Florida has the fourth largest economy in the US and small businesses make up over 99% of all businesses. They employ 3.3 million people, which is over 42% of Florida’s workforce. The unemployment rate in the Sunshine State is 3.2%, which is below the national average. However, despite the encouraging economic climate, running a business in Florida isn’t without its challenges. Here’s what you need to know if you decide to run a business in Florida.
Florida has numerous tax benefits
Florida is known for its tax advantages. Apart from Florida, only six other states don’t have a personal income tax. This is great news for flow-through entities, such as LLCs. The state sales tax rate is currently 6%. A growing number of entrepreneurs are relocating their businesses from other states to Florida in order to reduce their tax burden. Besides, moving anywhere in the state hassle-free is not only possible but also affordable.
The cost of living and operating a business in Florida
Compared to other major economic hubs in the country, living in Florida is more affordable, although the cost of living is slightly above the national average. Living and running your business in Florida costs less than doing it in NY, LA, San Francisco or Chicago.
Bear in mind that prices vary depending on the location within the state. For example, Miami is less affordable than other metropolitan areas, such as Tampa Bay or Jacksonville. If your business needs a physical location, do thorough research of the local market since real estate costs can vary widely.
Currently, the minimum wage rate in Florida is $8.46. Overtime payment requirements are not mentioned in Florida’s labor laws. Providing your employees with severance pay when you let them go isn’t required by any law. Providing your employees with vacation benefits or sick leave, paid or unpaid, isn’t required by any law either.
Florida has sufficient access to capital
Another benefit of running a business in Florida is having access to capital for starting and expanding your company. According to some entrepreneurs, the state of Florida has considerable amounts of investment capital from angel investors and venture capitalists.
Florida hasn’t always managed to attract private investors. However, the situation changed considerably in recent years. Nowadays, the Sunshine State offers many investment opportunities and has several economic hubs that encourage the formation and development of startups. One no longer has to be located in large metropolitan areas such as New York City and Silicon Valley to access investment capital. The state that used to be excluded from the startup and VC scene has become one of the most cost-effective and promising locations for startups.
Florida’s top five industries for small business are:
- accommodation and food services,
- healthcare and social assistance,
- and professional, scientific, and technical services.
Florida has a competitive labor market
Florida’s low unemployment rate shows how strong its economic performance is. Still, there is a downside to this. The process of recruiting new employees can be competitive and expensive. In addition, it can be hard to retain talented employees. Your competitors will try to attract skilled candidates with attractive benefits packages, higher salaries and wages, work-from-home policies, and other perks.
The seasonal economy makes it harder to run a business in Florida
Running a business in Florida requires some adjusting to its seasonal economy. Florida is a tourist state. The busy season lasts from Thanksgiving to Easter. When the weather is nicer and warmer in the northern US states, there are fewer tourists and snowbirds in Florida. Consequently, business slows down for the entrepreneurs who run a business in Florida year-round. Running a successful business in the Sunshine State means preparing for the slow months.
There’s also hurricane season – another slow period for business. During hurricane season, customers frequently evacuate. In addition, storms pose a disaster risk. Protecting your brick-and-mortar business from the damage natural disasters may cause should be a priority.
Starting a business in Florida – legal requirements
- To start your own business in this state, you must first determine whether you need a license. Then, you need to register your new company with the state Department of Revenue and the federal IRS. In case it’s a corporate entity or a business under a fictitious name, you are also required to register your business with the Department of State.
- When it comes to the cost of starting a new company, it varies depending on the nature of your business. There is a $100 fee to file articles of organization with the Secretary of State’s office. There’s also a $25 registered agent fee. Furthermore, a business license and business insurance may be a requirement. For a copy of your articles of organization, you must pay an additional $30 fee and a fee of $5 for a Certificate of Status.
- When it comes to insurance, commercial liability insurance isn’t mandatory in Florida. Still, it is recommendable to purchase an insurance policy. Workers’ compensation insurance is a requirement if your company has at least four employees, whether they work full-time or part-time. Furthermore, you must report claims within a week after you are notified of an injury or accident.
- As mentioned earlier, obtaining a business license may be mandatory to legally run a business in Florida. If you fail to obtain the proper licenses and permits, the future of your business may be at risk. You can obtain a general business license, a.k.a. business tax receipt, when registering your company with the county tax collector. Depending on the nature of your business and its location, there may be additional licenses and permits to obtain. Obtaining a business license in the state of Florida costs at least $125. Additional licenses or permits come with additional costs.
To get familiar with your specific obligations and requirements under Florida law, contact your local, county and state officials.
Briana Palmer holds a degree in economics and works for Authority Moving Group. She also helps her husband run a small family business in their hometown of Key West, Florida. Her hobbies include scuba diving, surfing, and embroidery.