Florida State is not a Tax Free option for corporations

Most of the States have a personal income tax; there are only seven of them which do not:Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.

Nevertheless, take your time and do not hurry to open an LLC in one of the tax-free States, just remember that they also need to earn an income somehow.

No-income-tax States often fund these revenues in a different way. In this regard, you can pay more in general taxation than in a state where your income is taxed at a reasonable rate.

What comes to mind when you think of the State of Florida? Miami, Key West and Orlando - our first associations; perhaps also, beaches, heat, hurricanes, crocodiles in the backyard and Spanish Moss on every tree.

Somehow, it turns out that to our compatriots Florida is not a tourist destination but the most popular state for opening companies. TaxFreeCorp receives a lot of requests to register LLC in this specific state.

It is fundamentally wrong to choose Florida just because you have an accountant there, a prep center, you fly there for a vacation, or you want to open a Bank account there.

The location of the above does not affect the need to register a company in a particular state. There are much more successful jurisdictions for opening companies in the United States if you are engaged in e-Commerce.

Recently, we published an article about Tax Free States.The topic of this article is the absence of income tax for individuals in tax-free States, if you have an LLC, such as a Partnership or a Disregarded Entity, but not an LLC with taxation, like a Corporation.

We are positive that opening C-Corp in Florida is NOT the best decision. Corporations doing business in this state have 4.5 % income tax. However, LLCs and C-corps are nevertheless exempt from paying income tax there.

By the way, Andrew Gillum, a Democrat from Florida, promised to increase the tax to 7.75%. Such a significant increase has not been approved yet, but the rate will be increased again to 5.5% by 2021.

To sum up, Florida is a good place for individuals residing in the state. They do not need to pay income tax (State Income Tax). On the other hand, if you open a C-Corp in Florida, in addition to the Federal Corporation tax of 21%, this Sunny state would "bite off" 4.5% (5.5% from 2021) of your C-Corp's net income.

In addition to these costs, you will need to withdraw the dividends and pay tax to Uncle Sam. Moreover, information about the founders will be revealed.

In addition to these costs, you will need to withdraw dividends and pay Uncle Sam tax on them. Plus, information about the founders will be in the open register.

Please note that the information in this article is not tax or legal advice.