How To Start a Business in Florida
Florida is a small-business state. As of 2022, there are over 3.0 million small businesses in Florida, representing 99.8% of all businesses. Applications for business registrations are also on the rise. The Business Formation Statistics from the US Census Bureau revealed Florida had a 27.3% increase in new business applications in 2021. This growth rate puts the Sunshine State second in the US, with over 632,000 business applications in the fiscal year. The majority of these registrations are for small businesses.
What makes Florida the ideal business location? Low tax rates, coastal location, and favorable economic policies encourage small-scale entrepreneurs to start a business in Florida. The barrier to entry is also low, leveling the playing field for veteran and budding entrepreneurs alike. Still, persons who wish to stake their business in Florida need to make a series of accurate decisions and take important steps to ensure their business meets legal standards.
That said, starting a business in Florida is uncomplicated with the right information, and it is possible to DIY without necessarily hiring an attorney or business consultant. Of course, there are advantages to hiring professionals, especially as the business expands. However, in the set-up phase of a new business, owners typically follow a similar pattern of steps. It starts with understanding the business enterprise to pursue in the first place.
Florida Economic Trends
- Florida is the fourth-largest economy in the United States and the 16th-largest in the world.
- The Sunshine State has a Gross Domestic Product (GDP) of 1.4 trillion dollars (as of 2022) and accounts for 5.23 percent of America’s GDP.
- Small businesses make up 99.8 percent of all businesses in Florida
- Small businesses made up 94.5 percent of exporters in the state
- Small business exporters accounted for 57% (23.7 billion dollars) of total exports in 2020, according to data from the Census Bureau.
Step 1: What Kind of Business Should I Start in Florida?
The foundation of Florida’s 1.2 trillion dollar economy is propped up by five major sectors:
- Finance and finance-related enterprises
- Professional and business services
- Government and government-related enterprises
- Educational services and health care
- Wholesale trade.
Combined, the aforementioned industries contribute 708.7 billion dollars (59.1 percent) to the gross domestic product (GDP). Meanwhile, relatively smaller economic beams like retail trade, information services, manufacturing, and construction also contribute to making Florida the fourth largest economy in the United States.
Finding a niche in the most profitable trades in Florida requires an intending business owner to do market research. Specifically, the individual must identify service gaps at the local and state levels if they wish to run a successful business and expand in the future. Intending business owners in Florida may use free and low-cost resources provided by the Small Business Administration to get advice applicable to their locale.
How To Do Market Research in Florida
The primary aim of doing market research is to identify product and service gaps in Florida and start a business that’s propped to fill those gaps. Furthermore, market research helps prospective business owners evaluate the economics of scale for their business idea. Florida entrepreneurs performing market research must find answers to the following questions:
- Why start that specific business (is it a matter of pursuing interests or monetizing skills?)
- What is the viability of that product or service at the local level and at scale? (This involves evaluating the pros and cons of starting that business in a particular location)
- What business structure is best fit for the business idea (e.g., sole proprietorship, general or limited partnership)
- What business model is appropriate to use (e.g., affiliate, subscription-based, or franchise model)
- How will the business be financed in the beginning and at scale?
- How much time is available to commit to the business?
- Will the business need a physical space, or is it feasible to start at home or on the Internet?
Step 2: How to Write a Business Plan
A business plan is a roadmap that guides founders on each stage of their venture. It also serves as a still picture for comparing expectations and realities down the road. There are several templates and guides for creating and developing a business plan online. In any way, a good business plan should contain the following parts:
- Executive Summary
- Product or Service Description
- Market Analysis
- Competition Analysis
- Production & Marketing plan
- Organizational and Management Plan
- Financial Plan and Business Projections
- Risk Analysis.
The content of some parts is standard, while others will depend on the nature of the business. Furthermore, the format of the business plan will depend on whether the founder wishes to craft a traditional or lean business plan. Traditional business plans are generally detailed, and founders write this type of plan if they are going into partnerships, creating a corporation, or seeking investment. On the other hand, lean business plans are suited for self-starters, founders bootstrapping their ventures, and entrepreneurs who want a quick launch.
Step 3: Do I Need a Business License in Florida
In many cases, yes. A business owner must obtain a license or permit if the nature of their business requires it. For example, starting a daycare business requires the founder to apply for a license. Likewise, professional occupations like lawyers, health service providers, financial service providers, maritime service businesses, as well as individuals dealing in alcoholic beverages, firearms, and ammunition in Florida require a municipal, state, or federal license as applicable.
The agency handling the licensing will depend on the nature of the business. Generally, professional associations handle member licensing. In some cases, such as businesses producing alcoholic beverages, dedicated government agencies handle licensing. The SBA provides additional information on obtaining federal and state business licenses.
How Much Does a Business License Cost in Florida
It varies. Generally, the cost of obtaining a business license will depend on the nature of the business as well as the licensing body. The average cost of licenses or certifications in Florida is about $50.00, but licenses can range from free to thousands of dollars. For example, the license for saltwater fishing is free for Florida residents fishing near the shore. On the other hand, the cost of obtaining a private pilot license is about $15,000.00, while a drone operator license costs about $500.00. Meanwhile, a lobstering permit costs $27.00.
Furthermore, licenses are only valid for a set time. So, business owners will need to renew their licenses periodically. Some licensing bodies charge a nominal fee for renewal, while others process license renewals for free.
How To Register for a Sellers Permit in Florida
A seller’s permit, also known as a sales tax permit, authorizes retailers in Florida to sell products and services. It is necessary to obtain one, especially if the entrepreneur intends to sell a product or service that is taxable in Florida. The Florida Department of Revenue issues this permit. Persons who wish to obtain a seller’s permit must submit a Florida business tax application (Form DR-1). The form contains instructions as well as requirements applicants must meet.
Application for the Florida sellers permit is free and typically takes three days when registering online. Persons applying for the seller’s permit by mail can expect the process to take up to ten days.
Step 4: How Much Does It Cost To Start a Business in Florida?
Starting a small business costs between $3,000 to $5,000, according to information obtained from the Small Business Administration. This amount considers the type of business, its structure, location, and scale.
Hence, the cost of starting a sole proprietorship will be significantly less than starting a corporation. Also, many sole proprietors do not need a physical office space to start the business, but corporations typically do. Similarly, businesses that require a lot of raw materials and space to process such materials into consumer products will need more starting capital than a business dropshipping the final product.
Consider the following factors in budgeting for a starting capital:
- Market research (especially if outsourced to a business consultant)
- Location (including the cost of leasing an office or factory space or making a website)
- Inventory (of all the raw materials needed)
- Licenses and permits
- Equipment and supplies
- Advertising and marketing
How To Self-Fund a Business in Florida
Self-funding, also known as bootstrapping, is when an entrepreneur uses their personal funds to start and operate a business. Bootstrapping is ideal for small-scale businesses requiring minimal start-up capital. However, in the long run, especially when the entrepreneur wishes to scale their business, external funding will be required.
Generally, business owners who intend to bootstrap their business must consider the status of their personal finance, including savings, liquid assets, and credit history. Furthermore, they must look for means to save on start-up costs: usually by using free tools provided by the government and non-profit organizations.
How To Find Investors in Florida
Investors provide capital, business expertise, or ease of supply chain, thus reducing the financial and non-financial burden on the entrepreneur. Besides capital and expertise, investors also bring networking prospects and advise the owner in making critical decisions.
Business owners looking to attract investors in Florida must have a traditional business plan and a pitch deck. The pitch deck is a summary of the business plan as well as a value proposition to potential investors.
With this, an enterprising founder can start looking for a Florida-based investor. One place to begin is online platforms like AngelList, Crunchbase, and Gust. Working with a business incubator, attending entrepreneur-focused events, and networking opportunities are also effective strategies for finding an investor in Florida.
How To Get a Loan To Start a Business in Florida
Borrowing extends a lifeline to a business, whether it be growing the business long-term or solving short-term financial obligations. Business loans can come from family, friends, banks, credit card companies, or even the government. The Small Business Association (SBA) is one such government-backed lifeline.
The SBA offers three loan programs, depending on the amount needed and the purpose of getting the loan. SBA microloans are best suited for entrepreneurs who need financial support to start their ventures. However, the amount is capped at $50,000.00. The requirement for obtaining this loan will depend on the microlender and the business structure.
Budding entrepreneurs can also obtain bank loans to start a business in Florida. The application process and requirements to get a loan will depend on the bank. In addition, the bank’s perceived risk of the business determines the interest rate on such loans. It is important to demonstrate that the venture is viable before applying. One way to do this is with a traditional business plan.
Similar to banks, credit unions also offer loans to self-starters. For instance, the Florida Credit Union offers business loans to persons who want to start a business in Florida. In addition to completing an application, a borrower may need to provide a business plan, business credit score, personal credit history, and a loan proposal.
Regardless of the loan source, some of the documents required for business loan application in Florida include:
- Proof of ownership
- Proof of registration
- Employer identification number (EIN)
- Tax returns
- Lease agreements
- Personal/Business Account Statements
- Tax returns
- Proof of insurance
How To Find Florida Business Grants
A business grant is money awarded to a business that the owner does not have to pay back. This financial support can be a lifeline to entrepreneurs who want to start or expand their businesses. Most grants come from the government, but it is also possible to get grants from private organizations. The Chamber of Commerce provides a list of business grants for interested business owners in Florida. Some organizations that provide business grants to Florida business owners include:
- Small Business Administration
- Florida Small Business Development Center (SBDC) Network
- Florida Department of Agriculture and Consumer Services
- Florida Black Business Investment Board (BBIB)
- FedEx Small Business Grant
- Enterprise Florida Virtual Business Matchmaking Grants
- Prospera Small Business Grant.
Can I Start a Business With No Money in Florida?
It depends. It is possible to start a small business if the owner does not need to source the raw materials for the product. Likewise, service-based businesses typically don’t require starting capital. However, as the demand for the product or service increases, or in a bid to increase profit margins, the owner may need funding for the business. Funding may come from personal savings, cash gifts from loved ones, grants, or loans.
Step 5: Choosing a Business Structure in Florida
The most common business structures in Florida are sole proprietorships, partnerships, corporations, and limited liability companies. Generally, the business structure an entrepreneur chooses to operate will depend on the estimated size of the business. Furthermore, the individual will need to consider factors like taxes and if they wish to be personally liable for the business’ expenses, debts, and legal suits.
Entrepreneurs with a small business where they are the single member typically set up as sole proprietorships. This type of business is suitable for freelancers, small bakers, hobbyists, and indie franchises. This form of business is simple and agile. However, it sacrifices agility for liability—the owner is directly responsible for all business debts, expenses, and legal actions that may arise against the business. Furthermore, there is a huge likelihood the business’ lifespan is tied to the owner’s.
Partnerships are of two kinds: general partnerships and limited partnerships. The difference between both types of partnerships is in how the owners designate the handling of day-to-day operations and liabilities.
General partnerships are two or more entrepreneurs pooling resources to start and operate a business. Also, the partners directly and equally share expenses, profit, and liability. In limited partnerships, however, there is a general partner who handles daily operations and limited partners who contribute to the financial aspect of the business. Limited partners avoid liability entirely but do not have control of the business. Indie creative studios, law firms, and startups are common businesses with this structure.
Unlike partnerships, where liability rests on the business owners, corporations separate the humans from the venture. So, the corporation is a separate legal entity. Corporations are typically larger than partnerships, with the business owners taking on the roles of executives or employees who act on behalf of shareholders.
Corporations in Florida are of two types: S corporations and C corporations. The distinction between the two types lies in how profit is taxed. In S corporations, shareholders are responsible for paying the taxes on profits instead of the corporation. Conversely, in C corporations, the business pays an income tax on its profits, and shareholders pay taxes on their dividends.
Limited Liability Company (LLCs)
LLCs have the characteristics of corporations and partnerships. For one, the business is a separate entity from the business owners. Unlike partnerships, the owners in LLCs have some control over business operations whilst eschewing personal liability for the business debts. LLCs are similar to S corporations in how they are taxed. This structure is suitable for single-member businesses, family-run businesses, and even partnerships.
How To Start a Sole Proprietorship in Florida
A sole proprietorship is a single-person business. In most cases, the business owner is the founder and sole employee of the business. The size and structure of this business mean that the business finances and personal finances are mixed. Also, there are no separate federal or state taxes on this business, the owner pays personal income tax on profit as they would normally. So, the business is the person, and the person is the business.
There is no extra paperwork required to start a sole proprietorship in Florida. The owner needs just to choose a business name and launch the business. The entrepreneur may also need to obtain a license or permit, depending on state or municipal regulations for that business.
How To Start a Corporation in Florida
A corporation is a business operating as a separate legal entity from its owners and shareholders. This separation removes liability from shareholders, meaning that the owners are not personally liable for the business debts or legal actions against it.
As a separate legal entity, the business has legal rights and responsibilities the law ascribes to individuals. So, corporations can make contracts, get loans, hire employees, pay taxes, sue, and be sued.
- To start a corporation in Florida, the shareholders—individuals who have a stake in the business—must first choose a unique business name and trademark. Corporation names end with “Inc.”
- Next, the shareholders must select or employ a registered agent, usually an attorney, who accepts and mails paperwork on the corporation’s behalf.
- Then, the shareholders must draft and file an Article of Incorporation with the Florida Secretary of State. The Article contains important information like the business name and location, as well as a description of public and private shares and bylaws.
How To Start an LLC in Florida
Limited liability companies offer the same liability protection as corporations and are typically used by sole proprietors and partnerships for that reason. LLCs let business owners and partners protect their personal assets from business losses, debts, and legal actions.
- To start an LLC in Florida, members must also choose a business name and trademark. Next, the owners hire a registered agent to receive and handle paperwork relevant to the company.
- Next, the members must file an Article of Incorporation with the Secretary of State. After this, the members form an operating agreement, similar to corporate bylaws, that guides business operations.
- LLCs with more than one member must obtain an employer identification number (EIN) from the Internal Revenue Service. Sole proprietors operating as LLCs do not need to get EINs unless they wish to be taxed as corporations.
- In addition to incorporating with the Department of State, LLCs must set up a separate bank account and obtain the relevant business licenses and permits needed to operate in their locale.
How To Start a Business Partnership in Florida
Business partnerships are ventures with two or more owners. There are three common partnership types: general partnerships, limited partnerships, and limited liability partnerships (LLPs). In all three types, there’s usually a general partner who controls daily business operations and limited partners who mainly contribute to funding the business. The limited partner will also have responsibilities ascribed to them per the partnership agreement.
To start a business partnership in Florida, the partners must first register the partnership with the Department of State. The forms to file will depend on the type of partnership the business owners wish to file. In addition, the partners must create a partnership agreement stating the rights and duties of partners as well as the extent of their assets and liabilities. The Uniform Limited Partnership Act contains additional information on rules guiding the creation and operation of business partnerships in Florida.
How To Start a Nonprofit in Florida
Nonprofits are organizations that primarily exist to further social causes and public benefits and are generally exempt from paying taxes. The rules governing the creation and operation of nonprofits in Florida are encoded in Chapter 617 of Florida Statutes. Generally, starting a nonprofit in Florida involves six steps:
- Develop the organization’s mission, goals, and bylaws: Nonprofits advocate or support a social cause or public benefit. At this stage, the founder must outline the organization’s purpose and objectives. In addition, the founder must also develop rules and procedures governing the actions of its officers.
- Find a funding source: Funding for nonprofits typically comes from donations, grants, and sponsorships from patrons. While securing funding sources, it is also important to have bank accounts dedicated to the organization. In addition, having accounting systems that foster transparency can bolster sponsors’ confidence in the organization.
- Assemble a board of directors: Florida nonprofits must have a board of directors with at least 3 members.
- File Articles of Incorporation: This step is required to register and legalize the nonprofit. Here, the founder must prepare and file documents that establish the organization as a nonprofit with the Department of State.
- Apply for an EIN: Although nonprofits are tax-exempt, the organization must still pay its officers and, as such, requires an employer identification number (EIN). The IRS provides instructions for applying for an EIN online.
- Apply for Tax-Exempt Status: Even after completing the above steps, nonprofits are not exempted from paying taxes by default. To become a tax-exempt organization, the founder must apply for 501(c)(3) status with the IRS. At the state level, the nonprofit must obtain a sales tax exemption certificate from the Department of Revenue.
Step 6: Choosing a Business Location
The type of business a founder intends to start is the primary factor to consider when choosing a business location. Ideally, a business that relies on locally-sourced materials should be located close to the raw materials, as this helps reduce logistics costs. Similarly, a retail business should be close to residential areas or places with high foot traffic.
Furthermore, safety is another important factor to consider when choosing the ideal business location. Still, at the heart of this decision are the municipal ordinances regulating business sites. Northern Orlando, Orange City, Stuart, Doral, and Lake Mary rank highly on the list of favorable places to start a business in Florida. These locations support home-based businesses, as well as rental spaces for businesses that require a physical location.
What Kind of Business Can I Run From Home in Florida?
Although Florida allows entrepreneurs to run businesses from home, there are regulations guiding running a business in a residential area (HB 403). The most important consideration is that the business does not violate local zoning ordinances or affect neighbors. Freelance creative works, recruiting agencies, pet daycare, selling homemade products, dropshipping, consulting, and online tutoring are some businesses people in Florida can run from home.
Furthermore, intending home-business owners may also want to check their homeowner association’s rules on home businesses. Likewise, tenants should check their lease agreements to confirm whether running a business from home violates their contract.
How Do I Start a Small Business From Home in Florida
For starters, the owner must confirm that they are legally allowed to run their business from home. Next is choosing a business name and registering it with the Department of State—if the business structure requires it. Sole proprietorships do not need to register with the DoS. However, LLSs and Corporations must register with the Department.
Afterward, the owner must obtain a business license or permit, especially if the nature of the business mandates it. For instance, Miami-Dade County requires home business owners to obtain a Certificate of Use. Likewise, businesses hiring workers must obtain an EIN for tax purposes. That done, the next step is setting up the business finances, such as bank accounts and accounting systems.
Starting a Business Online in Florida
Online businesses are businesses that primarily exist on the Internet. Here, the business owner offers their products and services via a website or social media platform. New entrepreneurs often choose to put their businesses online because it’s convenient to automate and streamline the supply chain.
Despite being online, Florida residents who wish to start online businesses in the state must comply with municipal, state, and federal laws. For starters, the owner must register the business and obtain a permit if necessary. Next, the individual must get a domain name—if they wish to have an independent website or set up an account with an online marketplace or social media platform for accepting and processing customer orders.
States laws, online marketplaces, and social media platforms have restrictions on the items merchants may sell online. For instance, selling individuals may not sell prescription drugs, scheduled drugs, items that promote hate or are provocative, and recalled items, among others.
Step 7: Legal Requirements for Starting a Business in Florida
Generally, new and existing Florida businesses must comply with municipal, state, and federal laws that protect consumers. The legal requirements for starting a business in Florida will depend on the type of business. These requirements include:
- Choosing and registering a business name
- Obtaining a license
- Setting up the business in an approved location or zone
- Operating up to health, safety, and insurance codes
- Meeting employment and labor law requirements
- Following advertising, promotion, and solicitation standards
- Filing state and federal tax registrations
- Setting up a payment & accounting system.
How To Get an EIN Number in Florida
The Employer Identification Number (EIN) is a unique nine-digit number assigned by the IRS to businesses located in the US for tax purposes. It is also known as a Federal Tax Identification Number. The IRS provides three options for business owners to obtain an EIN: online, fax, or mail-in application.
Generally, before applying for an EIN, the business owner must first possess a valid Tax Identification Number (TIN), such as a Social Security Number or an Individual Taxpayer Identification Number. Then, they may apply, choosing the most convenient option. In fax and mail-in applications, the applicant must download and complete Form SS-4. Then, they must submit the application:
Internal Revenue Service
ATTN: FIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
How To Get a Florida Registered Agent
A registered agent is an individual or business that handles legal documents and notices on behalf of a company. Florida laws require corporations, limited liability companies (LLCs), and limited partnerships (LPs) to have a registered agent. Granted, Florida laws allow business owners to act as their own agents.
Still, most entrepreneurs prefer to use registered agents for privacy, convenience, and cost-saving. An online search for “registered agents in Florida” will provide a list of accredited agents. Business owners may also use registered agents recommended to them by family, friends, attorneys, or business consultants. The cost of hiring a business agent is between $35 and $300 per year.
Patents, Trademarks, and Copyrights in Florida
A patent is a legal protection given to new innovations and intellectual property. Once filed, a patent prevents other people from using an individual’s invention for a specific number of years from the date of filing—usually 20 years. The U.S. Patent and Trademark Office in Florida is in charge of issuing patents under the Patent Act, Title 35 of the US Code. Concerned persons may file a patent by visiting the Patent and Trademark Resource Centers (PTRCs) in Florida.
100 S Andrews Avenue
Fort Lauderdale, FL 33301-1830
101 W Flagler Street
Miami, FL 33130-1535
4000 Central Florida Boulevard
Orlando, FL 32816-8005
On the other hand, a copyright is a legal protection that grants authors of creative work exclusive rights to that work. Third parties may not reproduce, distribute, perform, display, or create derivative works of copyrighted work without permission throughout the life of the author, plus 70 years. This protection is codified in Title 17 of the US Code.
Meanwhile, trademarks are words, phrases, symbols, or designs that distinguish a brand, individual, or business. Trademarks are registered with the United States Patent and Trademark Office under the Federal Lanham Act and the Florida Division of Corporations under the Florida Trademark-Service Mark Registration and Use Act.
Requests for patents and trademarks go to the United States Patent and Trademark Office. Applicants may conduct a patent/trademark search on the USPTO database to ensure the invention is eligible for patenting before applying on the USPTO’s Electronic Filing System. The cost of obtaining a patent varies with the type of patent and the applicant’s business status (large entity, small entity, or micro entity).
Are Business Records Public in Florida
Yes. Florida business records are publicly available per Florida Sunshine Laws. Thus, interested persons may obtain copies of business records from the record custodian. The Division of Corporations in the Department of State is the custodian for business records in Florida. Despite the public availability of business records, documents containing certain information are restricted from public access.
Generally, records containing sensitive information, such as social security numbers, financial information, private contact information, trade secrets, and intellectual property, are sequestered from public access or the sensitive details redacted. The same applies to bank account statements, cell phone records, and documents that fall under the hearsay rule of Florida Statutes Section 90.803(6).