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A single-member LLC is a limited liability company with just one member; “member” is another term for owner. Many entrepreneurs find that starting an SMLLC is a good entity type for them because it offers personal liability protection. In contrast, a sole proprietorship does not.
Sole proprietorships and SMLLCs are both small businesses run by just one person. But many pros regard the SMLLC as safer because an SMLLC is a separate legal entity from its owner. Usually, that separation protects the personal assets of the LLC’s sole member. This is a big reason some entrepreneurs decide it’s time to start an LLC.
If a Florida business defaults on a debt, collectors may use what’s called a “charging order” to come after the owner’s assets. Usually, charging orders can’t be used to confiscate the assets of an LLC’s owners. However, in the past, the Florida Supreme Court has ruled that the restriction for charging orders doesn’t apply to single-member LLCs. So in some cases, the courts treat an SMLLC like a sole proprietorship.
This primarily happens in a worst-case scenario. For example, in the Florida Supreme Court case Olmstead v. Federal Trade Commission, a single-member LLC owner was sued for scamming. After the court’s ruling, Olmstead lost both their ownership of the business and some personal assets.
If your SMLLC is 100% compliant, this usually won’t be an issue. But it is an important concern to note.
Starting a single-member LLC in Florida is an important legal procedure. But follow these five steps, and you’ll be well on your way to owning a brand-new Florida LLC.
Before we dive in: if you’re starting an LLC for a licensed profession, you’ll need to form a PLLC, or professional limited liability company. We don’t offer formation services for these businesses, but we can help you understand more about starting a Florida PLLC.
What will Floridians call your business? Now’s the time to decide. You’ll want to create a business name that’s memorable and descriptive of what your business does. But your name should also comply with state law. Florida law requires your business name to:
Ideally, your name should also match an available domain name so you can establish your online presence (see domain name definition). Once you have one, we can help you register your domain name for just $125 a year.
Do you have your perfect name but aren’t ready to register? The state of Florida allows you to reserve a business name for up to 120 days.
Every Florida LLC is required to appoint a registered agent. A registered agent is an individual or business entity who accepts service of process and other official communications on your behalf.
Florida law requires a registered agent to have a physical address in the state (P.O. boxes don’t count). A registered agent also needs to be present at that address during all regular business hours. Because of that, it’s a good idea to appoint someone you trust or a registered agent like ours to fill this role.
Now that you have your registered agent lined up, you can file your formation documents: the Articles of Organization. It’s easiest to file this form online, and you’ll want a credit card on hand to pay the $125 filing fee. Note: this cost includes the Articles fee and the registered agent designation fee.
The Articles of Organization asks for a lot of basic but important information. Much of it is required, but there are a few you can elect not to include. Here’s what required:
And then there are some optional items:
Once you file this form, your business is officially created. Hate paperwork? Our zero-cost Florida LLC formation service has you covered. Our handy state fee tool also lets you know how much to budget for your formation process.
An operating agreement acts a lot like a constitution or charter for an LLC; it describes how the LLC will function. (For more information, please see our operating agreement definition page.) Typically, an operating agreement dictates the responsibilities of each member, how business profits are distributed, and how membership can change in the future. Even though the operating agreement is just an internal document, it’s essential.
As a single-member LLC, you don’t technically have to draft an operating agreement, but it’s a very helpful tool. For one, some banks ask to see it when you apply for a business bank account. And you never know how your business will grow in the future. Most importantly, an operating agreement creates additional proof that your personal assets and business assets are completely separate.
If creating this legal document sounds overwhelming, never fear — our guided, customizable operating agreement template can make this process simple.
An EIN, or Employer Identification Number, functions like a Social Security number for a business. It’s a nine-digit code that the IRS assigns to your business. If an LLC has more than one member or employees, then an EIN is required.
Technically, if your single-member LLC has no employees, you might not have to get an EIN, provided you don’t file excise taxes or check any of the IRS’s other boxes for requiring one. That said, a bank may ask to see it if you apply for a business bank account. You can get an EIN for free from the IRS, or we can submit your EIN paperwork for you.
By default, every single-member LLC is considered a “disregarded entity” and is subject to pass-through taxation for federal tax purposes. Basically, the LLC itself doesn’t pay taxes. Instead, the LLC’s owner reports the business income on their personal tax return and pays taxes accordingly.
Normally, this process repeats on the state level. However, Florida is one of a few states that doesn’t charge a personal income tax. So LLCs that maintain their default status won’t pay any taxes. However, if an LLC opts to be taxed as a What is a C corporation? (sometimes done by larger LLCs to take advantage of certain corporate tax breaks), they’ll pay income taxes at both the state and federal levels.
Note: if you’ll be paying sales taxes (or you’re liable for any other state taxes), you’ll need to register with the Florida Department of Revenue.
Still wondering why you should start an LLC? Forming any business is an extensive process, but it’s usually well worth the effort. Here are some of the benefits of forming an SMLLC.
An LLC is pretty easy to maintain year over year. Usually, LLC owners need to maintain their business licenses, pay their taxes, and file their Florida annual report. Compared to entity types such as corporations, this maintenance is quite simple.
Many SMLLC owners choose to keep the default taxation status to avoid the “double taxation” of a C corporation (the standard form of corporation), in which a business’s profits are taxed at the federal level at both the business and personal levels. That said, if you want to elect S corporation (please see our What is an S Corp? page) or C corporation status, you have that option. In fact, many LLC members are able to lower what they pay in self-employment taxes by electing to be taxed as an S corp. With an LLC, you get to choose.
As the sole owner of your LLC, you get to call the shots and run your business the way you want. Multi-member LLCs require more compromise and collaboration to run smoothly.
It’s perfectly legal to operate as a sole proprietor, but some customers feel more comfortable supporting established brands. The designator “LLC” adds an extra layer of legitimacy to your brand identity.
Starting a business shouldn’t feel like you’re drowning in paperwork. Here at ZenBusiness, we love making the process as easy as possible. That’s why we offer zero-cost Florida LLC formation service and worry-free compliance help to stay in good standing with the state. We’ve also got your back for operating agreements, EINs, and much more. Let us handle the red tape so you can focus on making your business thrive.
How do SMLLC taxes work in Florida?
By default, a Florida SMLLC is considered a disregarded entity. In most states, that would mean the LLC’s owner would pay state income taxes on their personal returns. But in Florida, there is no state income tax. As a result, Florida SMLLCs and their owners don’t pay state income taxes unless they elect to be taxed differently.
Does a single-member LLC protect your personal assets in Florida?
It’s a little complicated. In the past, Florida courts have ruled to treat SMLLCs like sole proprietorships, compromising their personal assets. If you’d like more reliable personal liability protection, you have options. For example, you could create a corporation or start your SMLLC in another state and qualify as a foreign LLC in Florida.
Alternatively, you could also grant a very small membership share of your LLC to someone you trust. This small share makes you a multi-member LLC, and creditors usually can’t use charging orders to come after the personal assets of LLCs with multiple members. But practically speaking, you’d still have almost complete control of your business (as explained in your operating agreement).
Can a husband and wife form a single-member LLC in Florida?
If a husband and wife formed an LLC together, they’d be a multi-member LLC. Florida is a common law state (as opposed to community property law), so each partner owns property separately. This includes businesses they form together.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
Written by Team ZenBusiness
ZenBusiness has helped people start, run, and grow over 700,000 dream companies. The editorial team at ZenBusiness has over 20 years of collective small business publishing experience and is composed of business formation experts who are dedicated to empowering and educating entrepreneurs about owning a company.
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