A Breakdown of Business Taxes in Florida

Florida’s reputation as a business-friendly state is largely due to the absence of a personal income tax. This feature attracts entrepreneurs and companies. However, this does not mean businesses operate in a tax-free environment. Companies conducting business in the state are subject to a framework of state and local taxes, and understanding these obligations is important for maintaining compliance.

Core State-Level Business Taxes

The Florida Department of Revenue administers several taxes that form the foundation of business tax obligations in the state. The specific liability for these taxes depends on a company’s structure and activities.

The Florida Corporate Income/Franchise Tax is levied on C corporations and any other entities, like LLCs, that elect to be taxed as a C corporation for federal tax purposes. A $50,000 exemption applies, meaning only net income above this threshold is taxed. The tax rate is 5.5% on income exceeding the exemption. Pass-through entities, such as S corporations, partnerships, and most LLCs, do not pay this tax at the entity level, as the income flows through to the owners.

The Florida Sales and Use Tax applies to the sale, rental, or use of most goods and certain services. Businesses are responsible for collecting this tax from customers at the point of sale and remitting it to the state. The statewide sales tax rate is 6%. Many counties impose an additional discretionary sales surtax, which increases the total rate, and businesses must collect both.

Florida’s Reemployment Tax is the state’s unemployment tax, paid by the employer on the first $7,000 of wages for each employee annually. The tax rate varies for each employer, with a standard rate of 2.7% for new employers. After a business has reported for a specific period, its rate is recalculated based on its employment history, with rates ranging from 0.1% to 5.4%.

Common Local and Transactional Taxes

Businesses in Florida also encounter taxes imposed at the local level or on specific transactions. The applicability of these taxes depends on the business’s location and operations.

The Tangible Personal Property (TPP) Tax is an ad valorem tax levied by county property appraisers on business assets like machinery, equipment, and furniture. Inventory is exempt from this tax. Businesses must file a TPP tax return with their county property appraiser, and a $25,000 exemption applies to the property’s assessed value.

Most businesses must obtain a Local Business Tax Receipt, which is a fee for the privilege of operating in a specific city or county. A receipt is required for each business location and for each distinct business category. The cost varies by jurisdiction and business type, and receipts must be renewed annually by September 30th.

The Documentary Stamp Tax is a transactional tax on documents that transfer an interest in real property or create a written obligation to pay money. This includes deeds, notes, and mortgages. The rate for deeds is $0.70 per $100 of consideration, while the rate for notes and mortgages is $0.35 per $100 of the obligation, with the tax on notes capped at $2,450.

Tax Obligations by Business Entity Type

The combination of taxes a business must pay in Florida is tied to its legal structure. While some taxes apply universally, others are specific to certain entity types.

Sole Proprietorships and General Partnerships

For sole proprietorships and general partnerships, business income passes directly through to the owners’ personal federal tax returns. Since Florida has no personal income tax, this income is not taxed by the state. These businesses are still responsible for other taxes, including collecting sales tax, paying reemployment tax if they have employees, and complying with local requirements for Business Tax Receipts and Tangible Personal Property tax.

Limited Liability Companies (LLCs)

By default, a single-member LLC is taxed like a sole proprietorship, and a multi-member LLC is taxed like a partnership. This means income passes through to the members and is not subject to state income tax. However, an LLC can elect to be taxed as a C corporation, which makes it subject to the Florida Corporate Income Tax. Regardless of its federal tax election, an LLC must handle all other applicable state and local taxes.

S Corporations

S corporations are pass-through entities and are not subject to the Florida Corporate Income Tax at the entity level. The corporation’s income, deductions, and credits are passed through to its shareholders. Like other business structures, S corporations must still collect sales tax, pay reemployment tax for employees, and satisfy local obligations for business tax receipts and tangible personal property taxes.

C Corporations

C corporations are the primary entities subject to the Florida Corporate Income Tax. A C corporation is taxed on its profits at the corporate level before any distributions are made to shareholders. These entities must file a Florida corporate income tax return and pay the tax on net income exceeding the $50,000 exemption. C corporations are also responsible for the full range of other business taxes, including sales tax, reemployment tax, and local tax requirements.

Information Needed to Register for Florida Taxes

Before collecting and remitting taxes, a business must register with the Florida Department of Revenue using the Florida Business Tax Application. This application is used to register for several common taxes, including sales and use tax and reemployment tax. Gathering these items before starting the application on the Florida Department of Revenue’s website can streamline the registration process.

To complete the application, a business owner will need:

• A Federal Employer Identification Number (FEIN)
• The legal business name, any “doing business as” (DBA) name, and the physical address
• The North American Industry Classification System (NAICS) code for the business activity
• Full names, addresses, contact information, and Social Security Numbers for owners or officers
• Bank account information, including the routing and account number, for electronic filing

How to File and Pay Florida Business Taxes

Once registered, a business must adhere to a regular schedule for filing returns and remitting the taxes it owes. The Florida Department of Revenue’s online e-services portal is the main platform for filing returns and making payments for most business taxes.

Payments can be made through electronic methods like Electronic Funds Transfer (EFT), which allows for a direct debit from a business bank account. The online system provides a secure way to manage these transactions. Depending on the amount of tax remitted, some businesses may be required to pay electronically.

Filing frequencies and due dates vary depending on the specific tax. For example, sales and use tax returns are due on the 20th day of the month following the collection period, which could be monthly, quarterly, or annually. Corporate income tax returns have an annual deadline that aligns with federal due dates. After submitting a return and payment online, businesses receive a confirmation number to retain for their records.