Choosing the Right Business Structure in Florida

Starting a business in Florida means more than registering a name or opening a bank account. The structure you choose—sole proprietorship, LLC, S-Corporation, or C-Corporation—determines how you pay taxes, protect assets, and grow.

Many Miami entrepreneurs ask: Should I stay a sole proprietor on Schedule C, form an LLC, or elect S-Corp status? The answer depends on your income, goals, and compliance needs. This guide compares the options and links to in-depth articles for each choice.

1. Why Business Structure Matters in Florida

• Legal Protection: separates personal and business liability.
• Tax Treatment: determines whether profits face self-employment tax or corporate tax.
• Perception: clients, lenders, and investors prefer structured businesses.

2. Sole Proprietorship (Schedule C)

A sole proprietorship is the simplest path—no separate entity. Income and expenses are reported directly on your Form 1040 with Schedule C. While easy to start, all profits face self-employment tax.

For more details, see our post: Top Tax Deductions for Freelancers.

3. LLC (Limited Liability Company)

An LLC offers liability protection with tax flexibility. By default, single-member LLCs are taxed like sole proprietors. However, owners can elect S-Corp taxation for potential savings once profits rise.

Learn more: Incorporating a Business in Florida.

4. S-Corporation

Popular with freelancers and small businesses, an S-Corp allows you to split earnings into W-2 salary (subject to payroll tax) and distributions (not subject to SE tax). To qualify, you must pay yourself a reasonable salary under IRS rules.

Dive deeper: S-Corp vs. LLC vs. Sole Proprietor.

5. C-Corporation

Less common for small businesses, but valuable if you seek outside investors or plan to scale aggressively. C-Corps face double taxation (corporate tax + dividend tax), but allow benefits like stock options.

6. Payroll Compliance in Florida

No matter the structure, if you pay employees—or yourself through an S-Corp—you must run payroll and file required reports. Missing payroll compliance leads to penalties and IRS scrutiny.

Details here: Payroll Compliance in Florida.

7. Retirement Planning and Taxes

Retirement accounts like SEP IRAs, Solo 401(k)s, and SIMPLE IRAs not only build your future but also reduce taxable income. S-Corp owners often benefit most when combining payroll with retirement contributions.

Learn how: How Retirement Contributions Lower Taxes.

8. How to Choose the Right Structure

• What is your current income and growth potential?
• Do you need liability protection?
• Are you prepared to handle payroll compliance?

Many start as sole proprietors or LLCs, then elect S-Corp once profits consistently exceed $40k–$50k. A tailored consultation ensures you don’t miss opportunities or create IRS risks.

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Choosing between LLC, S-Corp, or sole proprietorship? Our Miami tax professionals will review your numbers, model the savings, and handle the filings for you.