When it comes to forming an LLC there are plenty of advantages and disadvantages in general. One thing to consider is how the tax system works in each state and whether it can benefit an LLC company or not. The tax system in Florida is ranked the fifth best out of all the states for LLC companies. That is why many companies form an LLC in Florida and here are some benefits to think about.
In Florida the sales tax is 6%, whereas income tax is 5.5%. However, as an LLC business owner, you are not required to pay income tax. In fact, you simply need to keep a record of your profits and losses within the company. This means that you as a company are saving a lot of money by not paying income tax. As an individual business owner, you have to do individual tax returns, whereas a corporation or partnership company has to do it as a partnership tax return.
However, if your LLC company has partnership, you also do not have to pay taxes as employers and the wages will not be taxable. If the company has other employees registered under the company, that is when you have to pay tax through wages. This is only exempt if the employees are family members, since you cannot pay wages to family members under the business.
Another great benefit when forming an LLC in Florida is that you can have as many members as you want to, without any limits. Again this works for you when it comes to taxes, because as individual members your wages will not be taxable.
Therefore, if you wish to save money on your business and have tax flexibilities for your company, then you should consider setting up an LLC in the state of Florida.
How do I set an LLC up?
There are five easy steps in order to set up your LLC in Florida. First, you have to come up with a name for your business that isn’t similar to other businesses and includes LLC or Limited Liability Company in it. The second step of the procedure is to choose a registered agent that will be held responsible for all the legal paperwork, taxes and lawsuits for your LLC company. The third step is to file your Articles of Organisation, which includes important documents for your company. After that you have to form an operating agreement, which means you elect each member for each role they are responsible for and finally, you have to get an EIN (Employment Identification Number).
What else do I need to consider?
Once you get an EIN, you are able to set up a business bank account and business credit card. This separates your business and personal finances and assets, which is also very useful in order to track your personal individual tax return when needed. Another benefit apart from the flexible tax that Florida offers is the state fee. The state fee costs $125 and there are no additional costs, unless you need help with setting up your LLC.
When it comes to running a business, you need to consider all benefits and figure out ways to cut costs ethically. That is why applying for your LLC in a state that offers flexible tax is an advantage for your business. If you hire a registered agent who can legally represent in the state of Florida, then that is an additional advantage for you, since their business address will go on the public record. In order to keep the LLC active, you need to be consistent with your cash flow, ethically comply with the rules and have good time management in order to pay the deadlines on time without facing any consequences. Having an LLC can help you as a business owner, for it can protect you and your company in many ways.