Key Takeaways
- Florida has no personal income tax AND no corporate income tax on most businesses
- Pass-through income (LLCs, S-Corps) follows your personal residence
- Business relocation to Florida can eliminate state income tax entirely
- Multi-state businesses may still owe tax in states where they operate
Why Business Owners Choose Florida
Florida offers a unique combination for business owners:
- 0% personal income tax: Pass-through income is not taxed
- No corporate income tax: On most businesses (5.5% only on C-corps over $50K)
- Business-friendly laws: Strong LLC protections, charging order limitations
- No estate tax: Wealth transfers without state estate tax
$10,000 - $100,000+
Potential annual savings for business owners
Tax Treatment by Entity Type
Pass-Through Entities (Most Common)
| Entity Type | How Taxed | Florida Benefit |
|---|---|---|
| Sole Proprietorship | Personal return | 100% at FL's 0% rate |
| Single-Member LLC | Personal return (disregarded) | 100% at FL's 0% rate |
| Multi-Member LLC | Partnership return, K-1 to owners | Your share at FL's 0% rate |
| S-Corporation | S-corp return, K-1 to shareholders | Your share at FL's 0% rate |
C-Corporations
C-Corps face different rules:
- Florida corporate tax: 5.5% on income over $50,000
- Dividends to you: 0% Florida personal tax
- Multi-state corps may owe tax in multiple states
Pass-Through Income Rules
For LLCs and S-Corps, your share of business income is taxed at your personal residence:
- Florida resident: 0% state tax on your K-1 income
- California resident: Up to 13.3% on the same income
- New York resident: Up to 10.9% on the same income
Example: You own 50% of an LLC that earns $500,000. Your K-1 shows $250,000 income. As a Florida resident: $0 state tax. As a California resident: ~$25,000+ state tax on the same income.
Multi-State Business Considerations
If your business operates in multiple states:
- Nexus states: You may owe tax in states where you have employees, property, or significant sales
- Apportionment: Multi-state businesses apportion income based on sales, payroll, and property
- Florida portion: Income apportioned to Florida is state-tax-free
- Personal residence: Still determines where YOUR share is taxed
Caution: If your business has operations in your former state, that state may continue taxing the portion of income sourced there. Consult a tax professional for multi-state situations.
Relocating Your Business to Florida
For maximum benefit, consider relocating business operations:
- Re-domicile your LLC/Corp: File to change entity's home state to Florida
- Move operations: Relocate employees, equipment, and decision-making
- Update registered agent: To Florida registered agent
- Close former state registrations: File withdrawal or dissolution
Florida Asset Protection
Florida offers strong protections for business owners:
- Charging order protection: Creditors can't force LLC distributions
- Homestead protection: Unlimited home equity exemption
- Tenancy by entirety: Spousal asset protection
- IRA/401k protection: Full creditor protection
Establishing Florida Residency as a Business Owner
- Get a Florida residential address through Your Tax Base
- File Florida Declaration of Domicile
- Get Florida driver's license
- Update business records (registered agent, addresses)
- File state exit returns for personal AND business if applicable