How Your LLC Will Be Taxed

In this guide, you'll learn about the primary Florida business taxes you'll be required to pay, including self-employment, sales, payroll, and federal taxes. The profits from an LLC aren't taxed at the business level the way they are in C Corporations. Instead, they're as follows:

1

Owners pay self-employment tax on business profits.

2

Owners pay federal income tax on any profits, less allowances and deductions.

3

Some LLCs pay Florida corporate income tax

4

Some LLCs pay Florida sales tax on products or services.

5

Employers pay payroll tax on wages paid to employees.

6

Employees pay federal income tax on their earnings.

Items 1 and 2 fall under pass-through taxation for LLC owners, managers and members who receive profits from the business. Profits are reported on personal federal tax returns.

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State Taxes for LLCs

You're only required to pay sales tax to the Florida Department of Revenue. Depending on how your business is set up, you may also need to pay use tax or corporate income tax.

Florida Income Tax

Florida is one of nine states that do not have income taxes.

Florida Sales Tax

If you sell physical products (such as electronics, books, cars, furniture, appliances, raw materials, etc.) or certain types of services, you may need to collect Florida sales tax at the point of purchase. It's sometimes referred to as Florida sales and use tax. You'll remit the taxes you collect to the Florida Department of Revenue

The general Florida sales tax rate is 6 percent, with some exceptions. City, county and local jurisdictions may impose additional sales tax over and above that 6 percent base.

In Florida, some items such as bottled water, prescription drugs, vitamins, some grocery items and even some pet food items are exempt from sales tax. The Florida Legislature publishes a tax handbook with extensive lists of items exempt from FL sales tax.

Use our sales tax calculator to get an idea of what you'll need to pay, but always check with your accountant and the FL Department of Revenue to find out whether your business is required to collect sales tax and ensure you remain in compliance.

Florida Use Tax

If you buy taxable merchandise or services and don't pay sales tax at the time of purchase, you may owe use tax. It's sometimes referred to as Florida sales and use tax. Usually, you're required to pay Florida use tax if:

  • you buy a taxable item in Florida and do not pay sales tax;
  • you buy an item tax exempt intending to resell it, and then use the item in your business or for personal use; or
  • you buy a taxable item outside Florida and bring it into (or have it delivered into) Florida, and you do not pay sales tax on the item.

The general Florida use tax rate is 6 percent, with some exceptions. City, county and local jurisdictions may impose additional sales tax over and above that 6 percent base.

Florida Corporate Income Tax

Some states — including Florida — levy a tax on certain businesses for the right to exist as a legal entity and do business in the state. This is usually called a franchise tax, transaction tax or privilege tax. In this state, it's the Florida Corporate Income Tax.

While it's mandatory for Florida Corporations, it can also sometimes apply to LLCs, specifically those that are classified as corporations for tax purposes.

Speak to your accountant or professional tax preparer to find out whether you're required to pay the Florida Corporate Income Tax to ensure compliance and avoid penalties.

Federal Taxes for LLCs

As the owner of an LLC, you must pay self-employment tax and federal income tax, both of which fall under “pass-through taxation."

Federal taxes can be complicated, so speak to your accountant or professional tax preparer to ensure that your Florida LLC is paying the correct amount.

Federal Self-Employment Tax

All members or managers who take profits out of the LLC must pay self-employment tax. This tax is administered by the Federal Insurance Contributions Act (FICA) and covers Social Security, Medicare and other benefits. The current self-employment tax rate is 15.3 percent.

You’ll be able to deduct some of your business expenses from your income when calculating how much self-employment tax you owe.

Here are some examples of how much self-employment tax you may need to pay, depending on your earnings:

  • On profits of $30,000, you would pay self-employment tax of $4,590.
  • On profits of $70,000, you would pay self-employment tax of $10,710.
  • On profits of $100,000, you would pay self-employment tax of $15,300.
  • On profits of $160,000, you would pay self-employment tax of $24,480.

Pay Less Self-Employment Tax by Treating Your LLC as an S Corporation

The Internal Revenue Service allows an LLC to be treated as an S Corporation for tax purposes, provided your business meets certain requirements. By making this election, you can reduce the amount of self-employment tax you pay by declaring some of your income as salary and other income as distributions or withdrawals.

Talk to your accountant or tax preparer for more information on reducing your LLC self-employment tax through an S Corporation tax election.

Treating your LLC as an S Corp can help you save money.

You can do this by making an “S Corporation Tax Election” with the IRS using a form known as Form 2553. We can file your Form 2553 with the IRS on your behalf.

Federal Income Tax

You're also required to pay federal income tax on the earnings you receive from your LLC. The amount you pay will depend on your earnings, deductions, income tax bracket and filing status.

You only pay federal income tax on profits you receive from the business, minus certain deductions and allowances. This includes your tax-free amount, plus business expenses and other deductions for things such as healthcare and some retirement plans.

Speak to your accountant for more information.

Employee and Employer Taxes

If you pay employees, there are some slightly different tax implications. Speak to your accountant to get clear guidance for your unique situation.

Employer Payroll Tax Withholding

As an employer, you'll be required to withhold federal taxes from your employees’ wages. You’ll withhold 7.65 percent of their taxable wages, and your employees will be responsible for 7.65 percent, adding up to the current federal withholding rate of 15.3 percent.

Speak to your accountant for more information.

Employees May Need to File Tax Returns

Regardless of whether you withhold federal employment tax, your employees may need to file their own tax returns.

Employee Insurance and Other Requirements

You may also need to pay insurance for any employees, such as employee compensation insurance or unemployment tax.

Other Taxes and Duties

Depending on your industry, your LLC may be liable for certain other taxes and duties. For example, if you sell gasoline, you may need to pay a tax on the fuel you sell. Likewise, if you import or export goods, you may need to pay certain duties.

Speak to your accountant about any other taxes or duties you may need to withhold or pay.

Estimated Taxes

Most LLCs will need to pay estimated taxes throughout the year, depending on the amount of income and profit you expect to make. The most common types of estimated tax are:

1

Federal income tax

2

Federal self-employment tax

Most LLCs will pay estimated taxes four times a year. Learn more on the IRS website, and speak to your accountant for more information.

FAQs on Florida Business Taxes

Does Florida Have Sales Tax?

Yes. Florida does have a sales tax, which varies among cities and counties. You can find more information above.

Does Florida Have a State Income Tax?

No. Florida does not have a general state income tax.

Is There a Florida Franchise Tax?

Yes. It's called the Florida Corporate Income Tax. If your LLC is classified as a corporation for tax purposes, you may be required to pay this additional tax. Find more information above.

Do I Need to Pay Estimated Taxes?

Yes. In most cases you must pay estimated taxes to the federal government. You'll find more information above.

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