Does the State of Florida Require LLC Tax Return?

By Laura Payet

Does the State of Florida Require LLC Tax Return?

By Laura Payet

A limited liability company (LLC) is usually a pass-through entity for taxation purposes. So the income passes through to its owners, called members, who then pay individual income taxes on their portions. For this reason, LLCs typically do not pay income tax, as they have no company income.

However, a business can affirmatively elect to be treated as a corporation for federal income tax purposes. If choosing to be taxed at the federal level as a corporation, Florida's corporate income tax must be filed and paid. Additionally, depending on its business, the Florida Reemployment Tax, as well as sales tax, might need to be paid.

Fountain pen and calculator resting on tax document

Filing a Florida Corporate Income Tax Return

By default, the U.S. Internal Revenue Service (IRS) treats all LLCs as partnerships, which are pass-through entities, so federal income tax is not owed. However, the IRS permits an LLC to choose to be taxed as a corporation, which is not a pass-through entity and therefore does have income subject to federal tax. A Florida LLC that elects to be taxed as a corporation for federal purposes must also pay Florida's corporate income tax.

As of 2018, the tax rate was 5.5 percent. Businesses can pay this tax online or by filing the Florida Corporate Income/Franchise Tax Return (Form 1120). If the state's criteria is met, a business may instead file the Florida Corporate Short Form Income Tax Return (Form 1120A). Florida taxpayers must file state returns electronically if they are required to file federal returns electronically or if they paid $20,000 or more in state corporate income tax during the previous state fiscal year.

An LLC that elects to have the IRS treat it as a partnership need not file a Florida corporate income tax return. However, if one or more of its members is a corporation, a Florida Partnership Information Return (Form 1065) must be filed. Additionally, the corporate member must file a state corporate income tax return and pay corporate income tax.

Finally, a single-member LLC that is disregarded for federal income tax purposes is not required to file a Florida corporate income tax return. If a corporation is the single member, however, that corporation must file a Florida corporate income tax return reporting its own and the LLC's income.

Florida Reemployment Tax and Sales and Use Tax

Florida's Reemployment Tax is the state's version of an unemployment insurance tax. If an LLC has employees, it may be liable for this tax. The state deposits the tax collected into its Unemployment Compensation Trust Fund to pay unemployment benefits to eligible claimants. Florida's Department of Revenue (DOR) recommends that businesses register to pay unemployment tax using its website.

A business that sells goods in Florida must collect and pay the state's Sales and Use Tax online or by using the Sales and Use Tax Return (Form DR-15). As of 2018, Florida's general sales tax is 6 percent, with some exceptions. The company must register with the DOR and pay sales tax periodically, usually quarterly, but it may qualify for different frequency depending on the amount of tax collected.

Structuring a business as an LLC offers several advantages in Florida. As with a corporation, the LLC format limits the owners' exposure to liability for the company's obligations. Because Florida has no personal income tax, if the partnership option is chosen for federal taxes, the company's revenue could escape taxation altogether. The business's income avoids state taxation at the company level because it passes through to the individual members, who also have no liability for state personal income tax on it.

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