A Road Map for Success
Building a business is a lot like planning a trip.
Know what taxes you’ll need to pay. Anyone who launches a business should expect to at least pay federal income tax on their earnings. But as a small business owner in Florida, you also may be subject to reemployment tax, sales and use tax, tangible personal property tax and more. You may need to consider the following potential tax liabilities:
Corporate Income Tax
• Corporations are subject to a 5.5% corporate income tax and must file a return annually even if no tax is due. C-corporations pay the tax on Form F-1120. If your corporation owes more than $2,500 annually in Florida corporate tax, you must make quarterly estimated tax payments.
• Limited Liability Companies classified as corporations for federal income tax purposes must file a Florida corporate income tax return; limited liability companies classified as partnerships must file a Florida Partnership Information Return (Form F-1065) if they are doing business in Florida and one or more of their owners is a corporation. Also required to file: the corporate owner of an LLC that is classified as a partnership for Florida and federal income tax purposes.
• S-Corporations usually do not have to file a Florida corporate income tax return unless there is federal taxable income.
Due: April 30, July 31, Oct. 31, Jan. 31
Corporate Income/Franchise Tax Emergency Order
On April 27, 2020, Florida Department of Revenue Executive Director Jim Zingale issued an emergency order extending certain corporate income/franchise tax (CIT) returns and payments. For more information, visit the General Tax Program COVID-19 webpage.
• Reemployment Tax Required of Floridians who paid at least $1,500 in wages within a calendar quarter, have employed one person for any portion of a day in 20 different weeks during the calendar year or are liable for federal unemployment tax.
Due: April 30, July 31, Oct. 31, Jan. 31
• Sales and Use Tax Businesses engaged in taxable transactions must register using Form DR-1 or at the Florida Department of Revenue’s e-file site. File electronically or, if the tax is less than $20,000 per year, on Form DR-15. Businesses having $1,000 or less per year to report may file quarterly; $500 or less, semiannually; $100 or less, annually.
Note: Individual counties may impose an additional tax on transactions that are subject to state sales and use tax; report this surtax on Form DR-15 along with sales and use tax.
• Use Tax on Out-of-State Purchases When out-of-state sellers fail to collect Florida sales tax, buyers must make the payment on their own using Form DR-15MO. Applies to items purchased out of state from internet sites, mail order catalogs, auctions, shopping networks or toll-free shopping services, and to items physically purchased out of state when the merchandise is shipped to a Florida address.
Due: First day of the month after the quarter in which the purchase was made
• Tangible Personal Property Tax An annual tax on personal property used for commercial purposes that is not included in the assessed value of the real property, excluding business inventory and state-registered vehicles; paid on Form DR-405 to the county property appraiser. All new businesses must file their first year; no additional filing is required if the amount of tangible property is less than $25,000.
Due: April 1
• Personal Income Tax For sole proprietorships and partnerships, profits and losses from the business are typically passed through to the owners and reported on their individual income tax returns. Under the American Tax Cuts and Jobs Act passed in December 2017, some small business owners may also qualify for a 20% pass-through deduction. For more detailed information, consult a tax professional.
Due: April 15 / Quarterly estimates due: April 15, June 15, Sept. 15, Jan. 15
• Self-Employment Tax All net profits derived from doing business as either a sole proprietorship or partnership with no employees are subject to federal self-employment tax, which is equivalent to the Medicare and Social Security taxes employers withhold from their employees’ paychecks.
Due: April 15
Catapult Lakeland, Polk County
Starting a business from scratch can be tough, especially if you try to go it alone. Thanks to Catapult Lakeland, startups in central Florida don’t have to. Recently re-located along Lake Mirror in downtown Lakeland and tripled in size to 38,000 square feet, Catapult provides fledgling entrepreneurs with ample space and the support they need to grow new business ventures. Among new features here: a manufacturing area and commissary kitchen for food startups. “Entrepreneurs can grow their businesses without having to invest in equipment and infrastructure,” says Christina Graham, Catapult Lakeland’s executive director. “Our goal,” she adds, “is that entrepreneurs use Catapult as a starting space and launching pad, then move out, hire and occupy space here in Lakeland.”