In Florida, you can establish a sole proprietorship without filing any legal documents with the Florida Department of State. There are four simple steps you should take:
- Choose a business name.
- File a trading name with the Department of State.
- Obtain licenses, permits, and zoning clearance.
- Obtain an Employer Identification Number.
1. Choose a Business Name
In Florida, a sole proprietor may use his or her own given name or may use an assumed name or trade name. It is always a good idea to choose a name that is not too similar to another registered business because of common and federal law trademark protections. To make sure your business name is available, run a search in the following government databases:
- Florida Department of State: (conduct your search for entities and trade names)
- U.S. Patent & Trademark Office: (Click on the TESS link under Tools.)
2. File a Trade Name
If you use a business name that is different from your legal name, Florida requires you to register the trade name. After you have chosen a name, you will need to publish it in a local newspaper in the county where your business is located. To file your trade name you can download the Trade Name Form and mail it to the Department of State or you can file it online at the Department of State’s Online Fictitious Name Registration. The filing fee is $50.
3. Obtain Licenses, Permits, and Zoning Clearance
Your business may need to obtain a variety of licenses and permits depending on its business activities. Florida Department of Business and Professional Regulation (DBPR) is the agency in charge of licensing and regulating most professions. Their website provides a complete list of the professions that it regulates and licenses. However, other professions such as health care and law are licensed by other departments. If your particular profession is not listed with the DBPR check with the appropriate Florida State Agency. In addition, local regulations, including building permits and zoning clearances, may apply to your business. You should check with your city and county governments for more information.
4. Obtain an Employer Identification Number
Sole proprietors who wish to have employees need to obtain an Employer Identification Number or EIN. This is a nine-digit number issued by the IRS for tax reporting purposes. All businesses with employees are required to report wages to the IRS using their EIN. Registering for an EIN can be done online at the IRS website.
Sole proprietors without employees are not required to have an EIN because they can use their Social Security number to report taxes. Nevertheless, you may want to obtain one anyway for your business. Some banks require one to open a bank account and it can reduce the risk of identity theft.
In Florida, businesses are required to file new-hire reports and register for an unemployment compensation account. You will need to use your EIN when registering your business through the Florida New Hire Reporting Center. For more information on unemployment compensation, see Florida’s Department of Revenue Online Unemployment Tax Center.
If you have employees, you must report and pay employment taxes on a periodic basis. For more information on being an employer in Florida, visit the New Business Owners’, Startup Kit.
It is important to consider doing the following once you have established your sole proprietorship:
- Open a business bank account. Using your fictitious business name and EIN, you should set up a bank account to keep your business and personal finances separate.
- Obtain general liability insurance. Because sole proprietors are personally liable for all debts and obligations of the business, a business liability insurance policy may be the only form of financial protection against unforeseen events.
- Report and pay taxes. Depending on your specific business activities, you may be required to report such items as sales tax and use tax. You will need to register with Florida’s Department of Revenue Online Business Tax Application or file a paper application. Instructions are available in the Florida Business Tax Application form.
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