Basics of Filing Florida Business Tax

how to file business taxes in Florida

Although it’s required, paying taxes is undoubtedly not the most pleasurable aspect of operating a business. Florida business tax is an essential component of organizations running in the state. It is also a crucial component of maintaining a company’s legal compliance. For various business activities, Florida controls and issues licenses or permits. The majority of firms are obliged to apply for a “tax receipt,” which is a type of business license, with their county and/or municipal. It can be confusing to know which state taxes apply to your Florida business, but we can assist.

We will let you understand what taxes might be applicable to your company, when, and how to submit them.

What is Florida Business Tax?

Residents of Florida are not subject to a personal income tax. This means that a business owner in Florida is not taxed on income that accrues from his small firm and is then distributed to the owner. However, some businesses are still subject to taxes. All incorporated enterprises operating in Florida are subject to a business income tax rate. In addition to companies with a physical presence in Florida, this business tax also applies to organizations that are outside of the state but generate revenue within its borders.

Who Should File Florida Business Tax?

Florida small business tax application

  • All businesses, entities, and organizations operating in Florida including tax-exempt entities.
  • Tax-exempt organizations are subject to Florida corporate income tax if they have “unrelated trade or business income” for federal income tax purposes. These organizations must submit Form F-1120 or Form F-1120A.
  • Every bank and savings association that conducts business, generates revenue or is already present in Florida.
  • Foreign businesses that participate as partners or members in partnerships or joint ventures in Florida.
  • Parties and political parties that submit Federal Form 1120-POL.
  • The Florida Business Income Tax Code applies to limited liability companies (LLCs) and mandates the filing of a Florida corporate income/franchise tax return if the LLC is treated as a corporation for Florida and federal income tax.
  • If one or more of the owners of an LLC that is treated as a partnership for Florida and federal income tax purposes is a corporation, the LLC must file a Florida Partnership Information Return (Form F-1065).
  • S corporations that use Line 22c of the Federal Form 1120S to pay federal income tax.
  • A single-member LLC rejected for federal and Florida income tax purposes is not required to submit a different Florida business tax return.
  • Homeowners and condominium associations that submit the Florida Corporate Short Form Income Tax Return (Form F-1120A).

Florida Corporate Tax Rate

Businesses can use the federal taxable income to calculate Florida corporate income. They can compute it by specific Florida additions, subtractions, and adjustments.

  • A company operating outside of Florida can divide its entire revenue. The calculation uses a weighted average, allocating 50% of the total to sales and 25% of the total to payroll and property considerations.
  • To the Florida component of the adjusted federal income, you should add non-business income assigned to the state of Florida.
  • The Florida net income is then calculated by deducting an exemption ($50,000 as of December 31, 2015).

The final step is to calculate tax by multiplying Florida’s net income by the applicable tax rate. Depending on the registration date of the organization it can be:

  • Before January 1, 2019, the corporate income tax rate was 5.5%.
  • From January 1, 2019, to December 31, 2021, the Florida business tax rate was 4.458%.
  • From or after January 1, 2022, the corporate income tax rate is 5.5%.

How to File Business Taxes in Florida?

These are the necessary steps that a firm should follow if they are conducting business in Florida.

Determine the Corporate Income Tax Responsibilities for Your Florida Firm

Florida doesn’t have a personal income tax, unlike the majority of states. Businesses operating in Florida are subject to a standard income tax of 5.5%. Limited liability companies (LLCs), sole proprietorships, partnerships, and S corporations are business entities that are free from Florida income tax.

Corporations may be eligible for exemptions, just like individuals, which can drastically reduce their tax rate. Subtracting exemptions and credits, you can utilize the federal income tax rate of 5.5 percent.

Determine the Additional State Taxes

You can owe a variety of Florida small business taxes depending on your company’s services. A summary of various additional Florida business taxes is provided below.

  • 5.5% on licenses and leases of commercial space.
  • Also, 6.95% on electricity.
  • 4% on earnings from amusement machines.
  • On sales and purchases of relevant goods, services, and short-term rentals, Florida also imposes a 6% general state sales tax.

Periods for filing sales taxes are determined by the amount of tax collected.

  • More than $1,000: Monthly.
  • $501 to $1,000: Quarterly.
  • $101 to $500: Half-yearly.
  • $100 or less: Annually.

Use tax is due if you buy a taxable item outside of Florida and deliver or transport it inside Florida without paying sales tax. Moreover, Florida also levies general excise taxes.

File and Pay your Florida Business Taxes

At last, you must pay all your Florida small business taxes to the Florida Department of Revenue. Obtaining all the necessary information is one of the most challenging parts of filing small business taxes in Florida. The state promotes online tax filing. To file on the Department of Revenue website, you must register.

Whether you’re an established business or brand new, you may face problems in keeping up with the tax laws and requirements. In such a scenario, you should hire a professional tax preparer.

Eligibility Criteria for Form F-1120A

Small businesses can submit the F-1120A, The Florida Corporate Short Form Income Tax Return, online if they do all of their business in Florida. But there are several conditions that must be fulfilled.

However, businesses must provide:

  • Corporate name.
  • Registration numbers.
  • Address.
  • Also, the contact number in Florida.
  • Registered firm bank information.
  • Also, give corporate income tax records from prior years and federal income tax records.

A corporation that owes no tax or less than $2,500 in tax may submit Form F-1120A if it meets the following conditions:

  • Has a Florida net income of $45,000 or less.
  • Do business only in Florida.
  • Does not disclose any adjustments or deductions from federal taxable income other than a deduction for net operating losses or any applicable state income taxes.
  • Is not on a consolidated corporate income tax return for Florida or the federal government.
  • Makes no additional tax credit claims beyond tentative or anticipated tax payments.
  • They are exempt from paying the federal AMT.

Tax Extension Request for Florida Business

Firstly, businesses can electronically apply for a tax extension. They must submit a Form F-7004: Florida Tentative Income Tax Return and Application for Extension of Time to File Return by the Florida return’s original due date together with your tentative tax payment in order to receive an extension.

The tentative tax payment at the the time of extension request should be equal to the due taxes after subtracting overpayment credits from last year and estimated tax payments. 

The extension will be void and there will be a late filing penalty if your tentative tax is underpaid by more than $2,000 or 30% of the tax return. A tentative penalty of 12% per year throughout the extension period is applicable to the underpaid amount if you underpay the tentative tax by a smaller amount.

Except for June 30 tax year-end extensions, which are valid for 7 months, extensions have a validity period of 6 months. The payment deadline for the tax obligation for the taxable year is not extended by an extension. The extension allows partnerships to file their returns 6 months beyond the original due date.

What Happens if you Fail to Pay Florida Corporate Tax?

A penalty of 10% of the tax with a minimum penalty of $50 will be assessed for late tax payments. There will be an additional 10% “failure to pay penalty” assessed if the payment isn’t done within the first 30 days. Until the entire or a portion of the balance is paid, this penalty is levied every 30 days, but it is not allowed to surpass 50%.  The failure to pay six consecutive tax returns could result in a third-degree criminal prosecution. The criminal charge might be upgraded to a second or first-degree felony depending on the amount due.

Frequently Asked Questions

How much can a small business in Florida earn before taxes?

The first $50,000 of income is free from Florida’s corporate tax as of 2019, regardless of the strategy you employ.

Does LLC have to file a tax return?

Florida doesn’t require LLCs to file tax returns. Members pay personal income taxes on their shares of the organization’s income after it is passed through to them. Due to this, Florida does not require LLCs to file tax returns.

What are the conditions under which Florida S corporation has to file taxes?

A Florida S company may need to submit returns to the state on a few occasions. These situations take place when the following occurs:
●      The company’s stockholders earn more than the average net passive income.
●      Before registering as an S corporation, the company valued its inventory using the LIFO method.
●      On Schedule D of Form 1120S, the company reported profits.

Which forms businesses can file on the Florida Department of Revenue website?

Businesses can electronically file:
●      Form F-1120A and F-1120A.
●      Fill the Form F-7004.
●      Also, Form F-7004 with the tentative tax payment.
●      Form F-1120ES.

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