How to Create an LLC in Florida

Ready to take the leap and start your own business in Florida? Whether you're launching a side hustle or the next big thing, understanding the right business structure is key to success. This blog walks you through the entire process of creating an LLC in Florida, from choosing a business structure to filing online, obtaining an EIN, and opening a business bank account. Get ready to turn your business idea into reality with this step-by-step guide!

Jordan Wu

17 min·Posted Mar 23, 2025

Getting Started With a Florida Business

Starting a business in Florida offers exciting opportunities due to its vibrant economy, favorable tax policies, and growing population. Whether you're launching a new startup or expanding an existing venture, understanding the essential steps to establish your business is crucial for long-term success. From choosing the right business structure to registering with the state, this guide will walk you through how to create your business in the state of Florida.

Business Structures

Starting a business requires selecting a business structure, which will dictate your tax obligations, personal liability, and how you operate. The type of business entity you choose also determines which income tax return form you must file.

Sole Proprietorships

A Sole Proprietorship is the simplest and most common business structure, where a single individual owns and operates the business. In this structure, there is no legal distinction between the business and the owner, meaning the owner is personally responsible for all debts and liabilities of the business.

Key Features of a Sole Proprietorship:

• Ownership: Owned and run by one person, with no formal requirements to register with the state, though local licenses or permits may be needed.
• Liability: The owner is personally liable for any business debts or legal actions, which means personal assets (like your home or car) could be at risk.
• Taxes: The business itself is not taxed separately. Instead, the owner reports income and expenses on their personal tax return (usually using Schedule C with the IRS).
• Management: The owner has full control over decision-making and operations.
• Pros:
  • Easy and inexpensive to set up and maintain.
  • Simple tax filing (pass-through taxation).
  • Full control over business operations and profits.
• Cons:
  • Unlimited personal liability.
  • Difficulty raising capital or attracting investors.
  • Less credibility compared to other business structures.

A Sole Proprietorship is ideal for small businesses with low risk and fewer administrative needs, but as the business grows or faces higher risk, owners might consider other structures like LLCs or Corporations for better liability protection.

For more information about tax forms:

https://www.irs.gov/businesses/small-businesses-self-employed/sole-proprietorships

Partnerships

A Partnership is a business structure in which two or more individuals or entities share ownership and responsibility for managing the business. Partnerships are a flexible way to organize a business, where partners agree on how profits, losses, and management duties are shared.

Key Features of a Partnership:

• Ownership: Two or more partners own the business and share its profits, losses, and responsibilities.
• Liability: The level of liability depends on the type of partnership:
  • General Partnership (GP): All partners share equal responsibility for the business’s debts and obligations. Each partner is personally liable for the debts of the business.
  • Limited Partnership (LP): There are both general partners (who manage the business and have full liability) and limited partners (who invest in the business but are not involved in daily operations and have limited liability).
  • Limited Liability Partnership (LLP): All partners have limited liability, protecting them from personal responsibility for most business debts or legal actions, commonly used by professional businesses like law firms or accounting firms.
• Taxes: Partnerships are typically pass-through entities, meaning profits and losses are passed through to the partners, and they report them on their personal tax returns. The partnership itself doesn’t pay income taxes.
• Management: Partners share management responsibilities, but the extent of each partner’s involvement and decision-making can be outlined in a partnership agreement.
• Pros:
  • Shared responsibilities and decision-making.
  • Easy to form with fewer formalities compared to corporations.
  • Pass-through taxation (avoids double taxation).
• Cons:
  • Partners are personally liable (in general and limited partnerships).=
  • Potential for disputes between partners if roles or expectations aren’t clearly defined.
  • Limited ability to raise capital compared to corporations.

A partnership can be a good option for businesses where multiple people want to contribute their expertise, capital, or resources but are willing to share both the risks and rewards. Having a clear partnership agreement is crucial to define roles, responsibilities, and profit-sharing arrangements.

For more information about tax forms:

https://www.irs.gov/businesses/partnerships

Corporations

A Corporation is a legal entity that is separate from its owners (shareholders). It can enter into contracts, own property, and be held liable for its actions, just like an individual. The corporation's structure offers the most protection against personal liability for its owners, but it also comes with more regulations and formalities.

Key Features of a Corporation:

• Ownership: Corporations are owned by shareholders, who hold shares of the company's stock. Shareholders can be individuals or other entities.
• Liability: The main advantage of a corporation is that it provides limited liability protection to its owners. This means shareholders are not personally liable for the corporation's debts or legal obligations beyond their investment in the company.
• Management: Corporations are typically managed by a Board of Directors, which makes major decisions, and officers (e.g., CEO, CFO), who handle day-to-day operations. Shareholders elect the Board of Directors.
• Taxes: Corporations face corporate taxation, meaning they are taxed on their income. In the case of a C Corporation, shareholders are taxed again on dividends they receive (double taxation). An S Corporation allows for pass-through taxation, where income is reported on shareholders' personal tax returns, avoiding double taxation (but with some restrictions on the number and type of shareholders).
• Types of Corporations:
  • C Corporation (C Corp): The most common type of corporation, which faces double taxation. Profits are taxed at the corporate level, and shareholders pay taxes again on any dividends.
  • S Corporation (S Corp): Allows for pass-through taxation, avoiding double taxation, but with restrictions on the number and type of shareholders (max of 100 shareholders, all must be U.S. citizens or residents).
  • Nonprofit Corporation: A corporation formed for charitable, educational, religious, or social purposes, which is exempt from income taxes.
  • Benefit Corporation (B Corp): A type of for-profit corporation that balances profit and social or environmental goals.
• Pros:
  • Limited liability for owners (shareholders).
  • Easier to raise capital by issuing stock.
  • Perpetual existence, meaning the corporation can continue even if shareholders or management change.
  • More credibility with investors and customers.
• Cons:
  • Double taxation (for C Corps).
  • More complex and costly to set up and maintain compared to other business structures.
  • Must adhere to stricter regulatory and reporting requirements (such as holding annual meetings and maintaining corporate minutes).

A corporation is suitable for businesses that need to raise substantial capital, plan to expand, or seek limited liability protection for owners. However, the complexity and cost associated with forming and maintaining a corporation might make it less appealing for smaller businesses.

For more information about tax forms:

https://www.irs.gov/corporations

S Corporations

An S Corporation (S Corp) is a type of corporation that allows profits, losses, and other tax items to pass through directly to its shareholders' personal tax returns, avoiding the double taxation typically associated with C Corporations. It is designed to combine the legal protection of a corporation with the tax benefits of a partnership or sole proprietorship.

Key Features of an S Corporation:

• Ownership: The business must be a domestic corporation and have 100 or fewer shareholders. Shareholders must be U.S. citizens or residents (no foreign shareholders or other corporations). Additionally, S Corps can only issue one class of stock.
• Liability: S Corps provide limited liability protection to their shareholders, meaning shareholders are not personally liable for the company’s debts or legal issues beyond their investment.
• Taxes: S Corps are considered pass-through entities, meaning:
  • The S Corp itself does not pay federal income taxes.
  • Profits and losses pass through to the shareholders’ individual tax returns, and shareholders pay tax on their share of the income at their personal tax rates.
  • This avoids double taxation, which applies to C Corporations (where the corporation is taxed on its income, and shareholders are taxed again on dividends).
• Management: S Corps are managed by a Board of Directors, which oversees major decisions, and officers (e.g., CEO, CFO), who handle day-to-day operations. Shareholders elect the board members.
• Ownership Restrictions:
  • The business must have 100 or fewer shareholders.
  • Shareholders must be individuals, estates, or certain trusts, not other corporations or partnerships.
  • All shareholders must be U.S. citizens or residents.
• Pros:
  • Pass-through taxation avoids double taxation.
  • Limited liability protects shareholders from business debts.
  • S Corps may help reduce self-employment taxes by paying shareholders a reasonable salary (which is subject to payroll taxes) and distributing remaining profits as dividends (which are not subject to payroll taxes).
  • Easier to raise capital than sole proprietorships or partnerships, although less so than C Corps.
• Cons:
  • Ownership restrictions (only 100 shareholders and no foreign investors).
  • More administrative requirements and costs than simpler structures like sole proprietorships or partnerships.
  • Must adhere to corporate formalities, such as holding annual meetings and keeping meeting minutes.
  • Reasonable compensation requirement: The IRS requires that shareholders who work for the S Corp be paid a "reasonable salary" for their work, and this salary is subject to payroll taxes. This can be a gray area and could lead to scrutiny by the IRS.

An S Corporation is ideal for small businesses that want the liability protection of a corporation but wish to avoid the double taxation associated with a C Corporation. It's often favored by small business owners and entrepreneurs who want to reinvest profits into the business or minimize self-employment taxes.

For more information about tax forms:

https://www.irs.gov/businesses/small-businesses-self-employed/s-corporations

Limited Liability Companies

A Limited Liability Company (LLC) is a flexible and popular business structure that combines the liability protection of a corporation with the tax benefits and operational flexibility of a partnership or sole proprietorship. It offers owners (called members) protection from personal liability for business debts while allowing them to manage the business with fewer formalities than a corporation.

Key Features of an LLC:

• Ownership: LLCs can have one or more members (owners), and there is no limit on the number of members. These members can be individuals, corporations, or other LLCs.
• Liability: LLCs provide limited liability protection, meaning members are not personally responsible for business debts or liabilities beyond their investment in the LLC. Personal assets (like a home or car) are generally protected from lawsuits or business creditors.
• Taxes: LLCs offer pass-through taxation, meaning the business itself is not taxed. Instead, the profits and losses "pass through" to the members, and they report them on their individual tax returns. This avoids double taxation (which applies to C Corporations). However, LLCs can also elect to be taxed as a corporation (C Corp or S Corp) if that’s more beneficial for tax purposes.
  • Single-member LLCs are typically treated as sole proprietorships for tax purposes (pass-through taxation).
  • Multi-member LLCs are treated as partnerships for tax purposes (pass-through taxation).
  • Tax Election: An LLC can choose to be taxed as a C Corporation or S Corporation if it meets the requirements and this is more advantageous.
• Management: LLCs have flexible management structures. They can be member-managed (where all members are involved in day-to-day operations) or manager-managed (where members appoint managers to run the business). This flexibility allows for simpler operations compared to corporations.
• Formalities: LLCs are less formal than corporations and don’t require a board of directors or annual meetings. However, members should still maintain operating agreements to outline management, profit-sharing, and operational rules.
• Pros:
  • Limited liability protection for members.
  • Pass-through taxation (avoiding double taxation).
  • Fewer formalities and less paperwork than corporations.
  • Flexible management structure (members can directly manage the business).
  • More credibility than a sole proprietorship or partnership.
• Cons:
  • Self-employment taxes: Members of an LLC are considered self-employed and may need to pay self-employment taxes (Social Security and Medicare) on the business’s profits.
  • Varied state regulations: Each state has its own rules for LLC formation and fees, and LLCs may face different requirements and taxes depending on where they operate.
  • Limited life: In some states, an LLC may have a limited lifespan (e.g., it might automatically dissolve after a certain number of years unless extended or re-formed).

An LLC is ideal for small to medium-sized businesses that want liability protection without the complex formalities of a corporation. It also works well for businesses looking for flexible tax options and management structures.

For more information about tax forms:

https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc

Create a Florida Limited Liability Company

The Florida Limited Liability Company (LLC) page is an official webpage provided by the Florida Department of State, Division of Corporations, where individuals and businesses can access information and resources related to forming and managing a Limited Liability Company (LLC) in Florida.

https://dos.fl.gov/sunbiz/start-business/efile/fl-llc/

Apply for an Employer Identification Number

An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify a business entity for tax purposes. It is essentially like a Social Security Number (SSN) for your business.

Purpose of an EIN:

• Tax Reporting: Businesses use the EIN to report taxes, such as income taxes and employment taxes. It's needed for filing federal tax returns and paying payroll taxes.
• Business Banking: You need an EIN to open a business bank account and apply for business credit.
• Hiring Employees: If you hire employees, you need an EIN to report employee wages and withholdings to the IRS.
• Filing Business Documents: Many business-related documents, including tax filings and licenses, require an EIN.

Who Needs an EIN?

• Corporations and LLCs: All corporations and LLCs are required to have an EIN.
• Partnerships: Partnerships must have an EIN, even if they don’t have employees.
• Sole Proprietorships: If you have a sole proprietorship and you have employees or operate as a corporation, you need an EIN. However, if you're a sole proprietor without employees, you may not need an EIN and can use your Social Security Number (SSN) instead.
• Non-Profit Organizations: Non-profits must have an EIN to apply for tax-exempt status and file required tax returns.

How to Apply for an EIN:

You can apply for an EIN online through the IRS website after you have formed your LLC, and it’s free to do so. The application process is quick, and you typically receive your EIN immediately upon completion.

https://www.irs.gov/businesses/small-businesses-self-employed/get-an-employer-identification-number

Open a Business Bank Account

Opening a business bank account is essential for keeping your personal and business finances separate, which helps protect your personal assets and maintain legal liability protection, especially if you operate as an LLC or corporation. A dedicated account enhances professionalism, making it easier to receive payments, track expenses, and manage cash flow efficiently. It also simplifies tax reporting, ensuring accurate record-keeping for deductions and IRS compliance. Additionally, having a business account can help you build business credit, qualify for loans, and establish credibility with vendors and clients.