Florida is known for being a business-friendly state, thanks in large part to its business tax advantages and efficient regulatory processes. In fact, a 2023 study from WalletHub ranked Florida as the second best state (behind Utah) to start a business in—and the fourth fastest-growing small business state.
According to the Small Business Administration’s Office of Advocacy, Florida’s three million small businesses make up 99.8% of all Florida businesses. If you own a business in the sunshine state or want to start one, here’s what you need to know about small business taxes in Florida.
What types of taxes do business owners pay in Florida?
In Florida, only business owners of C corporations and Limited Liability Companies (LLCs) with C corp status pay business taxes. If you own a C corp or LLC taxed as a C corp, you have to pay Florida corporate taxes.
On the other hand, S corporations, standard LLCs, partnerships, and sole proprietorships are all exempt from paying state business taxes, though they may have to pay Florida sales taxes.
Florida state income taxes
Though Florida residents have to pay federal income tax, they don’t have to pay state income tax. Florida doesn’t impose personal income taxes on individuals, which means pass-through entities like partnerships, S corps, and sole proprietorships don’t have to pay business taxes. Corporations, however, still have to pay a corporate tax.
Florida corporate taxes
Florida imposes corporate income tax on corporations for the privilege of conducting business in the state. The corporate tax rate in Florida is 5.5% on federal taxable income.
If you run a C corp or LLC classified as a C corp, you’re required to pay the higher amount of the standard rate minus all exemptions and tax credits—or else pay an alternative minimum tax (AMT) of 3.3%. However, your first $50,000 is exempt from the corporate tax rate.
Florida corporate tax deductions and incentives
Florida businesses can take certain tax credits to lower the amount of corporate income tax they owe. There are tax incentives related to jobs, investment, energy, and health maintenance organizations. Here are several of the most common corporate income tax incentives in Florida:
- The Internship Tax Credit gives an incentive ($2,000 per student intern) to qualified businesses employing student interns.
- The Rural Job Tax Credit incentivizes certain businesses in designated rural counties to create new jobs (they get $1,000-$1,500 in credits per hired employee).
- The Research and Development Tax Credit gives a corporate income tax credit to eligible businesses for research purposes.
- The Renewable Energy Production Tax Credit is for businesses that produce some form of renewable energy and get approval from the Florida Department of Agriculture and Consumer Services.
If you take tax credits as a business owner in Florida, consult with your accountant to make sure you’re following the credit guidelines and submitting paperwork on time.
How to pay Florida corporate income taxes
If you owe Florida corporate income taxes, you have to file Florida Form F-1120 each year, even if no tax is due. The due date is based on your corporation’s tax year. Here are the guidelines:
- For tax years ending June 30, the due date is on or before the first day of the fourth month following the close of the tax year. That makes the due date October 1.
- For tax years that don’t end June 30, the due date is on or before the first day of the fifth month following the close of the tax year. For example, if your tax year ends December 31, your corporate income tax return is due May 1.
Florida estimated quarterly tax payments
If your C corp or C corp-classified LLC owes more than $2,500 in corporate income tax annually, you also need to make estimated quarterly tax payments. If you underpay your estimated tax, you’ll get charged a 12% penalty per year.
Estimated tax is due at varying times depending on the tax year:
- For tax years beginning before January 1, 2017 and for tax years ending June 30, the due dates are the last day of the fourth month, the last day of the sixth month, the last day of the ninth month, and the last day of the tax year.
- For tax years beginning on or after January 1, 2017—and for tax years that don’t end June 30—the due dates are the last day of the fifth month, the last day of the sixth month, the last day of the ninth month, and the last day of the tax year.
Florida sales and use taxes
Florida imposes a sales tax of 6% on every sale, admission, storage, or rental in the state. Some Florida counties also have a discretionary sales surtax that’s added on top of the state’s sales tax. You can see the various county rates here.
If your business sells goods and certain services in Florida, you’re responsible for registering with the Florida Department of Revenue, collecting sales tax from your consumers at the time of sale, and paying sales tax to the state. Here’s a list of common business activities subjected to sales tax:
- Sales of taxable items at retail
- Repairs or alterations of tangible personal property
- Rentals, leases, or licenses to use real property (for example: commercial office space or mini-warehouses)
- Rentals of short-term living accommodations (for example: motel/hotel rooms, beach houses, condominiums, timeshare resorts, vacation houses, or travel parks)
- Rentals or leases of personal property (for example: vehicles, machinery, equipment, or other goods)
- Charges for admission to any place of amusement, sport, or recreation
- Manufacturing or producing goods for retail sales
- Selling service warranty contracts
- Operating vending or amusement machines
- Providing taxable services (for example: investigative and crime protection services, interior nonresidential cleaning services, or nonresidential pest control services)
- Out-of-state businesses selling into Florida that have any number of transactions with total sales over $100,000 in the prior calendar year
- Marketplace providers facilitating remote sales into Florida
Use tax is a tax on items that don’t get charged sales tax at the time of purchase. Here are the conditions when use tax is necessary:
- You buy a taxable item in Florida and don’t pay sales tax.
- You buy a tax-exempt item with the intention to resell it, then use it in your business or for personal use instead.
- You buy a taxable item outside of Florida, bring it into the state or have it delivered, and don’t pay sales tax on it.
How to pay Florida sales and use taxes
Generally, you pay sales and use tax on a quarterly basis. However, you might qualify for a different filing frequency depending on the amount of tax you collect. Here are the different categories:
- If you collect more than $1,000, you file and pay sales tax monthly.
- If you collect between $501 and $1,000, you file and pay sales tax quarterly.
- If you collect $101 to $500, you file and pay sales tax semi-annually.
- If you collect $100 or less, you file and pay sales tax annually.
You have to report sales and use tax on Form DR-15, the Sales and Use Tax Return. If you paid $5,000 or more in sales and use tax during Florida’s previous fiscal year (July 1 – June 30), you’re required to file and pay your taxes electronically with the Florida Department of Revenue. Otherwise, you’ll receive penalties.
Your sales and use tax returns and payments are due on the first day of the month following each reporting period—and considered officially late after the 20th day of the month. Let’s say, for example, that you have monthly sales and use tax payments. Your returns and payments for the June reporting period would be due July 1 and considered late after July 20. Keep in mind that you have to file a return for each reporting period, even if no tax is due.
If you file your sales and use tax return online and pay online in a timely manner, you can take a collection allowance of 2.5% of the first $1,200 of tax due (not to exceed $30).
Florida reemployment tax
If you hire employees for your Florida small business, you’re subject to Florida reemployment tax. Florida employers pay this tax to the Florida Department of Revenue; from there, the money goes toward the Unemployment Compensation Trust Fund for the purpose of giving eligible workers reemployment assistance and benefits.
The reemployment tax rate for new employers is 2.7%. That’s applied to the first $7,000 in wages paid to each employee during a calendar year; anything over $7,000 isn’t subject to taxes.
If you can prove that your business has a stable employment record, you’ll receive reduced reemployment tax rates over time. The minimum reemployment tax rate in 2023 is 0.10% ($7 per employee) and the maximum is 5.4% ($378 per employee).
Do you have businesses in other states or want to see how Florida’s rate compares? Here’s an updated list of unemployment tax rates for every state.
How to pay Florida reemployment tax
To pay your Florida reemployment tax, you need to register with the Florida Department of Revenue by the end of the month following the calendar quarter in which you become an employer. You need to file Form RT-6 by the end of each month following the end of the quarter, even if you had no employees or wages to report for that quarter. That means your due dates are:
- Quarter 1: April 30
- Quarter 2: July 31
- Quarter 3: October 31
- Quarter 4: January 31
You can make payments online.
Need help determining withholdings for your employees? Check out Gusto’s Florida Hourly Paycheck and Payroll Calculator.
Florida business tax breakdown
Here’s a summary of Florida business types and their federal and state tax obligations. Keep in mind that pass-through entities don’t pay federal income taxes.
|Business type||State income taxes||Sales and use taxes||Reemployment taxes||Federal taxes|
|C corporation||Yes, 5.5% corporate income tax rate||Yes, if applicable||Yes, if you hire employees||Yes|
|S corporation||No||Yes, if applicable||Yes, if you hire employees||No|
|LLC with C corp election||Yes, 5.5% corporate income tax rate||Yes, if applicable||Yes, if you hire employees||Yes|
|LLC||No||Yes, if applicable||Yes, if you hire employees||No|
|Partnership||No||Yes, if applicable||Yes, if you hire employees||No|
|Sole proprietorship||No||Yes, if applicable||Yes, if you hire employees||No|
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