The Fundamentals of Florida Small Business Tax: To know all about it

Owners: Rates, Deductions and Filing

Having a small business in Florida comes with its benefits, but you must have a good understanding about the taxes at state and federal levels to help ensure you are doing what is necessary to stay in compliance and to put as much back into your company as possible while not paying unnecessary taxes. That handbook decodes Florida tax rates, common deductions and instructions for business owners to file and make the best choices without getting bogged down in jargon.

In a Nutshell What to Know About Your Florida Taxes

Florida is a business-friendly state. "Many small business owners benefit from this in that there is no personal state income tax which makes taxation at the owner level simpler for sole proprietors and pass through entities," Shama Johal, CPA, partner of firm accountants and advisers at KLR said. The corporations are still subject to other state taxes, including corporate income tax (only for C corporations), sales and use tax, employment taxes. In addition to state responsibilities, every company has to pay federal taxes.

Varieties of Business and Tax Results

• Sole proprietorship Business income taxes on owners federal return personal income; there is no Florida state personal business tax.
• Partnerships and S corporations: Pass-through entities that almost always cannot pay Florida state income tax at the entity level but are required to file federal pass-through information returns with any applicable state returns.
• You can be taxed as a C corporation, which is taxable at both the federal and state level; (and in Florida your company could still have to file a corporate income tax return).

State Tax Rates to Watch

• Corporate income tax: C corporations doing business in Florida must pay an annual state corporate income tax rate, which varies by business size; rates and thresholds may change so verify current rates when submitting returns.
• Sales and use tax: Florida's state sales tax rate is 6% which applies to most goods and services, subject to certain exemptions; local jurisdictions may impose up to an additional 2.5%. Businesses in Topeka that provide taxable goods or services must collect the state’s sales tax from their customers, and remit the tax to the state.
• Withholding: Employers are responsible for withholding from the wages of these employees federal income tax and paying federal payroll taxes. FLORIDA – Unemployment Tax and Benefit info Employers must obtain State Department of Revenue tax area coverage for contribution purposes An Employer shall pay contributions as provided by the State.

Listening: Uncommon Deductions, and How to Get Them Made Common

Legitimate deductions allow small business owners to reduce taxable income. Keep clear records in each category of expense to prove deductions and in case you are challenged.

• Operational Expenses: Costs such as rent, utilities (for example, but related to light and power), office supplies, professional fees are generally deductible as ordinary business expenses.
• Employee costs: A business can write off wages, benefits (such as health, dental and life insurance), employer payroll taxes and contributions the company makes to establish qualified retirement plans for an employee.
• Home office: If you use a portion of your home exclusively and regularly for business, you may be able to deduct mortgage interest or rent as well as the costs of utilities and insurance. Document is record of your actual home office space and the time you spend working there.
• Car expenses: Among car-related deductions, keep a record of the actual costs for business travel or its standard mileage rate, along with a log listing and documenting business miles.
• Startup and organization costs: Generally, new businesses can claim a deduction for startup costs and organizational expenses in the first year of business with amortization on any overage.
• Depreciation and equipment: “You can depreciate (write off over time) equipment, machinery or other property you buy,” said Rhyne. And many smaller purchases are fully deductible in the year of purchase under tax rules.
• Health insurance and retirement: Owner-operators may also be able to save some of their health insurance premiums — or money set aside for retirement — on a tax-deferred basis, adding up nicely over time.

Sales Tax: Collection and Remittance

Congress has said that the internet is about connections, or what it calls nexus, across state lines and its power to regulate commerce “directly between different states” in Article 1 of the Constitution — connections that are created when a company sells its goods or taxable services in another state. If your business is doing that, you would need to get a sales tax permit, collect from each buyer there at their rate and pay over to the state. Filing frequency typically depends on the total amount of sales tax collected during regular business activities, so taxpayers will file more often as they accumulate larger amounts of taxable sales. Keep detailed records of all sales and receipts.

Filing Deadlines and Estimated Taxes

Small companies have to file taxes in a few ways. They have to do income tax returns, payroll tax deposits and quarterly estimated payments on income. Sometimes they also have to do sales taxes. Many small companies have to make estimated federal tax payments for income that is not withheld. For companies that have to pay sales tax they have to follow the states filing deadlines. If you make a tax calendar and set reminders for annual filings you will not have to pay penalties. This is because you will get reminders and you will not have any excuses.

Recordkeeping and Documentation

Good records are very important for taxes. You should keep your books neat and organized. You should have records of your income, expenses, payroll, receipts, invoices, contracts and bank statements. You should keep these records in printed form. You should keep them for many years as you are supposed to keep tax records. If you have records it will be easier to do your taxes and you will be able to get more deductions if you get audited.

Practice Pointers To Minimize Tax Risk

• Keep your personal and business money separate. Open business. Credit cards so you can easily track your spending. This way you will not mix up your business money.
• Check your accounts regularly. You should check your bank and credit card statements every month. This way you can catch mistakes early.
• Use a checklist for accounting. Keep track of your income and expenses. Use a checklist to help you remember business expenses.
• Plan for taxes. Put aside some of your revenue every month to cover your tax obligations. This way you will not be surprised when it is time to pay your taxes.
• Check your companys structure. Make sure your company is set up in a way that's good for taxes. As your company grows and changes you may need to change your structure.

When to Seek Professional Help

Tax laws and rules can be complicated. There are nuances in tax law, credits and industry information. If you have a situation like a company that operates in many states or you have to make big purchases or you have complicated payroll you should get a tax professional. A tax professional can help you avoid problems and save money.

For your Florida business managing taxes means knowing the rules that are specific, to Florida. You have to know about sales tax and corporate income tax well as federal taxes. You should focus on keeping records filing your taxes on time and getting all the deductions you can. If you plan ahead and follow financial rules you can manage your taxes and focus on growing your Florida small business.