Florida offers more than a retirement haven and lots of sunshine. It is also one of the friendliest places for companies, particularly for small businesses.
Here, only C corporations need to pay state income tax. Meanwhile, limited liability corporations (LLCs) and S corporations operate as pass-through entities as far as taxes are concerned.
Besides a lighter tax burden, many business owners claim that the Sunshine State offers an excellent quality of life. The ease of doing business is also great as it costs less to process licenses, permits, and registrations quickly. The state also boasts labor force and transport and information technology infrastructures.
In other words, thinking of opening a company here in Florida may be an excellent decision in the long run. However, regardless of the size of your business, you need capital. The question is, where do you get it here in the state?
Here are a few ideas you can consider:
In business, bootstrapping is the process of starting a company with limited resources. These usually refer to your savings, non-interest-bearing loans from friends and family, or offers of shares or part of the revenue to relatives who invest.
To bootstrap, you need to have the ability to save money, and it seems Florida makes it easier for you to do so. It doesn’t levy any vehicle, inheritance, gift, or personal income tax. It is among the top ten states with the lowest tax rates.
In fact, in a feature by Fox Business, a person who decides to move to the Sunshine State from high-income tax states could expect to save as much as 13 percent on their tax bills. If that’s a Californian, that’s a savings of a whopping $28,000!
And although the cost of living in Florida is around 4 percent higher than the national average, according to insure.com, it is still less expensive to reside here than in Virginia, Delaware, or Colorado.
2. Use Your Mortgage
At some point, bootstrapping will stop working, especially when you already want to scale or expand your business. So that it can grow faster (and you can generate higher profits and spend on more cost-effective marketing measures), you now have to consider other options, including using your mortgage.
You can get smart with your home loan in the following ways:
- Make the most of the mortgage rates. Look for banks and loan programs that offer the best mortgage rates. They can provide you with choices such as refinancing, which will help you take advantage of a much lower interest rate for your home loan.
- Consider a renovation home loan. Some banks may also provide you with a renovation home loan, which is an ideal funding option if you’re into real estate. You can use the money to buy a foreclosed property or participate in a short sale.
- Apply for a HELOC. HELOC stands for home equity line of credit, and as its name suggests, it is a type of revolving credit attached to your mortgage. In this scenario, you can borrow up to the value of your property’s equity and then use the home as collateral in case of default. While that is definitely risky, it can also provide you with a good amount of money. As long as it’s used well, you are less likely to lose your home.
3. Maximize the Incentives
The state also grants various tax credits and incentives to help reduce your operation costs, increase your capital, or boost your cash flow.
Take, for example, businesses that relocate on a former brownfield site (a brownfield is a previously occupied and used land that may now have been abandoned or not used and may have been contaminated).
Under the Brownfield Site Rehabilitation Agreement, these companies may be eligible for a redevelopment bonus refund to help stir job creation and redevelopment. It can be up to $2,500 tax refund for every job the business can generate.
On the other hand, the qualified target industry tax refund program aims to encourage certain industries to provide high-quality jobs and, in exchange, receive tax refunds that can range from $3,000 to 6,000 depending on the business location.
Moreover, the company can claim a job bonus of $1,000 if it pays over 150 percent average local wage or $2,000 if the average local salary paid is over 200 percent.
Running a business is financially challenging, but your choice of location can also matter. Opening a company in Florida may be beneficial if you are looking to pay less on your taxes, want easy access to affordable loans, and are committed to providing good jobs since the state can help lower your spending with its incentives.