Florida Sole Proprietorship vs LLC:
Fees, Taxes, and Decision Guide (2026)
Florida has no state income tax for either structure. The main cost difference is the LLC's $125 filing fee and $138.75 annual report. Here is what Florida residents actually need to know.
Florida LLC Fees
$125
Articles of Organization filing fee
$138.75/yr
Annual report fee
$0
State income tax (LLC or sole prop)
1-3 weeks
Standard processing time
5-Year Cost Comparison for Florida Residents
| Structure | Year 1 | Year 2-5 (each) | 5-Year Total |
|---|---|---|---|
| Sole Proprietorship | $0 | $0 | $0 |
| Florida LLC | $263.75 | $138.75 | $818.75 |
Florida Taxes: No State Income Tax
Florida has no personal state income tax, which means neither sole proprietors nor LLC members pay state income tax on business profits. This is a significant advantage compared to states like California (up to 13.3%) or New York (up to 10.9%).
Sole Proprietor in Florida
- + Federal income tax (federal brackets)
- + Self-employment tax (15.3% federal)
- + No Florida income tax
- + No Florida franchise tax on individuals
Florida LLC (Default)
- + Federal income tax (same as sole prop)
- + Self-employment tax (same as sole prop)
- + No Florida income tax
- ! $138.75/year annual report fee (LLC only)
Florida-Specific Considerations
Florida's LLC veil protection
Florida courts have generally respected the LLC veil for single-member LLCs when proper formalities are observed. Florida Statute 605.0304 provides that members are not personally liable for LLC obligations. However, commingling funds and failing to maintain an operating agreement remain the main veil-piercing risks.
Sunbiz.org: where to file
Florida LLCs are formed through the Division of Corporations at sunbiz.org. Online filing takes about 30 minutes. Annual reports are due by May 1 each year. Failing to file the annual report results in administrative dissolution.
DBA registration in Florida
Sole proprietors operating under a business name other than their legal name must register a fictitious name (DBA) with the state for $50. LLCs can operate under the LLC name without a separate DBA registration.
Specific Recommendations for Florida Residents
Stay sole prop if...
- Revenue under $30k and low-risk work
- No employees and clients do not require an LLC
- The $138.75/year annual report is a meaningful cost
Form a Florida LLC if...
- Revenue above $50k (S-Corp election available)
- Physical services, products, or advice-giving work
- Planning to hire or bring on a partner
Should Florida residents form out of state?
No. If you live and operate in Florida, form your LLC in Florida. A Wyoming or Delaware LLC means you pay that state's fees plus Florida's $125 filing fee and $138.75 annual report as a foreign LLC. You pay more and get no extra protection.