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What does it mean to start a sole proprietorship in Florida?
There’s a career myth that says there’s one perfect job out there for everyone. The truth is, that the best way to work in the business you want is to create it yourself, tailored to your goals and dreams.
Starting a sole proprietorship in Florida is an easy and affordable way to go into business by yourself. In this simple structure, you operate under your legal name and can start business activities without filing any legal documents with the Florida Department of State. However, to run your business smoothly, there are a few key steps you should consider.
In this guide, you'll learn how to start a sole proprietorship in Florida and what it takes for it to prosper. Here are a few things to focus on as you navigate the challenges of being a sole proprietor:
- Set your own goals: Don’t measure your progress using someone else’s ruler. Your goals and dreams are your own, and you should create a plan that’s tailored to what you want instead of what others think is best.
- Lead with value: Consider what you bring to the table. Ask yourself questions like what kind of impact do you want to make? And, how do you define personal success?
- Keep your eyes on the prize: End goals…loading. Never forget the end goal. Realize that your choices affect not only you, but the generations to come after you. Be proud of the work you put in this lifetime.
By learning what it takes to be a sole proprietor in Florida, you will be able to take a step-by-step approach to establishing your business.
How to Start a Sole Proprietorship in Florida
Florida is an easy state to start a sole proprietorship in because you don't need to file any legal documents with the Florida Department of State if you're going to carry out business activities under your legal name. The only requirement is to get any necessary licenses, permits and zoning clearances, although this doesn’t apply to every type of business. Permits and licenses are usually necessary for working in real estate and cosmetology, among other fields. Check out the Florida Department of Business and Professional Regulation website for a full list of businesses that are required to have licenses or permits in your area. Additionally, if you want to use a trade name or to hire employees, there are a few additional steps you should take:
- Choose a Business Name: If you don't want to use your own name, the first step is to select a business name. The name of your company must be different from already-established companies. To make sure your name isn't the same as one already in use, check business names against those registered with the Florida Department of State and the U.S. Patent & Trademark Office.
- Publish a Notice of Intention about Your Fictitious Business Name: If you decide to operate under a trade name, Florida law requires publishing a notice to advertise fictitious business names in a newspaper in the county where business is conducted. Make sure to do follow through with this step before registering your business name.
- Register Your Business Name: To register your business name, you’ll have to either complete a Florida Fictitious Name Form online or mail the completed form to Fictitious Name Registration, PO Box 6327, Tallahassee, FL 32314-1300. Fees for this step include $50 to register your name, and $30 for a certified copy of your name registration, which you will need if you want to open a bank account under the company name.
- Obtain an Employer Identification Number: If you want to hire employees in Florida, you'll have to get an Employer Identification Number (EIN). This federal tax id number, is used to identify businesses for tax purposes and required to open a bank account under your business name. An EIN is also very handy when it comes to reducing the risk of identity theft. To apply for an EIN you can log on to the IRS website.
Next Steps After Starting a Sole Proprietorship in Florida
Each business and its needs are as individual as their owner. Depending on how your business is growing, you may find it helpful to take additional steps. Here are a few things sole proprietors should consider after getting started.
- Open a Business Bank Account: When you're running a professional enterprise, it's crucial to keep your business and personal assets separate. Why? Well, for starters it'll be easier to do your taxes. When you're going to open your business bank account, make sure you bring your certified Fictitious Name Registration as it's something they require. Additionally, having a clear separation of assets can be beneficial when applying for business funding, as lenders often require a detailed review of your business's financial records.
- Obtain General Liability Insurance: When it comes to business liability, sole proprietors are personally responsible for any debts and legal obligations that their business gets into. This means that if you don’t have insurance to protect you, anyone that wins a legal case against you can take your personal assets such as your house. Even though liability insurance is not required by law in Florida, it's a good idea to get it to protect yourself from unforeseen business debts.
- Report and Pay Taxes: To pay taxes, you'll have to register with the Florida Department of Revenue (DOR). The taxes collected will be impacted by whether you have any employees and depending on your business, you should submit all business taxes to the state on a monthly, quarterly or annual basis. Additionally, as a sole proprietor, you may be required to file a number of tax documents with the IRS including an Income Tax Return, which you can download from the IRS website. Depending on your type of business, you may be responsible for paying some or all of the following:
- Income Tax
- Self-employment tax
- Estimated tax
- Social security and Medicare taxes and income tax withholding
- Providing information on social security and Medicare taxes and income tax withholding
- Federal unemployment (FUTA) tax
- Filing information returns for payments to non-employees and transactions with other persons
- Excise Taxes
Pros and Cons of Sole Proprietorship in Florida
Before diving in head first to any enterprise, it's important to have comprehensive information on all sides of the subject. Even though starting a sole proprietorship in Florida is easy and inexpensive, it's not without challenges. Here are a few insights that will help you make an informed decision:
Pros of Sole Proprietorship in Florida
- Easy to set up and maintain: For many kinds of businesses, a sole proprietorship in Florida doesn't require filing documents.
- Taxes: When it comes to filing taxes as a sole proprietor in Florida, it's very similar to how you file taxes as an individual. The only additional thing you'll need to include is a Schedule C which lists your business profits or losses.
- You make your own decisions: You can choose to work when, how, and where you want to. Additionally, you have full control over all business decisions.
Cons of Sole Proprietorship in Florida
- No liability protection: If your business is sued, your assets, like your home, cars, and bank account, are at risk of being used to settle any outstanding debts if you lose the case.
- Lack of credibility: Operating under your legal name is often seen as being less credible in the business world in contrast with a company that uses a trade name.