How to start a sole proprietorship in Florida
Looking to start a sole proprietorship in Florida? We've listed some important steps to follow when establishing a sole proprietorship in that state.
Looking to start a sole proprietorship in Florida? We've listed some important steps to follow when establishing a sole proprietorship in that state.
The term "sole proprietorship" means a business owned solely by one person. Sole proprietorships are the simplest business structure in Florida and other states because they are run by an individual, there's no need for registration or formal paperwork, and income is taxed as personal income. However, there are still rules and regulations on the formation of sole proprietorships.
No! In Florida, sole proprietors don’t need to file legal documents with the state to establish their businesses. However, as mentioned above, there are guidelines for setting one up.
Florida allows sole proprietors to either use their own names or trade names. It's also possible to use an assumed name (such as a synonym, alias, or false name). When selecting a name, it's recommended to go for names that aren't similar to other registered business names in order to avoid trademark issues.
Florida has a state database you can use to search for unique business names[1]. You can also use the USPTO (U.S. Patents & Trademark Office) to ensure you avoid intellectual property issues related to business/trade names.[2]
Besides selecting a business name that is unique, available, and free of intellectual property issues, the business name you choose should reflect your brand. In some cases, it's not advisable to use your name as your business name. However, the nature of your business should inform your decision.
Other considerations should also be made when choosing a business name for a sole proprietorship. For instance, it helps to think about the ethos of your business in relation to its name. You should also consider how the name looks on your logo or letterhead and if there are any negative connotations linked to the name you choose.
If you use your actual name (legal name) as your business name, you don’t need to register the name. However, individuals who select business names that are different from their legal names must register those trade names.
Before a trade name is filed in Florida, it must be published in the local daily/newspaper where the business will be located. Trade names are filed using a trade name form[3]. The form should be mailed to the address indicated at the bottom. Alternatively, trade names can be filed online via the Florida Fictitious Name Registration[4]. You are required to provide some business and personal information on the trade name form. Some fees must also be paid for the registration to be processed and completed.
Filing a trade name is critical for doing business. Many banks require proof that you have filed a trade name before they can open a bank account for your business. The state regulations on filing trade names are contained in Florida Statutes - Section 865.09.[5]
Your sole proprietorship will have to meet some licensing obligations based on the nature of your business. To know the exact licenses and/or permits required for your business, visit DBPR – the agency responsible for regulating most professionals in Florida. The DBPR (or Department of Business & Professional Regulation) website has a comprehensive list of who it regulates and the licenses required.
However, sole proprietorships owned by professionals in legal and health care sectors aren’t licensed by the DBPR. Sole proprietors who can’t find their licensing and regulatory requirements on the DBPR website can check the state agency directory to identify the appropriate agency.[6]
If you intend to conduct business involving construction or related professions, it helps to check local regulations, zoning clearances, building permits, and other rules/requirements that may apply to your business. Generally, some businesses will require federal licenses & permits in Florida. For instance, businesses in Florida that conduct agricultural activities like transporting animals, animal produce, plants, biologics, or biotechnology from Florida to other states require a USDA permit.
A sole proprietorship that deals firearms, ammunition, and explosives will require additional licensing from the ATF.[7] Businesses in transport and logistics should also meet the U.S. Department of Transportation requirements. It helps to research widely or consult Florida business registration experts to ensure you meet all licensing and permit requirements applicable to your business.
Sole proprietors with employees need EINs (Employer Identification Numbers). An EIN is a 9-digit no. provided by the IRS. Every business with employees in Florida and every other state in the U.S. must report the wages of their employees to the IRS via the EIN. You can apply for an EIN via the IRS website. [8]
If your sole proprietorship doesn’t have employees, you don’t need an EIN. You can use your social security number to report taxes. However, an EIN may still be important since some banks require it to open a bank account for your business. This measure reduces identity theft risks.
While sole proprietors are free to use their personal bank accounts, a business account separates personal from business finances. As mentioned, you may need your EIN to open a bank account for your business, although some banking providers, like Nearside, do not require an EIN.
Once you've set up your sole proprietorship in Florida, it’s a good idea to acquire liability insurance. As mentioned, sole proprietors have personal responsibility over the debts and other liabilities faced by their businesses. Depending on the type of coverage, business liability insurance can reduce or eliminate unfavorable exposure.
Most importantly, insurance may be mandatory in some cases. Florida law requires mandatory workers' compensation insurance for businesses that employ four or more people.[9]
Florida has certain tax reporting and payment obligations that may be applicable to a sole proprietorship. This is usually based on the specific business activity in question. You should investigate your eligibility for taxes with the Florida Department of Revenue. If such taxes are applicable to you, register online. Alternatively, you can follow the paper application process that requires you to complete and submit Florida’s Business Tax Application form.[10]
Understanding the advantages and drawbacks of a Florida sole proprietorship is important before you establish one. Here are the main pros:
Sole proprietorships also have cons, the main ones being:
If you establish an LLC in Florida, you stand to enjoy the following pros:
Some of the main cons of LLCs include:
No. If you use your legal name, there's no need for a trade name or DBA (doing business as). However, it may be better in some instances to get a trade name i.e., when doing so adds credibility to your business or removes negative connotations that may be linked to a name.
Florida has a special database that lists all business names and trademarks in existence.
Visit SunBiz website and input your tracking number to check the status. Certificates of status are available for reprinting a day after creation.
[1] Florida Department of State - https://dos.myflorida.com/
[2] US Patent and Trademak Office - https://www.uspto.gov/trademarks
[3] Florida Department of State - https://dos.myflorida.com/
[4] FL Fictitious Name Registration - https://efile.sunbiz.org/ficregintro.html
[5] Online Sunshine - Official site of Florida Legislature - http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0800-0899/0865/Sections/0865.09.html#:~:text=(a)%20A%20person%20may%20not,The%20name%20to%20be%20registered.
[6] Florida Department of State - https://dos.myflorida.com/library-archives/research/florida-information/government/state-resources/state-agency-homepages/
[7] ATF Bureau - https://www.atf.gov/#:~:text=ATF%20is%20a%20law%20enforcement,and%20the%20illegal%20diversion%20of
[9] Online Sunshine - Official site of Florida Legislature - http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0400-0499/0440/0440.html
[10] FL Department of Revenue - https://floridarevenue.com/Pages/default.aspx