If you’re considering which state to launch a business in, Florida enjoyed an economy that exceeded $1.4 trillion in GDP, ranked fourth in the nation, and stands as the 16th largest in the world. With a blend of warm weather, robust infrastructure, and a diverse workforce, the Sunshine State continues to attract retirees, visitors, and entrepreneurs. These are statistics that may encourage entrepreneurs to start a business in Florida.
- Upwards of 40 percent of Florida’s state and local own-source revenue is considered non-taxable.
- Driven by tourism, sales taxes account for 78.1 percent of all Florida’s collections.
- Florida’s per capita (CIT) burden only increased by 36.5 percent compared to the national average increase of 67.1 percent.
In 2022, Florida outpaced all other states in terms of economic inflows. The influx of people and cash added more than $23 billion in adjusted gross income to the economy. That success prompted the state government to issue a press release highlighting its success metrics. For example, the total income of families moving to Florida is roughly $120,832 and the Sunshine State ran nearly a full GDP percentage point above the national average.
Those are some of the reasons business professionals are flocking to Florida to take advantage of growth opportunities. But to launch and sustain a new enterprise, it’s crucial to know how to navigate the landscape. These are things for business leaders to consider.
Florida Business Incentive Programs
The incentives Florida offers to new and growing businesses are comprehensive and lucrative. The state encourages capital investment and is open arms to startups across sectors. Whether your organization focuses on tourism, services, agriculture, or manufacturing, among others, these diverse incentives can reduce costs.
- Capital Investment Tax Credit: Designed to support high-impact entities, a qualifying business or project must make a cumulative capital investment of $25 million. In return, the state offers an annual 5-percent tax credit for up to 20 years.
- Community Contribution Tax Credit: A 50-percent tax credit is available to offset community-based contributions of up to $200,000 made by businesses. These donations can bring awareness to a brand and build relationships.
- Entertainment Industry Tax Credit: Businesses that offer entertainment services may be eligible for a tax credit for up to five years through the Florida Department of Economic Opportunity.
- Film Sales Tax Exemption: A qualified production company engaged in the making of motion pictures, made for television shows, TV series, commercial advertising, music videos, or sound recordings can apply for a sales tax exemption.
- New Markets Tax Credit: A 39 percent credit is available when qualified investments are made under Florida statute Section 288.9913(9).
The state offers a wide range of tax incentives related to energy, insurance, health care, employment, and machinery, among many others. The Florida Department of Revenue has a comprehensive list for new and existing business professionals to review.
Florida Business Licenses, Permits, and Registration
Broadly considered one of the most business-friendly states, the Department of Business and Professional Regulation oversees licensing. While the state does not necessarily demand a license to operate every outfit across the state, it does require one for occupations such as attorneys, accountants, real estate agents, brokers, and medical professionals, among others. A complete list can be found on the state’s business and professional regulation platform.
The state also requires organizations to acquire a business tax receipt to operate. This applies to all entities, from sole proprietorships to large corporations. To secure a business tax receipt, you must check with the county tax collector regarding the need for a license. After that, you can register with the Florida Department of Revenue.
Cost of Living in Florida
The median income for people in Florida stood at $61,777, according to the U.S. Census Bureau. The national average was slightly higher, at $61,900. That puts working families in the Sunshine State nearly even. The state also experienced a wage growth rate of 0.2 percent when accounting for all occupations and more than 147 million workers. The fastest growing industries included the following.
- Shoe Machine Operators (27.9 percent)
- Camera and Photographic Equipment Repairers (21.4 percent)
- Patternmakers, Wood (20.3 percent)
- Shoe and Leather Workers and Repairers (18.4 percent)
- Terrazzo Workers and Finishers (17.8 percent)
Industries that employ the most people include Office and Administrative Support, Transportation and Material Moving, Sales, Food Preparation and Serving, and Management, among others, according to the U.S. Bureau of Labor Statistics. Since cost of living will influence your business both directly and indirectly, especially if you hire employees, this is an important consideration to keep in mind.
Florida does present a minor financial challenge in terms of the cost of living. Opening a company, and residing in Florida, means you would pay slightly above the national average for goods, services, and housing. Based on a dollar equaling 100, it costs 103.1 to live there. Groceries hovered at 102.3, health care at 102.8, and transportation ranked highest at 112.6. While the median home cost in the U.S. was $362,400, buyers in Florida paid an average of $338,100.
Florida Offers Low Tax Burden
Although the average American paid upwards of 8.9 percent of their hard-earned money to taxes in 2020, Floridians only gave 6.7 percent to the government. That ranked as the fifth-lowest tax burden in the country. The Sunshine State benefits from a high sales tax influx due to tourism which allows it to not charge a personal income tax. According to the Florida Department of Revenue, the state charges a 6 percent sales tax that municipalities can augment.
In terms of opening a company in Florida, entrepreneurs can anticipate paying a corporate income tax in the range of 5.5 percent, with up to $50,000 of the initial earnings exempt. Depending on what type of business structure you form, the entire income can be exempt or its tax liability greatly reduced. The state ranks 17th in corporate income tax liability, with South Dakota and Wyoming waiving the expense. New York, Pennsylvania, Oregon, Delaware, and New Jersey level the heaviest tax burden on businesses.
Best Places to Open a Business in Florida
Where you set up shop in Florida is largely determined by the type of business, access to customers, and supporting infrastructure. With all things being equal, cities such as Jacksonville, Miami, Tampa, Orlando, and St. Petersburg are considered rising markets due to population, housing costs, and wage growth. Before establishing a brand in any market, it’s essential to conduct due diligence and form a company.
Types of Business Structure in Florida
Forming a business in Florida is a relatively straightforward process. Start by researching the types of entities based on which fits the operation and provides liability protections. These are the most common among new ventures.
- Sole Proprietorship: In this type of business, an individual has the revenue flow through and they report it on their personal tax return. In a sole proprietorship, your liability may be exposed.
- Partnerships: Partnership formations help define roles and responsibilities. Like sole proprietorships, they leave people exposed to civil lawsuits.
- Limited Liability Companies: Commonly referred to as an LLC, this structure provides sound liability protection and tax benefits. The LLC is typically the preferred type of business for new and growing operations.
- Corporations: Often reserved for large operations, corporations enjoy a legal status that separates liability from shareholders. The tax liability of corporations tends to exceed that of LLCs.
Once you have chosen a name and structure, fill out the necessary forms and register the business with the Florida Department of State. Or, register your Florida LLC using an automated service that will handle all the paperwork for you.
Florida continues to attract residents and startups because of its good weather, robust economy, business incentives, and the fact it doesn’t charge a personal income tax. To fast-track the formation process, consider using Tailor Brands’ Florida business platform that provides advice and convenient resources.