Florida LLC Taxes
Florida LLCs pay some of the lowest taxes in the country, which is why so many business owners flock there. LLCs in Florida are taxed as pass-through entities by default, meaning they don’t have to pay corporate income tax. Profits and losses are passed on to the members, who pay individual taxes on their share. Luckily, Florida has no individual income tax, so LLC members only need to pay the federal self-employment tax of 15.3%. Florida has a 6% sales tax, and some municipalities impose additional local taxes. Here’s what you need to know about Florida LLC taxes.
In this article, we’ll cover:
How Are Florida LLCs Taxed?
If you have a single-member LLC, your default tax classification is “disregarded entity,” just like a sole proprietorship. Multi-member LLCs are taxed as partnerships by default. These are the tax forms that LLCs with default status need to file:
- Single-member LLC—Form 1040 (usually Schedule C, but some SMLLCs file C-EZ, E, or F)
- Multi-member LLC—Form 1065
Florida LLCs can also elect to be taxed as an S-corp or C-corp.
Florida LLCs taxed as S-corp
Both LLCs and corporations can apply with the IRS to be taxed as S-corps by filing Form 2553. S-corps are pass-through entities, so they don’t have to pay corporate income tax. Also, S-corps can make distributions to their members that aren’t subject to the 15.3% self-employment tax. However, not all LLCs will save money by electing S-corp status. It’s a good idea to consult a CPA before you make this move.
S-corps report their income by filing IRS Form 1120-S.
LLCs taxed as C-corp
While it’s not common, LLCs can also elect C-corp tax status, the default status for corporations. C-corps in Florida need to pay the federal corporate income tax of 21% and the state corporate income tax of 5.5%. Although C-corps are subject to greater taxes than regular LLCs, they are also eligible for more tax breaks, so this choice will make sense for some LLCs. However, you should consult your accountant before electing C-corp status.
Florida State Income Tax
Florida has no state personal income tax and lower than average corporate income tax, making it one of the most tax-friendly states in the US. If your LLC has default or S-corp tax status, you won’t need to pay any state income tax on profits you make in Florida. However, if you have an LLC C-corp, you will need to pay Florida’s corporate income/franchise tax of 5.5%.
To learn more about Florida corporate income tax, visit the FL Department of Revenue website.
Sales and Use Tax
Florida has a state sales tax of 6%. Many counties in Florida charge an additional local sales tax—called a “sales surtax”—of between 0.5% and 1.5%. Check out the Discretionary Sales Surtax Information guide to find the surtax in your county. If your business sells taxable goods or services, you’ll need to complete the Florida Business Tax Registration application.
Local Florida Taxes
You should contact your municipal government office and learn about the local taxes in your county. You’ll need to pay local taxes both in the county where your LLC is based and in any other counties where you do business.
In addition to local sales tax, there are a few other types of local option taxes that some Florida counties impose, including:
- Convention development tax
- Food and beverage taxes
- Fuel tax
- Municipal resort tax
- Tourist development taxes
- Tourist impact tax
- Transient rental taxes
Other Taxes in Florida
We’re not done yet! Here are some other taxes your LLC might need to pay.
Florida State Employer Taxes
Most Florida employers need to pay for workers’ compensation insurance and reemployment tax (aka unemployment tax).
- Reemployment Tax—The tax rate for new employers during their first 10 quarters (2.5 years) is 2.7%. After that, the rate will depend on the size of your payroll and the amount of reemployment benefits charged, with a maximum rate of 5.4%.
- Workers’ Compensation—This insurance compensates workers who are injured on the job and is mandatory for most Florida employers with 4 or more employees. Workers’ comp. insurance costs an average of 26 cents per $100 of payroll for low-risk employees and $19.40 per $100 of payroll for high-risk employees.
To learn more, go to the Florida Department of Economic Opportunity website.
Industry Taxes
LLCs in certain industries will need to pay additional taxes. Here are some industry-specific taxes in Florida:
- Asphalt use tax
- Communication services tax
- Fuel and pollutant taxes
- Municipal public service taxes
- Oil and gas severance taxes
- Prepaid wireless E911 fee
Do foreign LLCs in Florida need to pay Florida taxes?
Yep! If your Florida foreign LLC (any LLC not based in Florida) wants to do business in the Sunshine State, you’ll need to register with the Florida Department of Revenue and pay any applicable state and local taxes.
