Choosing the Right Taxation for Your Florida LLC

BFG Law’s Guide to Why LLCs Are a Smart Choice for Miami Entrepreneurs

Why LLCs Are So Popular in Florida

Florida business owners—especially those in Miami and other metro areas—often choose to form Limited Liability Companies (LLCs) due to their flexibility and protection. A Florida LLC provides:

• Limited liability protection: shielding personal assets from business debts or lawsuits
• Flexible management: members can manage the business directly or appoint managers
• Multiple tax election options: choose how you want your LLC taxed at the federal level
• No state income tax for individuals (a major perk for Florida residents)

Under Florida law, LLCs are governed by Chapter 605, Florida Statutes, which supports member flexibility and does not impose state-level corporate income tax for pass-through entities.

1. Default Taxation: Sole Proprietorship or Partnership

By default, a single-member Florida LLC is treated as a disregarded entity, while a multi-member LLC is taxed as a partnership. In both scenarios:

• The LLC does not pay federal income tax
• All profits and losses “pass through” to the members’ individual tax returns
• Income is generally subject to self-employment tax (15.3%)

This is ideal for small businesses in Miami seeking simplicity and avoiding corporate tax filing.

2. Electing C Corporation Tax Treatment

If your Florida LLC plans to retain profits, seek outside investment, or eventually go public, you may elect to be taxed as a C Corporation by filing IRS Form 8832.

Pros:

• Flat 21% corporate tax rate
• Ideal for reinvesting profits in the business
• Attractive to venture capital or angel investors

Cons:

• Double taxation if profits are distributed as dividends
• More complex filing and compliance obligations

This structure is less common for local Miami businesses, but can be a strategic option for fast-growing startups or real estate holding companies.

3. Electing S Corporation Status

A Florida LLC with U.S. citizens or resident members can elect S Corporation tax status by filing IRS Form 2553. This option allows for a mix of salary and distributions, potentially reducing self-employment tax.

Requirements:

• All members must be individual U.S. tax residents
• No more than 100 shareholders
• Only one class of membership interest allowed

This election is a popular choice for professionals, consultants, and small family-run businesses in Florida, especially those earning over $100,000 per year and seeking tax efficiency.

Comparison Table: Tax Options for LLCs

Conclusion: What’s Right for Your Miami Business?

Florida LLCs are a powerful tool that provide asset protection and allow you to tailor your federal tax treatment based on your goals. Whether you want to keep things simple with default pass-through taxation, reinvest profits under a C Corp model, or optimize payroll and distributions with an S Corp election, the key is to structure it right from the start.

At Bianchi Fasani & Green, we help clients across Miami and South Florida make the smartest decisions when forming or restructuring their business. If you’re launching a new LLC or thinking of changing your tax status, schedule a strategy session with our team today.