Know the law
Anyone who launches a business should expect, at the very least, to pay federal income tax on their earnings. But depending on your business type, size and personnel, you also may be subject to various state levies, including reemployment tax, sales and use tax and tangible personal property tax.
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
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 online or by mail with the Florida Department of Revenue using Form DR-1 (Florida Business Tax Application). Taxes may be filed electronically or, if 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: Florida imposes a statewide general sales tax rate of 6%. However, individual counties may impose an additional tax of up to 2.5% 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 a TPP return their first year; no additional filing is required if the amount of tangible property remains at or below $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 Tax Cuts and Jobs Act passed in December 2017, some small business owners may also qualify for a 20% pass-through deduction, which is currently scheduled to last through 2025. For more detailed information, consult a tax professional.
Due: April 15 / Quarterly estimates due: April 15, June 15, Sept. 15, Jan. 15
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
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.
FEDERAL LABOR LAWS
Federal Minimum Wage
Requires federal employees to be paid a minimum wage of $15.00 per hour, effective January 30, 2022. (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
Beginning in September 2021, requires employers in Florida to pay a minimum wage of $10.00 per hour and at least $6.98 per hour for tipped employees in addition to their tips. Each year thereafter, Florida’s minimum wage will increase by $1.00 until it reaches $15.00 per hour on September 30, 2026.
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)
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. (myflorida.com/DBPR/child-labor)
Private citizens or companies may request a state-only criminal history record check of an individual through the Florida Department of Law Enforcement website for a fee of $24 per case. (fdle.state.fl.us)