Florida Corporate Tax: Everything You Need to Know
Florida Corporate Tax is specified at a set rate of 5.5 percent on all income. 3 min read
Florida Corporate Tax is specified at a set rate of 5.5 percent on all income and it is important to remember that any corporation must also complete and return an appropriate tax return, even if they owe zero tax.
What Is Florida Corporate Income Tax
The state of Florida does not impose a personal income tax on residents, but certain businesses are not exempt from tax. Corporate income tax is charged at a rate of 5.5 percent on all incorporated businesses that are in operation within Florida. This corporate income tax applies not only to a business that is physically based in Florida but to any businesses that are registered outside the state, but that may still earn money in the state.
Any corporation that is registered in Florida must complete a corporate tax return, even if they are not liable to pay any tax, but certain types of business, as well as individuals, do not necessarily have to complete a tax return, particularly if they are not incorporated. The following are excluded from completing returns:
- Sole Proprietors
- S Corporations (may have to pay tax at a federal level, however)
Florida Taxes — a Quick Look
As Florida does not tax individuals on their personal income, corporate tax is an important source of income for the state. As already stated, businesses run as a corporation are compelled by law to complete a tax return in order to pay the corporate tax on business income, but individuals and corporations both need to be aware that there are other taxes that are collected by the state too.
These taxes include, but are not limited to:
- Sales tax of 6 percent levied on purchases across the state
- Property tax calculated on the first of January each year and based on the current market value
What Is Florida Corporate Income Tax (CIT) Internet Site?
The Florida state government use the CIT website to enable the fast and efficient filing of corporate income tax returns. There are several different tax returns which can be processed online and it's possible to make online payments, too:
- F-7004, Florida Corporate Extension of Time
- F-1120A, Florida Corporate Short Form Income Tax Return
- F-1120ES, Florida Corporate Estimated Tax Payment
The F-1120, Florida Corporate Long Form Income Tax Return can be processed and paid online, however, specialized software must be used. This can be obtained through the Internal Revenue Service.
How a Corporation Can Qualify to File for Florida Corporate Short Form Income Tax Return (F-1120a)
For small corporations that conduct all of their business within Florida, it's possible to file the F-1120A, The Florida Corporate Short Form Income Tax Return, online. There are, however, certain requirements which must be met.
To qualify for this, businesses need to provide their corporate name, registration numbers, proven address, and contact number in Florida. They also need to provide corporate income tax records from previous years and federal income tax records, in addition to their registered company bank details.
Corporations will also need to prove the following:
- They only do business in Florida, not in any other state
- Net income is no more than $45,000
- The corporation has not already filed or been included any other tax returns
- They do not pay federal Alternative Minimum Tax
- They have no tax credits, with the exception of Tentative Tax Payments or Estimated Tax Payments
How High is Corporate Income Tax Rate in Your State?
Florida's corporate tax rate of 5.5 percent is very comparable to rates in other states. The state of Arkansas charges corporation tax on income that exceeds $100,000. They take 5.4 percent on the first $100,000 and 6.5 percent on anything over $100,000.
The tax rate in Arkansas also involves a large surtax though, which can increase corporate tax to a much larger 8.25 percent. Surtax is applied only on corporations that earn $100 million or more.
Other states, including Washington, do not charge corporate tax on income, but have a different system, known as "gross receipts tax". Some states have gross receipts tax, which is charged on top of corporate income tax.
Taxes vary from state to state, of course, and businesses across the country will find themselves subject to different taxes. In Florida, with a flat rate of corporate income tax, it's easy to calculate and to then file your corporate returns.
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