Due to its adaptability and simplicity, limited liability companies (LLCs) have grown to be a popular type of business company in Florida. The taxes an LLC must pay to function in the state, however, are a topic of confusion for many people. This article will discuss how to form an LLC in Florida, the taxes LLCs must pay in Florida, the distinction between an LLC and a corporation, and how LLCs are taxed.
First, a $138.75 annual state fee is charged to an LLC in Florida. Each year, this charge is required by May 1st, and failing to pay it could lead to the dissolution of the LLC. An LLC must also pay federal income tax, which is deducted from the owners’ individual tax filings. A single-owner LLC is treated as a “disregarded entity” for taxation purposes, which means that the owner must disclose the LLC’s earnings and outgoings on their own tax return. Contrarily, an LLC with several owners is regarded as a partnership and is required to submit a partnership tax return to the IRS.
Let’s now talk about the distinction between an LLC and a corporation. A corporation is taxed as a separate legal entity from its owners. This implies that the corporation is responsible for preparing its own tax returns and paying income taxes. Taxes are paid by shareholders of corporations on the dividends that they receive. The revenue and expenses of an LLC, on the other hand, are recorded on the personal tax returns of its owners because an LLC is not a separate legal entity from its owners. A benefit of an LLC is that it avoids double taxation, which is frequently cited as a benefit.
Consequently, how do you form an LLC in Florida? Selecting a name for your LLC and making sure it is available for use is the first step. On the website of the Florida Division of Corporations, you can determine whether a name is available. The Florida Division of Corporations must then receive your articles of organization, together with a $125 filing fee. You must acquire the necessary licenses and permits to run your business in Florida after forming your LLC.
Let’s talk about LLC taxes lastly. As was previously indicated, a single-owner LLC is viewed as a disregarded company, and the owner is responsible for reporting the LLC’s earnings and costs on their personal tax return. A multi-owner LLC is regarded as a partnership and is required to submit a partnership tax return to the IRS. An LLC may, however, choose to be taxed as a corporation by submitting Form 8832 to the IRS. This is frequently done when an LLC generates sizable profits and the owners desire to benefit from specific tax breaks available to corporations exclusively.
In conclusion, a Florida LLC is liable to federal income tax, which is paid on the personal tax returns of its owners, and is required to pay a state-level yearly fee of $138.75. An LLC differs from a corporation in that its owners are considered its owners and that the income and costs of the LLC are recorded on the owners’ personal tax returns. You must decide on a name for your LLC, submit your Articles of Organization, and get all required licenses and permissions in order to form an LLC in Florida. Finally, by submitting Form 8832 to the IRS, an LLC might choose to be taxed as a corporation.