As a small business owner, processing payroll is just one item on your to-do list, but ever-changing regulations and tax code updates can make it the most time-consuming task in a given week. These tax updates occur at the federal, state, and local levels, and depending on where your business is based and where your employees live, some small businesses have it tougher than others. We’ve started this monthly series to focus on state-specific tax considerations, to help you keep up with what’s changing around you.
We’ve previously covered Washington, New York, Pennsylvania, and Oregon. This month, our spotlight turns to Florida (FL). While this is by no means a comprehensive list of Florida tax and payroll regulations, we are highlighting a couple of key things to know.
With the exception of Washington, the states we’ve previously covered all had state-level income taxes. Florida does not have a state income tax, which can be appealing for employees, and make payroll calculations a bit simpler for employers.
Note: While Florida does not have a state income tax, it does have a Corporate Income Tax requirement. The Florida corporate income/franchise tax is imposed on all corporations who conduct business, generate income, or exist within Florida.
A corporation’s federal income, as adjusted by Florida additions, subtractions, and adjustments, is allocated to Florida based on its activities in Florida compared to its overall activities everywhere. In most cases, this is inclusive of the corporation’s property, payroll, and sales.
This tax is assessed on a variety of entity types, including:
- All corporations (including tax-exempt organizations) doing business, earning income, or existing in Florida.
- All associations or artificial entities doing business, earning income, or existing in Florida.
- A limited liability company (LLC) classified as a corporation for Florida and federal income tax purposes is subject to the Florida Income Tax Code and must file a Florida corporate income/franchise tax return.
- S corporations that pay federal income tax on Line 22c of Federal Form 1120S.
- Tax-exempt organizations that have "unrelated trade or business income" for federal income tax purposes are subject to Florida corporate income tax and must file either Form F-1120 PDF Icon or Form F-1120A.
Click through for a full list of entities subject to Florida’s Corporate Income Tax.
The Florida Corporate Income Tax rate is calculated at 5.5% of the company’s Florida net income.
Aside from guidelines related to unpaid wages or reimbursed expenses upon employee death, there is no official final paycheck law on the books in Florida in cases of termination or voluntary separation. If you are unsure how to handle a final paycheck for your employees in Florida, you should consult federal recommendations related to final paychecks.
As you can see from our coverage of Florida, every state differs when it comes to small business payroll and taxes. So whether your business is in the Sunshine State, the Beaver State, or any state in between, you want to be sure that you are keeping up with tax and regulatory changes at the federal, state, and local levels. This can be hard to do on your own, but there are resources to help.
If you’re considering outsourcing payroll to help cut down on administrative tasks and mitigate tax risk, here are some things to consider in selecting a provider:
- Do they have your back when it comes to payroll taxes?
- How long is their payroll processing time?
- Do they offer extended support hours on evenings and weekends?
We’ll be back October 31st with a spotlight on Texas taxes.
This website contains articles posted for informational and educational value. SurePayroll is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, SurePayroll. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant. If you require legal or accounting advice or need other professional assistance, you should always consult your licensed attorney, accountant or other tax professional to discuss your particular facts, circumstances and business needs.