Florida LLC Formation
Are you a business owner or entrepreneur in Florida? Starting an LLC could be a great idea for you! This process offers several benefits, including limited liability protection, like a corporation. Additionally, it provides easy pass-through taxation, like sole proprietorships and partnerships. With our helpful 5-step guide, we walk you through the process of how to start an LLC in Florida.
Step 1: Name Your Florida LLC
Choosing the appropriate name for your Florida LLC is an important first step in starting your LLC. Your name should stand out, be easy to recall, and convey your company’s message, product, or brand.
It must also be one-of-a-kind when compared to other businesses that are already registered in Florida. Likewise, make sure to avoid certain restricted words that are not permitted by the state.
To create a name that sets you apart, you should be imaginative and resourceful while also adhering to Florida’s LLC name guidelines. This ensures that your company’s name is in compliance with the state’s rules and regulations.
Florida LLC Name Guidelines
- Company Indicator: Florida Law requires all LLC names to end with the words Limited Liability Company, or an abbreviated version such as LLC or L.L.C. Current filing trends indicate that LLC is the most popular company ending for Florida LLCs.
- Distinguishable Name: Selecting a name for your business requires careful consideration. Your name should be memorable and catchy, setting you apart from a marketing perspective. However, it is equally important to comply with Florida’s naming regulations and avoid using names that are already registered in the state.
- Name Restrictions: Refrain from using the words bank or insurance. Also, suggesting that your company is a government-affiliated agency or that it is anything other than an LLC.
Florida LLC Name Availability
Once you’ve narrowed your options and have a name you would like to use, make sure to run a business name search on the Florida Division of Corporation’s page.
Review the full list of name guidelines for Florida before making your final decision.
Step 2: Appoint a Florida Registered Agent for Your LLC
Every LLC that is registered with the state of Florida is required to appoint and maintain a Registered Agent in compliance with state regulations.
This individual or company acts as the primary contact between the LLC and state and federal agencies. Including, the Secretary of State and the IRS.
Florida Registered Agent Options
- An Individual Resident of Florida
- A Registered Agent Service Company
Florida Registered Agent Requirements
- A Florida Registered Agent is required to have a physical address located within the state of Florida where they are available during normal business hours, Monday-Friday.
- Individuals acting as a Florida Registered Agent must be residents of Florida and at least 18 years of age.
- If a Service Company is serving as the Registered Agent, it must be registered to do business with the state of Florida.
Step 3: Submit LLC Articles of Organization to the Florida Secretary of State.
After choosing an available and unique name for your Florida LLC, you need to file the Articles of Organization with Florida’s Division of Corporations.
This is done either online through Florida’s SunBiz portal or by mail, and you’ll need to include the filing fee of $125.00 in order for the state to process your formation.
What’s Included in Florida LLC Articles of Organization?
- LLC Name
- Company Address
- Registered Agent Information
- Member Details
- Organizer Details
Step 4: Get a Florida LLC Operating Agreement
Your company’s ownership, management, and operations should be clearly defined in an operating agreement. Although it is not mandatory in Florida for your LLC to have one, it is highly recommended.
If you have multiple owners, the operating agreement serves as a reliable guide on how to add or remove members and how to resolve conflicts between them.
Even if there is only one member in your LLC, the operating agreement confirms that the LLC is separate from you as an individual. Then, it helps protect your limited liability.
What to Include in Your Florida LLC Operating Agreement?
Your LLC Operating Agreement should include specific details about your LLC. Such as, the number of owners, the type of business it conducts, and how profits are distributed.
Although there are no set requirements for what to include, common elements within an LLC Operating Agreement are listed below. You can adjust the contents to fit your specific needs.
- Company Name
- Company Address
- State of Formation
- Date Formed
- Registered Agent Details
- Business Purpose
- Duration of the Business
- Preferred Tax Treatment
- Management Structure
- Member Details
- Manager Details (if applicable)
- Member/Manager Duties/Responsibilities
- Ownership Percentages
- Member Contributions
- Voting and Approval Rights
- Procedures for Adding or Removing Members
- Dissolution Procedure
- Liability Statement
- Death of a Member Provisions
- Dispute Resolution Details
- Other provisions as needed
Step 5: Apply for an EIN for Your Florida LLC
After the Florida Secretary of State accepts and files your Articles of Organization, it’s important to get an EIN. Meaning, Employer Identification Number, from the IRS.
This unique 9-digit number is assigned by the Internal Revenue Service (IRS) and is needed for your LLC to open a business bank account. Likewise, hire employees, or file/pay federal taxes.
You can use a third-party service to obtain an EIN for your LLC or apply for one online through the IRS website. The information you’ll need is listed below.
Default Tax Classifications
The IRS uses the total number of owners to determine how the LLC is taxed initially. Below is a simplified explanation of the default classifications and full details are found in the Classification of an LLC section of the IRS website publications.
Single Member LLCs
An LLC with one owner is considered a “Disregarded Entity” and thus is taxed as a “Sole Proprietorship” by default.
Multi-Member LLCs
If the company has more than one owner, then by default the IRS classifies the company as a “Partnership” for tax purposes.
In both cases, the LLC does not pay taxes on its own behalf. Instead, each LLC owner reports their share of the LLC’s profits & losses and taxes are paid on the individual’s tax return. This is what is often referred to as “pass-through” taxation.
Elective Tax Classifications
One of the benefits of structuring your company as an LLC is the flexibility you get when it comes to taxes. While the IRS determines the default tax classification for your LLC, the owners can elect to be taxed differently. You can file a Entity Classification Election which can result in big tax savings in some cases.
C Corporation (C Corp) Tax Election
Any LLC that is unsatisfied with the default tax classification can file IRS Form 8832 to elect C Corporation Tax Status if it wishes to be taxed as a corporation instead of the default tax status.
S Corporation (S Corp) Tax Election
An LLC that is eligible to be taxed as a corporation AND meets all the IRS mandated eligibility requirements can file IRS Form 2553 to request S Corporation Tax Status.
Conclusion
Navigating the technicalities of an LLC is challenging, but you don’t have to do it alone. Professional guidance can streamline these steps. Consequently, ensuring that you meet all legal requirements, get documents in order, and set your business up for success from the onset.
If you’re ready to take the leap into entrepreneurship with your Florida LLC, consider reaching out to our experts to do the tedious work for you. Embark on your business journey with confidence and the right support today!
