How to File LLC Taxes in Florida? (A Complete Guide)
As a Florida business owner, you must ensure your firm's taxes are paid correctly and on time. However, knowing the correct tax forms to submit and the tax filing requirements needed by the Secretary of State may be challenging.
To assist you in understanding the tax filing procedure, we consulted with our qualified LLC advisors with over two decades of experience in the industry.
We examined the Florida Secretary of State's website for accurate and up-to-date tax form details for four weeks and here’s a rundown of all taxes Florida requires of LLCs.
Quick Summary
- To file LLC taxes in Florida, you must classify the company accordingly and submit the correct tax forms.
- A Florida LLC is a pass-through business, meaning earnings flow directly to the members.
- Florida C-Corps must pay a 5.5% corporate income tax.
- Drawing from my experience, the state imposes an entity-level tax on Florida companies but does not impose a separate franchise or entity tax on LLCs.
How Are LLCs Taxed in Florida?
LLCs in Florida are taxed as pass-through entities by default, so they do not have to pay Florida corporate income tax. Profits and losses are distributed among members, who pay taxes on their shares.
If you have a single-member LLC, the default tax classification is "disregarded entity," which is the same as a sole proprietorship.
By default, multi-member LLCs are taxed as partnerships.
From my professional experience, the following tax forms must be filed by LLCs with default status:
- Form 1040 (typically Schedule C, but several SMLLCs file C-EZ, E, or F) for a single-member LLC [1].
- Form 1065 for a Multi-Member LLC [2].
State Taxes for Florida LLCs
Here is how different LLC structures are taxed in Florida.
1. Single-Member LLCs
Single-member LLCs are taxed similarly to sole proprietorships.
The revenue and expenses of the limited liability company are recorded on Schedule C of their individual income tax filings.
"The net income profit or loss of a single member LLC is recorded on the business income portion of the US Personal Income Tax Returns Form 1040."
- Delina Yasmeh, J.D./Tax LL.M, Distinguished Expert in Mergers & Acquisitions
2. Multi-Member LLCs
A multi-member LLC is taxed similarly to a general partnership. In this case, the firm's revenue is recorded on the members' personal tax returns.
For our multi-member company, we submitted our taxes through Form 1065, which records the partnership's total revenue and costs.
Each LLC member subsequently submits a Schedule K-1 detailing their profit portion.
3. LLCs Taxed as S-Corp
From our experience as Venture Smarter, by completing Form 2553, both LLCs and corporations can petition to the Internal Revenue Service (IRS) to be taxed as S-corps [3].
Because S corporations are pass-through entities, they do not have to pay federal income tax.
An S corporation can also pay distributions to members exempt from the 15.3% self-employment tax.
Learn more about electing LLC to be taxed as an S-Corp.
4. LLCs Taxed as C-Corp
LLCs can also choose C-corp tax status. In Florida, C-corps must pay 21% federal income tax and 5.5% corporate income tax.
Drawing from our firsthand experience, although C-corps pay more taxes than conventional LLCs, they also qualify for additional tax incentives, so this option may value some LLCs.
Florida State Income Taxes
From our experience owning multiple LLCs in Florida, we understand that the state does not require you to pay federal income taxes, making it among the most tax-friendly states in the US.
However, even though you don’t have to pay federal income tax, you must pay 5.5% Florida corporate income tax if you have an LLC C-corp.
Self Employment Tax
Most of the time, as an LLC owner, you will generate income through business activities. This is classified as self-employment revenue.
This implies you must pay a 15.3% self-employment tax. This tax is broken down into two sections [4].
Based on our experience, the first 12.4% is allocated to Social Security, with the remaining 2.9% allocated to Medicare and hospital insurance.
Read our article for more information on how to avoid self-employment tax.
Federal Taxes for Florida LLCs
Drawing from our professional experience as Venture Smarter, these federal taxes are levied on Florida LLCs by the IRS.
Federal LLC Payroll Taxes
If your LLC employs people, you must pay payroll taxes.
Payroll taxes are a collection of taxes and filings that include:
- Employee deductions
- Federal income tax withholding
- Local/county deductions
- Social Security tax
- Reemployment tax or State unemployment taxes (SUTA)
- Medicare tax
- Federal unemployment taxes (FUTA)
As an employer, you must set up payroll, deduct payroll taxes from employees' paychecks, and then file and pay those taxes with the government.
Note that LLCs in Florida are only required to file withholding taxes to the IRS at the federal level; employers in Florida are not required to pay withholding taxes at the state level.
Employers must, however, register for the Florida Reemployment Tax with the Florida Department of Revenue.
Other Taxes
Here are some additional LLC taxes your LLC may be required to file and pay in Florida.
1. Sales and Use Tax
The state sales tax in Florida is 6%. Many counties in Florida levy an extra local sales tax, known as a "sales surtax," of 0.5% to 1.5%.
To determine the surtax for our LLC in our county, we checked the Discretionary Sales Surtax Information Handbook. We also completed the Florida Business Tax Registration form as our company offers taxable products or services.
Related articles:
- Opening an LLC in Florida
- Professional LLC Formation Services in Florida
- How to Dissolve an LLC in Florida
2. Florida State Employer Taxes
Most Florida companies must pay workers' compensation insurance in addition to reemployment tax (sometimes known as unemployment tax).
- Reemployment Tax: During the first ten quarters (2.5 years), the LLC tax rate for new employers is 2.7%. Following that, the rate will be determined by your payroll size and the volume of reemployment benefits levied, with a maximum rate of 5.4%.
- Workers' Compensation: Most Florida firms with four or more employees are required to have this insurance, which pays injured employees. Workers' compensation insurance costs low-risk employees 26 cents per $100 of payroll and high-risk employees $19.40 per $100.
3. Local Florida Business Taxes
For our company, we also contacted the municipal government office to learn more about our county's local taxes.
You must pay these taxes in the county where your LLC is registered and any additional counties where you conduct business.
In addition to the local sales tax, several Florida counties levy the following forms of local choice taxes:
- Transient rental taxes
- Convention development tax
- Tourist impact tax
- Food and beverage taxes
- Tourist development taxes
- Fuel tax
- Municipal resort tax
4. Industry Taxes
Certain industries will require LLCs to pay extra taxes, including the following:
- Prepaid wireless E911 fee
- Asphalt use tax
- Oil and gas severance taxes
- Communication services tax
- Municipal public service taxes
- Fuel and pollutant taxes
What Is Tax-Deductible for an LLC in Florida?
The tax-deductible for an LLC in Florida includes automobile and travel expenses, start-up costs, corporation health insurance deductions, corporation disability insurance deductions, and corporation retirement plan deductions.
Other possible tax-deductible for Florida LLCs include:
- Charitable Deductions: A corporation or taxable LLC may only deduct charitable donations up to 10% of its taxable revenue. You can claim more if you, as the owner, make personal charitable contributions.
- Corporation Longevity or Productivity Awards Deductions: A corporation or taxable LLC may deduct up to $400 of the cost of physical property provided to an employee by calling it a longevity or productivity reward [5]. The award can be given out on a selective basis every five years, with potential beneficiaries including the owners who work for the company.
FAQs
Do Foreign LLCs in Florida Need To Pay Florida Taxes?
Yes, Foreign LLCs in Florida need to pay Florida taxes. Suppose your Florida foreign LLC wishes to conduct business in the Sunshine State. In that case, you must register with the Florida Department of Revenue and pay all relevant state and local taxes.
What Are the Tax Benefits of an LLC in Florida?
The tax benefits of an LLC in Florida are: the LLC is exempt from state taxes, members can determine their tax status at the federal level, and the IRS treats LLCs as disregarded businesses for tax reasons.
References:
- https://www.irs.gov/forms-pubs/about-form-1040
- https://www.irs.gov/forms-pubs/about-form-1065
- https://www.irs.gov/forms-pubs/about-form-2553
- https://smartasset.com/taxes/self-employment-tax
- https://www.kudos.com/blog/are-employee-rewards-a-taxable-benefit
