Thinking of starting a business in Florida? In case you haven't already heard, we have good news for you: Florida has some great benefits for small business owners, especially when it comes to taxes... or lack thereof.
In fact, Florida small business owners pay less in taxes than nearly any other state in the nation thanks to the fact that sole proprietorships, partnerships, limited liability companies (LLCs) and S-corporations do not pay state income taxes.
Only traditional corporations, or C corporations, are required to pay state income taxes in Florida.
As a result, the vast majority of small businesses in Florida pay no state income tax. Not only that, Florida residents do not pay a state income tax, which means that business owners who pass income through their businesses to themselves are also not taxed.
For example, if you start a business venture on your own as a sole proprietorship and the income from the business is distributed to you, you would only be responsible for paying federal taxes on the distributions at an ordinary income tax rate.
In another example, if you decide to form an LLC to operate your business, the LLC will not face state-level taxes, so long as it is not also a corporation, which is rarely the case. Income that is distributed to you through the LLC would also not be taxed on a personal level. Again, only federal taxation would apply.
Even if your business becomes a corporation at some point in the future, Florida tax rates are still quite low compared to the rates of other states.
Ultimately, Florida is a great place to start a business, tax wise. Keep reading if you would like to learn more about starting a business, including what kind of business entity to choose -- such as sole proprietorship, general partnership, corporation, S-corporation or LLC.
At Viera Williams, P.A., we would be happy to help make your dream of owning a business a reality.