners from paying themselves an artificially low salary in order to pay less self-employment tax.
What is a distribution?
A distribution is a dividend that a shareholder/owner can take from the business profits that remain after a company pays all of its employee salaries. Shareholders must pay personal income tax on distributions, but distributions aren’t subject to self-employment tax.
Can I still use my DBA name if I elect to be an S corp?
LLCs and corporations that operate under a “doing business as” (DBA) name can choose the S corp election.
Can I switch from an LLC to an S corp in Florida?
If you already formed an LLC in Florida, you can update its tax status to an S corp — as long as your business meets the IRS’s requirements for an S corp. Electing S corp status for your LLC changes its tax status, not its business structure.
Is Florida a good state in which to form an S corp?
The best place to start your business and elect the S corp tax designation for it will be where you plan to have its primary operations. While there’s no “best” state in which to form an S corp, Florida certainly offers several benefits — from tax benefits and a great location to a thriving economy.