How to start a business in Florida in 8 steps
Often thought of as a great place to vacation, Florida offers an ideal environment for business owners to fulfill their dreams of creating a start-up. Whether you want to make a name for yourself in one of many metropolitan restaurant scenes, or you’d rather flex your creative muscles and finally turn your passion for arts and crafts into a profitable operation, setting up a small business in Florida is easier than you might think.
Running a Florida business isn’t necessarily a walk in the park, though, as there are several steps to complete before you can officially open your proverbial (or sometimes physical) doors. Once you establish these foundational aspects of your business, you’ll be in a prime position to reap all of the benefits that come from owning your own company. New business owners often find that their passion and drive are strong enough to tackle the following 8 steps.
1) Think about the type of business you want to start
Maybe you already have a great business idea, or you’d like to spend some time on your business development. Either way, if you’re reading this article, you likely already have an idea of what kind of organization calls to you. Some types of businesses require a minimal amount of research, particularly if you’ll be operating out of your own home or if you have experience in your desired industry already. Other entrepreneurs may want to take some time to look into their field a bit further.
Even if you’re an expert in your new business venture, it won’t hurt small business owners to examine who their competition might be, both in their area and in other parts of Florida. Consider how you can offer better service, lower prices, or more value overall than your soon-to-be competitors and use that information to further flesh out your ideas. At this stage in the game, many entrepreneurs want to create their business plan before doing anything else, outlining exactly what their vision is for the future.
While it’s great to have the nuts and bolts of your new small business thought out in advance, there’s one additional element to consider. Creating a startup can be a trying task, involving long hours and sometimes a lot of money at the outset. Ask yourself if you’re truly up for the challenge—most individuals who are passionate about their new company will say “yes” wholeheartedly.
2) Set up your legal structure
With your business plan in hand, you’re now ready to start completing the first steps in forming your business. All Florida entrepreneurs need to determine their preferred business structure and weigh each selection’s benefits and potential drawbacks. For more information on any of the following options, it’s recommended that you contact the Florida Department of State.
- Sole proprietorship: Individuals who want to maintain an easy business structure and do not anticipate hiring any employees may want to become sole proprietors. If you want to operate your business under a name other than your own, you’ll need to register your fictitious name with the Division of Corporations. Keep in mind that the personal assets of sole proprietors are not kept separate from the business.
- General partnership: If your business needs dictate that you’ll need a partner to run the company, a general partnership may be right for you. In this business structure, both partners have equal rights and responsibilities to the business. Like a sole proprietorship, individuals in a general partnership are personally responsible for any debts that the company incurs. General partnerships in Florida require a handful of forms that can be accessed at sunbiz.org.
- Limited partnership: Partners who want to differentiate each person’s liability in the company can opt to form a limited partnership instead of a general partnership. You and your business partner will need to decide who is the general partner, the person responsible for running the business, and the limited partner, the one who cannot make managerial decisions. This structure is often ideal when one partner can take on more risk than the other.
- Limited Liability Company (LLC): A popular choice for many, your business entity may benefit from being set up as a limited liability company. Florida LLCs are fairly straightforward from a paperwork standpoint and help reduce a business owner’s level of personal liability should the company incur any debts. Unlike a corporation, an LLC is not required to hold regular stockholder meetings or adhere to many of the other formalities required of larger companies.
- Corporation: There are several types of corporations that might be right for Florida small businesses, including a C corporation and an S corporation. There are some nuances between these designations, most of which relate to the company’s federal taxes. Corporations are treated as separate business entities from the owners and stockholders and require far greater regulation than any other types of structures mentioned.
It’s smart to explore the various options for your business structure and make sure you fully understand the paperwork needed once you’ve made your decision. You may need to create an operating agreement, articles of organization, or articles of incorporation and pay all applicable fees to get started. Additional options like forming a nonprofit may also be right for you, so don’t be afraid to spend some time on this crucial step.
3) Name and register your business
Structuring your business can be a big step, but you’re only just beginning on the path to entrepreneurship! If you need a little break from paperwork, sit down in your favorite chair and spend some time thinking about your business name. You may already have a vague idea of what it could be, so once you’ve made your firm decision, check online to see if it’s already been registered.
Sole proprietors are typically the only exception to registering a business name unless they select a moniker that differs from their legal name. If that’s the case, they’ll need to follow the appropriate steps for registering a DBA—“doing business as.” When it comes time to file taxes with the IRS, it will be clear that you’re using a different name for your business entity.
It’s advised that you contact the Florida Division of Corporations for further clarification if you aren’t sure whether you need to register your fictitious name or not. Some corporations, LLCs, or limited partnerships may not require this step. Ultimately, it’s important to select a name that’s not in use by any other company so that you can distinguish yourself from other organizations in the area.
4) Apply for licenses and permits
One sometimes overlooked step in forming a small business is finding out if you require any business licenses to operate. While some states offer a general licensing process that applies to all entrepreneurs, Florida functions differently. We advise that you check with your County Tax Collector to determine whether individuals in your industry require a license or permit.
Should you discover that you need a business license, you can apply for one easily online from the Department of Revenue. You’ll also need to inquire about other types of permits specific to your business, like a Resale Certificate for Sales Tax. There may be some filing fees associated with these permits, and they will likely need to be renewed annually, so make sure to note the dates you apply for them and remember that you’ll need to keep them current each year.
5) Choose a location
If you’re opening a brick-and-mortar start-up, it’s super exciting to begin searching for your new business location. Many small business owners try to complete this step earlier in the process, but remember, every month you occupy a retail space and aren’t turning a profit is simply unnecessary money that you’re spending on rent. While it’s an exciting step, it’s not the first one to start with.
There are several factors to consider when choosing a location, too, depending on your industry. It’s best to be conservative with your budget, especially in more expensive areas of the state like Miami, as your rent will be a long-term expense. Business owners should also think about how their business will fit into the other retail spaces in the immediate area, how much foot traffic there is, and how much square footage will be necessary.
6) Open a bank account and prepare for future taxes
Owning your own company can bring an immense amount of personal satisfaction, but it can turn stressful quickly if you aren’t profitable or at least have your finances in order. Before you officially open for business, we recommend that you open a business bank account and start to establish your business credit. Many like to apply for a credit card to do this, but simply paying your company bills on time will also suffice.
Rather than scrambling just before tax returns are due, it’s wise to do some legwork ahead of time. Unless you’re a sole proprietor and can use your social security number on your tax returns, you’ll want to apply for an employer identification number or EIN. Florida doesn’t require residents to pay income tax, but corporations are required to pay state taxes and their federal obligations to the Internal Revenue Service. You can always hire a professional to help with your business taxes if your financial situation is complex.
7) Purchase business insurance
If you’ve made it this far and you still want to open your Florida small business, congratulations!
This is the final stretch in the process but perhaps one of the most important. Your company can be subject to any number of unforeseen circumstances that could completely drain you of all assets and force you to close for an indefinite period. Small business insurance helps to protect you from this scenario and offers you peace of mind with options including workers’ compensation insurance, general liability coverage, business property protection, and more.
8) Create a marketing plan, hire employees, and more
Depending on how much word of mouth your business already has, you may find that developing a marketing plan is your next step toward success. Your business plan may include a general idea already, or you might want to differ from your original plan—it’s entirely up to you.
If your business is scaling rapidly, it might also be time to bring some new hires into the mix. As the profits continue to stack up, you’ll want to refer back to your business plan to determine how to expand, what financial milestones you want to reach, and if you need to make any operational changes along the way.
Opening a small business in Florida is a dream for many. Still, it’s important to keep your feet firmly planted in reality and complete each of these steps before you officially open. Among everything on your list, you’ll want to explore your small business insurance options thoroughly.
Florida business owners are required to enroll in Florida workers’ compensation coverage and can learn more about other policies from Huckleberry. Get a quote online in minutes and get back to doing what you love—running your own business!