Florida Single Member LLC

Florida Single Member LLC

Florida recognizes two types of LLC, the single member LLC and a traditional or multi-member LLC. The multi-member LLC has always been a more well-known solution because not all states accepted single member LLCs as a legitimate business entity for some time. Florida and all other U.S. states do currently accept single member LLCs as a business form.

Our focus in this guide will be specific to Florida single member LLCs.

What is an LLC?

The term LLC stands for limited liability company. This business structure is a United States structure that allows members to create a company that doesn’t fall into the corporate category but still provides some liability protection for the individual owners or members of the LLC. The rare exception to this protection is when fraud or criminal activity is apparent.

The LLC takes qualities from both partnership or sole proprietorship and corporation. It mixes some of the best qualities of each one to create a hybrid business. This hybrid has advantages and disadvantages but provides a feasible business solution for many.

What is a Single Member LLC in Florida?

A slightly new form of LLC is the single member LLC. This is often also referred to with the acronym SMLLC. In the event of an SMLLC, there is only one member, much like a sole proprietorship simply has one owner.

The IRS typically defaults a single member LLC to a disregarded entity for income tax purposes. The business can choose to designate otherwise but because of the structure of the business a disregarded entity is the catch-all unless another designation is specifically applied and documented

This means that single member LLCs typically pass through all business income and expenses on their individual tax return as no business filing is required or expected from the IRS. The single member will use a Schedule C to accommodate the filing when they file their person Form 1040.

If the single member of the SMLLC was a business or corporation, then the income and business expenses would flow through that owner still on their business return process.

SMLLCs were slowly integrated as a business structure option and it took some time for many states to update their statutes and accept them. Florida does accept SMLLCs, as do all other states at this time.

Benefits of an SMLLC in Florida

An SMLLC is not without benefits in any state, including Florida. With an SMLLC, you are the sole member so it is very similar to a sole proprietorship and may be worth taking a look at if you are currently operating or considering operating under a sole proprietorship.

Below, you will find a few benefits of an SMLLC in Florida.

  • You will have a unique name for your LLC and no other business can register as an LLC with that name.
  • Owner and business assets are kept wholly separate.
  • Member assets will be protected by the formation of an SMLLC as the business will become a separate entity.
  • Business income and expenses are reported as self-employed income, which may provide some tax benefits.
  • Florida requires LLCs to use the suffix or the words associated with the suffix in their business title. This will be recognized and viewed as a professional business. It will be treated as a legitimate business.
  • There is privacy available when the SMLLC is registered anonymously.

How to Form a Single Member LLC in Florida

There are some things you will need to follow through with in order to create a single member LLC in Florida. They do require a unique name for the business so you should start by searching the database to determine whether or not your name is unique before you get started.

Here are the steps to follow in order to form a single member LLC in Florida.

  1. Choose the state in which to form the SMLLC. Even if you are located in Florida, you can establish the LLC in another state if you desire.
  2. Check the state’s database and choose a unique name that does not already exist. Remember that Florida requires the use of LLC, LC, or limited liability company in some form in the title.
  3. Choose a registered agent that is able to accept legal mail and correspondence on behalf of the business.
  4. Put together an operating plan. Florida does not require this step but it is recommended for your business as it details operations and management.
  5. Files your articles of organization or formation and pay the filing fee. In Florida, the fee is $125.
    • Articles of organization include the address and identifying information of the member, a mailing AND physical address for the business, and information and signature about your registered agent.

One thing to keep in mind as you select a name for your SMLLC is that you will probably need a EIN as well. This separates the business and the member. You should complete this step of the process when you select a name for your business.

You will follow the same steps to form an SMLLC that you might use to form an LLC. The only differentiating factor between the two in terms of forming the SMLLC is that there is only one member involved rather than multiple members

How is a Single Member LLC Taxed in Florida?

The default tax filing for a single member LLC is as a disregarded entity. This means that the income and expenses are passed through to the sole member’s personal taxes and filed as a Schedule C when they file their personal tax form.

A single member LLC can request to be treated as a S or C-corporation by the IRS. In order for this to happen, some paperwork will need to be filed with additional details. Essentially, the SMLLC will need to make this designation specifically to avoid the default.

There is no way that single member LLCs can be identified as partnerships. Partnerships require two or more members while a single member LLC only has one member.

What Taxes Do Florida Single Member LLCs Have to Pay?

In Florida, a single member LLC may be required to pay state income tax. In addition, they will pay self-employment tax as well as federal income tax for the business.

Employer Identification Numbers

What exactly is an employer identification number or an EIN? Essentially, this is a social security that was designed to be an identifier for a business. It is a unique identifier, much like a TIN or an SSN would be.

There are multiple ways to apply for an EIN and the process is pretty simple.

Why Does a Single Member LLC Need an EIN?

A single member LLC will need an EIN because it is not eligible to be operated under your individual SSN. Remember that an SMLLC is a separate entity from the business owner. This means that it requires its own unique identifier, which is completed by obtaining an EIN.

How Do You Get an EIN as a Single Member LLC?

The IRS provides us with an instructional that provides details on how to apply for an EIN. You can apply directly on the IRS website or you can apply using another option. They offer application processing via fax, mail, and telephone as well.

The application process is fairly simple to complete in order to obtain an EIN.

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