You know your starting point and your final destination, but for all those miles in between, you’ll need a road map. So let’s create one, beginning with eight must-do tasks you’ll need to tackle first.
Task 1
Choose a business structure. Your options are: sole proprietorship, partnership, corporation or limited liability. Choosing the right structure depends on the type of business you envision and whether you intend to have employees or go solo. See dba Florida™ for descriptions of each.
Task 2
Choose a name. What will you call your business? The easiest choice: your own name. You might also consider keywords that relate to what you do or where you are located. Look to pop culture and to friends for ideas too, keeping in mind that the best names are:
- Concise – fewer than 10 letters for easy recall, log-ins and tweets;
- Flexible – in case you expand to new product lines or locations later on; and
- Original – search uspto.gov or trademarkia.com to be sure no one else is already using the name you’ve chosen.
And one final caveat: If you plan to conduct business under a name other than your own, you must file a Fictitious Name registration application with the Florida Department of State, Division of Corporations. See dba Florida™ for details
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Task 3
Choose a location. Deciding where to site your business can be as important as choosing a name. As you ponder locations, consider these questions:
- Is the area zoned for your type of business?
- Can you afford the monthly rent at this location?
- Is the site occupant-ready or will renovations be needed?
- Are surrounding businesses complementary or competing?
- Is there a readily available labor pool you can draw from?
Task 4
Apply for an Employer Identification Number (EIN). To pay federal, state and local taxes, you must have an official federal ID number. If you are operating as a sole proprietor with no employees, your Social Security number is enough; otherwise, you will need to obtain an EIN. It’s free at irs.gov/businesses/.
Task 5
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:
FLORIDA TAXES
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
FEDERAL TAXES
• 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.”
Launch Your Online Business
Online businesses are popping up everywhere, and no wonder. Startup costs may be low and, once launched, very little overhead is required. You can work from practically anywhere, set your own hours and pocket all the profits.
You will still need to do many of the same things new brick-and-mortar business owners have to do: choose a business structure, choose a name, choose a location (your home most likely), pay taxes, secure the necessary permits and licenses, obey the law, and craft a written business plan.
And since a website is where your business “lives,” you will need to purchase domain registration and web hosting and create the actual website. If you’re only mildly web savvy, hiring a professional who knows about proper configuration, logo creation, search engine optimization, etc., will be money well spent and you’ll be left with time to pursue funding and promotion opportunities.
Task 6
Secure the necessary permits and licenses. Unless you are working from home as a sole proprietor with no employees, you will likely need one or more of the following to legally open and operate your business:
- Zoning Permit Must be obtained before receiving a business tax receipt. If you are within city limits, apply at the city zoning department; outside city limits, apply at the county zoning department. Note: Some jurisdictions require both city and county permits.
- Business Tax Receipt (aka Occupational License) If your business is within city limits, and the city and county issue separate business tax receipts, contact your municipal and county government offices to determine if you need just one or both.
- State and Professional Business Licenses More than 300 job categories/professions require a license from either the Florida Department of Business and Professional Regulation or the Florida Department of Agriculture and Consumer Services. Health-related professions/businesses are licensed and regulated by the Florida Department of Health. Costs vary and applicants must meet established criteria.
- Health Permits and Licenses Required for public lodging and public food service businesses; available from the Florida Division of Hotels and Restaurants. Licenses for retail food stores, food processing plants and food storage/distribution businesses may be obtained from the Florida Department of Agriculture and Consumer Affairs.
- Beverage Licenses Businesses that sell alcoholic beverages must apply for a beverage license through the Florida Department of Business and Professional Regulation; fees depend on types of beverages sold or served. Retailers and wholesalers of beer, wine or liquor must pay federal occupational tax and obtain a control number from the U.S. Department of the Treasury.
- Retail Establishment Licenses Required by the Florida Office of Financial Regulation for any business financing the sale of goods or services sold by installment contract or revolving charge account to a retail buyer. Also subject to licensing: collection agencies, consumer finance companies, mortgage brokers, securities dealers, investment advisors, mortgage business schools.
- Environmental Permits Required for any business that is an actual or potential polluting source; one-time construction permits and renewable operating permits are also required. Permitting is mandated for such activities as dredge and fill, storm water construction, water treatment and sewage treatment. Apply through the Florida Department of Environmental Protection.
For more detailed information about permits and licenses pertaining to your specific business, visit myflorida.com/dbpr and sunbiz.org.
Task 7
Expand your knowledge of labor law.You don’t have to be an expert in labor law to run a business, but it helps to have at least a working knowledge of federal and state requirements with regard to employee health, wages, safety and fair treatment. See the following for a list of laws every business owner should be familiar with and websites to find more information.
FEDERAL LABOR LAWS
- Federal Minimum Wage Requires employers nationwide to pay a minimum wage of $7.25 per hour and overtime pay of not less than one-and-one-half times the regular pay rate after 40 hours of work per week. (dol.gov)
- Occupational Safety and Health Act Requires businesses to protect their workers from health and safety hazards on the job. (osha.gov)
- The Americans with Disabilities Act Prohibits employment discrimination against qualified individuals with disabilities; requires public accommodations and commercial facilities to comply with specified accessibility standards. (ada.gov)
- Family and Medical Leave Requires businesses employing 50 or more to give certain employees up to 12 weeks of unpaid, job-protected leave per year (26 weeks for qualifying military caregivers) while preserving their health benefits. (dol.gov/whd/fmla)
- Equal Pay Act Prohibits wage discrimination between men and women performing substantially equal work within the same workplace. (eeoc.gov)
STATE LABOR LAWS
- Florida Minimum Wage Requires employers in Florida to pay a minimum wage of $8.56 per hour and, for tipped employees, a minimum wage is $5.56 per hour.
- Workers’ Compensation Requires employers with four or more employees (full- or part-time) to carry workers’ compensation coverage for their employees; different requirements apply for construction and agriculture. (myfloridacfo.com/division/wc)
- Child Labor Workers under age 18 cannot work in certain hazardous occupations, including excavation, electrical work, roofing and mining, or around explosives, toxic or radioactive substances or dangerous equipment. Additional occupations are banned for children ages 14-15. Minors cannot work during school hours without an exemption.
- Background Checks Private citizens or companies may request a state-only criminal history record check of an individual through the Florida Department of Law Enforcement website.
5 Ways to Tweak Your Business Plan
1. Package your plan in a loose-leaf binder. It’s easy to make revisions as conditions change.
2. Be thorough but concise. Avoid flowery language. Tell your story with hard facts instead.
3. Do your homework. Identify your target market and address potential obstacles up front.
4. Tout your strengths with concrete evidence. Instead of “My product is priced significantly less than its closest competitor XYZ,” say: “By pricing my product 20% below XYZ, I’ll be able to recoup costs within six months.”
5. Make it personal. Introduce your management team and stress the specific talents each brings to this new venture.
Task 8
Commit your plans to paper. Big dreams have launched many a new business, but they aren’t enough to sustain one. To ensure that you start off on the right track and can carry your vision through to completion, you will need to prepare a written business plan. Committing your plans to paper may seem like busy work. But to potential investors, the extra effort you put into crafting a workable business plan may be just the proof they need to consider you and your business worthy of their financial support.
An effective business plan describes: (1) the nature of your business; (2) how you intend to achieve specific goals for your business; and (3) the profits you expect to gain as a result. And since all business plans typically consist of the same 8-10 specific elements, there’s no mystery involved in putting one together.
Why you need a business plan To succeed as a business owner, you need to craft a written plan for two important reasons:
The process of writing a plan causes you to think about every aspect of your business and devise solutions to potential problems before you have to face them.
No potential investor or financial institution will take you or your business seriously without one.
What to include in your business plan A business plan typically consists of these elements:
- Executive Summary Highlight the key strengths of your plan, including where you want to take your company and why your idea will be successful.
- Company Description Make this your extended “elevator pitch” to help readers, especially potential investors, quickly grasp the uniqueness of your business.
- Market Analysis Demonstrate that you understand your industry, target market, customers, competitors and pricing structure.
- Organization and Management Describe your company’s organizational structure; introduce the principals and key members of your management team.
- Service or Product Line Emphasize the benefits you can provide to current and potential customers.
- Marketing and Sales Explain how you plan to promote your product, create customers and boost sales.
- Funding Requests Lay out current and future funding requirements; tell how you will use any funds you may receive and the types of funding you prefer.
- Financial ProjectionsSummarize projected income and expenses, past credit history, intended allocation of resources and other financial details.
- Appendix Provide supporting information and documents, including but not limited to: your credit history; letters of reference; resumes of key managers; leases; licenses, permits and/or patents; a list of business consultants (attorney, accountant, etc.); relevant research, magazine articles or book references.