How to Start a Microbusiness in Florida (Essential Steps for Success)
If you’re looking to start a business in Florida, there are a few steps you must take to be compliant. While you may feel apprehensive because you don’t know what to do, following the rules will help get the right business structure in place and everything else to get started.
One of the first things to decipher is what a microbusiness is. When getting started, most people don’t know the difference. While they all operate the same, the designation is different. So, what exactly is a microbusiness?
Microbusinesses are entities that have 10 people or less. While most people consider themselves a small business when they are just starting out, chances are they can be categorized as a microbusiness. This includes freelancers, solopreneurs, people pursuing a hobby as a side business, and more. Small businesses are considered to have at least 250 to 500 employees.
Creating a microbusiness is the same process as starting a small business. We’ve included the process to ensure you do things the right way from the beginning, so you won’t have to backtrack to fix things later.
Explore your idea
What makes you want to start a microbusiness? Is it a dream you’ve always wanted? Is there a goal you want to achieve? The first step is knowing what type of business you think you’ll be good at. It should be something that you would love to do even if you didn’t get paid.
Market research is very important because you don’t want to get tied up in an area that’s oversaturated. Putting together this part of a business plan can help you stay organized and pinpoint your target audience and competition. Conducting marketing research is not something that you want to skimp on, make sure you perform an in-depth dive into your market and broader industry.
Choose a legal structure
Although there are several types of business entities, the most common for microbusinesses are LLC’s and DBA’s.
LLC’s are great option for businesses who intend to expand and take on employees. Aside from this, forming an LLC offers more tax benefits and also provides protection from personal liabilities. The downside is that the process to set-up an LLC can be complex but lately there are companies that automate the steps of forming an LLC in Florida.
Another popular business structure is a DBA. In Florida, DBAs are called Fictitious Names. While you do not have to file for a fictitious name, a number of businesses go this route if they want to use a vanity name in addition to the name of the business. You can do a search to see which names have already been taken. The fee to register a DBA is $50 and is first-come, first-served.
Understand the taxes you must pay
There are a few. The federal business tax is paid to the IRS. This includes income tax, self-employment taxes, estimated taxes, and excise tax. The state business tax is paid to the Department of Revenue. This includes the sales and use tax, unemployment, corporate income tax, and other taxes. There may be a local business tax paid to the local county tax collector, and a city business tax based on the municipality.
Obtaining permits and licenses
Depending on the type of microbusiness you have, a license may be required. While there are certain professions like barbers, real estate agents, and others that must be licensed by either the Department of Business and Professional Regulation (DBPR) or the Department of Agriculture and Consumer Services (DACS). There are other professions that may not need a license. It’s important to check the list or contact the departments directly.
Find a location
While this may have been one of the first things on your list, it’s important to cover it. You may have a home office or a brick-and-mortar building. Wherever it is, there are city and county taxes that may be a factor. This should be a line item in your budget. Your location may also help your microbusiness grow into your expectations.
Open your business bank account(s)
Even with a microbusiness, you should have a bank account to keep things organized and your finances separate. You must have an Employer Identification Number (EIN) issued by the IRS to open one. A business bank account helps establish credibility and helps solidify your position as a legally operating entity. Depending on the bank, you may have several perks and incentives for having a business bank account and possibly a business credit card with your financial institution. This puts you in a position to apply for loans and other funding you may need.
When getting started, you may choose to bootstrap, but some microbusiness owners look for grants and small business loans to assist in getting their operations in full swing. There are many options for getting funding including pitch contests, crowdfunding, or financial assistance from the Small Business Administration (SBA). Working with your local small business agency or development center can help get you through the process.
Making sure your finances are in order helps you stay out of hot water. Not knowing where you stand financially can cause problems down the road. All expenses, income, and payments should be tracked in an accounting program like QuickBooks so this information is easily accessible and makes it easier to work with an accountant.
As your microbusiness grows, you’ll have financial reports to help you forecast and set a realistic budget based on your needs. You should always know what you bring in and what’s going out to see if you need to cut costs or expenses. If you’re spending more than you’re making, you’ll never be able to thrive or hire employees to help you scale.
These steps will help you in establishing your microbusiness in Florida while keeping you compliant with the rules and regulations of the state. While some things may change, these general rules for filing and operations usually stay the same.
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