According to the State of Florida, incorporating a new business is easy and can be done in less than an hour. The process will cost you $50-$300 depending on your business type (if you want to get fancy with it), and that’s all. Follow these steps to succeed in forming your company in Florida.
How to Start a Business in Florida
Step 1: Choose the Right Business Idea
This is the first and most important step. You can’t do anything without a good idea that will bring you sustainable revenue. So how to choose the right business? The best recommendation is to find something people are already paying for somewhere online.
You want to make sure your idea fits these requirements:
- Find something people are actually buying on the Internet, or get creative with it
- Find something that has the potential of making at least $300-$500 per month
- If your product doesn’t sell itself, have an email list ready with 10k subscribers
- Make sure you’re not reinventing the wheel because there’s no point in creating competition
Once you’ve found your golden nugget, don’t waste time navel-gazing, you have work to do.
Step 2: Plan Your Florida Business
Once you have the idea, you should start planning. One of the most important things to consider is your sales strategy. How will people know about your product/service? If it’s a physical good, figure out how to ship it around the country or world if needed.
It doesn’t matter if you are selling t-shirts or consulting services online-you need to have a strong marketing plan in place before starting up your company. Even with a great product, no business can survive long-term without an effective method for acquiring new customers.
These are just some of the things that you should have ready at this point:
- A list of keywords that describes your “niche.”
- Website copy and design ready
- Your product ready
- An idea for a brand name
- A logo, colors, etc.
Name Your Business
One mistake many entrepreneurs make is choosing a random name for their business. Or, even worse, they choose something related to their personal name or nickname.
These approaches may feel comfortable, but they are usually not the best choices. Your choice of brand should be short and memorable. Make sure it is also not already taken by checking on the following resources:
- The USPTO Database for Trademarks
Depending on your type of business, you will need a “doing business as” (DBA) name as well as a registered trademark/logo too. This comes from the Secretary of State’s office in some states, but in Florida, it is with the County Clerk’s office where your physical address is.
Find a Business Location
Once you’ve found your name and prepared your business documents, you need to set up a physical office. One of the best things about starting a company in Florida is that there are no state taxes on small businesses!
As for location selection, settle on a spot that is accessible to your target customers and try to find something prominent. If you’re setting up shop in the USA, it makes sense to be near a major city, but if you want to stay competitive on a global level, make sure your location offers great transportation options for people from all over the world.
Conduct Market Research
Now that you have the physical location picked out, it’s time to do some research. Because starting a company is an expensive endeavor for many people, you’ll want to make sure there is enough demand for your product or service before investing all of the money into your new venture.
One way to do this is through market research. If you’re not sure what strategy will work best for gathering data about your potential customers’ buying habits, here are three tried and true methods:
- Focus groups
- A/B Testing (also known as split testing)
1. Focus Groups allow you to meet with small groups of people in person where they can give their candid feedback about any marketing material or products that you offer them. This information is invaluable because it comes straight from the source without any bias.
2. Surveys are very similar but can be handled almost completely online now, thanks to companies like SurveyMonkey. You may also want to consider using Google Forms or other solutions that let you create custom surveys with unlimited questions and email notifications.
But, whatever method you choose, make sure that whatever feedback you receive is organized in a way that allows for easy analysis later on. 3-5 focus groups or individual interviews should be more than enough to get started, so start this part of your business plan early!
Write a Business Plan
Before you actually start doing business, the final step is to write a business plan, and this document will serve as your roadmap for growing your new company.
- When creating it, mention how much money you think the company could feasibly make within its first year of operation and then project out yearly income up to five years in advance.
- Don’t forget expenses when projecting revenue! An important idea in this process is what’s called the break-even point–the moment when revenues are just about equal to expenses. You’ll want to aim for this date being somewhere in the third or fourth year that your corporation is active because this means that all profits can be reinvested back into your business instead of being taxed by the government.
- If you have any debt to take care of, you’ll also need to include debt service in your projections. For example, if you plan to borrow from a traditional bank or a friend/family member, this number should be the monthly expense you have to pay once you sign any loan agreements.
- Keep in mind that your projected income is just a starting point and might not be accurate for every company. Also, keep in mind that many businesses lose money at first because it’s part of the process! If things get better, great but don’t expect immediate success when you start out. You can improve upon these numbers later after trying out different strategies to see what works best for your new business model.
Step 3: Get Funding
Unless your business is located in Ukraine, you’re going to need to get some funding. If you can self-fund the business yourself, that’s always best since you won’t have any outside influences discouraging growth or making cuts into your profits. You can also check out our article about alternative startup funding options.
However, if this isn’t an option for you, it might make sense to seek out investors who are willing to put up enough money so you can focus on growing the company rather than worrying about every financial shortfall.
Just like with market research, there are many different strategies at your disposal when it comes time to find people willing to invest in your idea:
- CircleUp and AngelList allow entrepreneurs and investors to link up through a social network – Pitching potential investors is one of the most straightforward methods and should only take around an hour of work to prepare for if you know exactly who you want to meet with.
- The Automated Venture Creation System (AVCS) was created by Dr. Carl Schinder, a business professor at Florida State University. This model takes into account what kinds of businesses tend to succeed in certain funding climates and then matches them with local funding sources that are compatible with their respective industries.
Step 4: Choose a Business Structure
You’ve done your research, you’ve written a business plan, and now you’re ready to officially form the company.
The first thing to decide is what type of legal structure best fits your needs. There are five different options to choose from:
This type of structure is great for one-time transactions or if an individual simply wants to transfer assets to their name rather than create an extra layer between them and their assets. It’s also the simplest option, so it makes sense for people who don’t want there to be any complications when filing taxes later on.
A simple partnership between two or more people that functions just like a sole proprietorship except that this entity deals with multiple people instead of just one.
Limited Liability Company (LLC)
An LLC is a newer type of business structure that offers more flexibility than a traditional corporation while reducing risk by limiting the amount of financial liability each member has to take on.
Because this entity was created as an alternative to the traditional C-Corporation, many people find this structure easier to work with and manage because you’ll only have to file articles of organization and annual reports instead of having to deal with all sorts of red tape.
Limited Partnership (LP)
If two or more partners are working together and sharing ownership, profits and losses equally, they might want to consider forming a limited partnership. This legal structure allows for individual investors’ personal assets to be protected while at the same time allowing them to share in the risks and rewards of running a business.
Created originally by the federal government to offer some tax advantages to entrepreneurs who wanted to create their own small business entity.
However, since lawyers don’t like writing up too many contracts for businesses with this structure, it currently doesn’t make sense for most people to use this type of legal structure unless you know your company will be expanding within a few years or if you plan on bringing in outside investors.
Step 5: Register Your Florida Business
Before you go try to get funding, make sure there’s nothing standing in your way of actually starting up the business. The first thing you’ll want to do is find out whether or not you need to register with the State of Florida (and if so, how).
- If the only thing you will be selling is products that are already in your possession, then you do not need to register with Florida’s Department of State. However, if you plan on selling products for which you don’t own the rights (i.e., knockoff handbags), you’ll need to apply for a trademark and register it with the State.
- If your company does not meet any of these two criteria, then go ahead and visit Florida’s website and search “Doing Business As.” You should find plenty of helpful information regarding how to start up a business in Florida through this section.
Step 6: Get Your Employer Identification Number
The next step is to get an Employer Identification Number (EIN) from either the federal government or the State of Florida if your company is an LLC/LP/S-Corp.
However, this step isn’t necessary if you are just starting out as a sole proprietor, but for everyone else who plans on filing taxes as an LLC/LP/C-Corp, it’s highly advised to take care of this now before you do anything else. Having one early will save you time come tax season because you won’t have to explain why there wasn’t one on your records yet.
Step 7: Set up Business Banking, Credit Cards, and Accounting
This is one of the most important steps when it comes to starting up any business because you’ll need to make sure your business and personal finances will be in order. If you don’t, you’ll have some serious problems on your hands later on down the road.
1) Open A Business Bank Account
Make sure your bank account is set up with a Tax Identification Number so that you can write checks for personal and business expenses without having to worry about them being rejected later on down the line. Also, if you are planning on taking out loans or even applying for lines of credit, then this step needs to happen ASAP before someone looks over your financial records and decides against giving your company funds.
2) Setup Personal and Business Accounts For Credit Card Processing
When accepting payments from customers through credit cards, you can either set up an arrangement with a payment processor who charges a fee per transaction or uses the services of your bank and pay a flat rate.
Again, this step isn’t necessary if you plan on not accepting credit (or debit) cards for purchases, but it is highly advised to make sure your company is ready to take on all forms of payments available since most customers don’t carry cash around anymore.
3) Establish A Relationship With An Accountant
When starting out, many entrepreneurs come across problems that aren’t quite addressed by books (i.e., How To Start A Restaurant For Dummies). That’s when they need to hire someone like an accountant who can give them insight into what they’re doing wrong and, more importantly, how they can fix it.
Step 8: Get Business Insurance
One of the most important things you’ll need to do as a business owner is making sure your company is insured. In some cases, this may not be necessary, but for most small businesses, it will at least prevent any major catastrophes from sinking your company’s future.
This is a no-brainer when it comes to quality of life in the workplace. Though all companies should have this regardless, many entrepreneurs still take the risk and try to save money by passing on this requirement.
General Liability Insurance
This kind of insurance protects your business from an unforeseen event (i.e., someone slips and falls into a pool) that may result in serious injury or death. Not only will this protect you from litigation, but it’s also required if your company wants to lease property for its operation (the landlord won’t want anything to do with you if you don’t provide proof of having such coverage).
Excess Liability Insurance
Not as commonly used as General but still something to consider. Also known as Umbrella, this kind of insurance is important because it will cover any and all types of damages that exceed the amount you’re covered for through your other policies (i.e.: Worker’s Compensation and General Liability Insurance)
The experts at Startup Nation highly recommend having a separate policy for company vehicles so that if anything happens while on the job, you’ll be prepared.
Step 9: Obtain Permits and Business Licenses
Anytime you’re beginning a business, it’s important to make sure that the company is in compliance with all state and federal laws. This includes having inspections done on your premises as well as paying any necessary fees for operating your company (filing taxes, registering your name with the State, etc.).
Some permits and licenses may be free, whereas others will cost money, but either way, this should never be ignored if you want to do business legally.
Step 10: Hire Employees
After establishing your company and making it profitable, the next step would be to hire employees.
This isn’t necessary if you’re running a one-man show but once your business grows past that level, then hiring employees will become mandatory for keeping up with all of the work that needs to be done. Since this is another step that can take up a lot of valuable time, many people choose to outsource this part of their companies.
How is an LLC classified for Florida state tax purposes?
According to the State of Florida Department of Revenue, whether you choose to be taxed as an S-Corp or a C-Corp, depends on how many owners your company has. If there is only one owner, then it’s automatically treated as a sole proprietorship. But if an LLC has two or more members (owners), then it will automatically be treated as a partnership.
Is my Limited Liability Company required to hold an annual meeting?
Yes, all corporations that are organized in Florida need to hold board meetings at least once per year. This requirement can be fulfilled by either holding an in-person meeting within the state or through written consent (electronic correspondence).
At this time, shareholders/members can make changes with regard to business decisions, assets, officers, etc. If anyone wishes to be removed as an officer/director/shareholder, this should occur during this meeting.
Why do I need a registered agent?
A registered agent is someone who serves as the chief point of contact for your company with the State of Florida. They are responsible for receiving important documents on behalf of the business and will also communicate any important notifications that might require your attention.
This can help keep you out of trouble by ensuring that you’re always aware of what’s going on with your company in regard to legal matters.
What are Articles of Organization?
A document filed with the State of Florida by a person or persons wishing to create a limited liability company (LLC). It provides important information such as business name, agent for service of process, and registered office address. This is also sometimes referred to as the Articles of Organization.
How do I file my Federal Tax?
All businesses established in Florida need to complete Federal tax forms such as annual reports, personal income tax returns, and employment tax forms. These can be submitted online at www.irs.gov.
What are Fictitious Names?
Fictitious names are often used when you’re doing business under a different name that may not be your legal name. They should include the words “fictitious” or “doing business as” somewhere in the title to avoid any confusion. Just make sure you file this name with your local Clerk’s office or register it with the State of Florida.
What is an Operating Agreement, and why would I need one for my LLC?
An agreement that’s made between co-owners in a limited liability company. It can address things such as voting rights, roles within the LLC, and how profits/losses will be distributed. Although it’s not required to have an LLC, it is highly recommended since this provides you with protection from your partners in the event of a disagreement or any lawsuits against your business.
What is an “Annual Report,” and do I need to file one with the state?
A report is submitted annually by corporations doing business in Florida. Annual reports must include information like: Articles of Incorporation (corporations only), meeting minutes (corporations only), board members/officers (LLCs & Partnerships Only), and dissolved corporations (corporations only).
What is a “Domestic Corporation,” and what are the benefits?
A company that’s formed by filing Articles of Incorporation with the Florida Secretary of State. Unlike an “International Corporation,” foreign status companies cannot transact business in Florida without first registering as a foreign entity. However, this does not apply to professional corporations such as law or accounting firms.
What are Holding and Operating LLCs?
Holding LLCs are used to hold assets such as property, business bank accounts, etc. This protects the member’s interests by segregating liability onto the Holding Companies instead of everything being placed on one entity. Operating Companies are LLCs that actively conduct business and generate income for their owners.
If you’re an entrepreneur thinking about forming a company in Florida, it’s important to know that this costs little (license costs are generally paid only once, whereas permits and tax filings require few fees on an annual basis) but can make all of the difference in your success. By following these easy steps, anyone should be able to form their own business without any problems.