Florida has one of the lowest tax burdens in the country, with no state income tax and a low sales tax, making it an attractive environment for businesses to operate in. If you’re a business owner or looking to establish a business in the Sunshine State, knowing what taxes you must pay and how to file business taxes are crucial. This article will dive into business taxes in Florida and how to file them.
Understanding Business Taxes in Florida
Types of Business Taxes
Your business may be subject to various taxes depending on its operation, structure, and revenue.
Corporate Income tax
C corporations and LLCs that are classified as C corporations are subject to Florida corporate income tax. Other types of businesses, including S corporations, partnerships, and sole proprietorships, are exempt from the Florida corporate income tax.
Sales and Use tax
Businesses selling goods or taxable services must pay a 6% sales tax. Furthermore, a use tax may be imposed on businesses that purchase taxable goods for use but do not pay sales tax on the transaction.
Remember that some counties have a discretionary sales surtax added to the sales tax.
Reemployment / Unemployment Tax
Businesses are required to pay unemployment compensation to their employees. The tax you pay is deposited into the Florida Department of Revenue Trust Fund, from which eligible employees can receive compensation and benefits in the event of a job loss.
The reemployment rate is 2.7% for the first $7,000 paid to each employee per calendar year. Anything over $7,000 is not subject to taxation. Furthermore, the rate may decrease or increase based on the business’s employment history. For instance, businesses with high turnover rates may have a higher rate, and vice versa.
Importance of Filing Taxes Correctly
Knowing how to file business taxes correctly is critical because it directly affects your business. For example, filing your taxes incorrectly can result in penalties and a bad record when applying for a loan or credit from lenders, who frequently check tax filings to assess risks.
Filing taxes correctly, on the other hand, ensures that you remain in compliance with the tax laws and thus avoid getting into trouble. Filing your business taxes correctly is also important for deductions and credits. Businesses use deductions and credits to reduce their tax burdens.
Preparing to File Business Taxes
Gather Necessary Documents
The first step in understanding how to file business taxes is to organize and prepare all of the necessary documents. Keep track of your records and organize them so they are ready to use when it comes time to file your taxes.
The necessary documents can include basic business information (name, address, bank accounts, etc.), an income statement, sales records, invoices, payroll documents, utilities, insurance, deductions, and credit files.
Understand Your Business Structure
As we mentioned earlier, the type of business tax you pay depends on the type of business you’re operating. This is why it is critical to understand your company structure. Understanding your business structure also helps you determine which deductions and credits your company is eligible for.
How to File Business Taxes in Florida
Determine Your Tax Obligations
Once you’ve determined the type of business you run or intend to start, the next step is to figure out your tax obligations. Which taxes apply to your situation?
Ensure you conduct a thorough review of your tax requirements to ensure compliance and avoid missing any crucial information. Consult a tax attorney if you’re still unsure about your tax obligations.
Choose the Right Tax Forms
Part of accurate filing is choosing the right tax forms for the type of business you’re running. Here are some of the business forms you can find for the state of Florida:
Form F-1120: for filing Florida Corporate income tax.
Form DR-15: for reporting and remitting sales and use tax.
Form RT-6: used to report reemployement tax.
It’s also advisable to regularly check with the Florida Department of Revenue and the IRS for the latest tax forms and requirements.
Filing Process
Filing business taxes in Florida is determined by the type of business taxes you are required to pay. However, the steps generally include registering your accounts with the Florida Department of Revenue (if you are a new business), accurately completing the necessary forms, and submitting forms and payments by the due date. Most of Florida’s business taxes can be filed and paid online.
Common Mistakes to Avoid
Errors in Calculating Deductions
Calculating deductions can be challenging. Calculation errors can not only cost you the opportunity to reduce your tax burden, but they can also result in penalties, such as if you claim more deductions than you are entitled to.
Missing Deadlines
Meeting the deadline is critical to remaining in compliance with current tax regulations. Missing deadlines will result in penalties and possibly more serious tax issues.
To learn more about due dates, click here.
How Greenberg Law Group Can Help
As you still unsure of how to file business taxes correctly? Greenberg Law Group, P.A. can assist you in understanding the tax obligations that apply to you and your business in Florida. As you can see, filing taxes is not a straightforward process. It requires an understanding of various types of taxes and their requirements, as well as determining any applicable tax credits and deductions for your situation.
Let the expert handle all of your tax matters. Contact us, and let’s start working together to create a stable and stress-free tax situation!
