Incorporator The Journal of U.S. Formation
Start Free Quiz
Editorial 8 MIN READ

Florida in late 2020: the fee schedule held, the volume did not

A $125 formation, a $138.75 annual report, and a filing surge that turned Sunbiz into one of the busier agencies of the pandemic

The Editors
Staff, Incorporator.org
8 min read Updated
Contents 6 sections
  1. What Florida charges in 2020
  2. The annual report, mechanically
  3. The corporate income tax, still walking down
  4. What the pandemic did to the filing curve
  5. Who Florida actually makes sense for in 2020
  6. Sources

Florida LLC costs $125 to form and $138.75 a year to keep. Neither number moved in 2020, which is the most interesting thing about the fee schedule this year; everything else around it did.

This is a mid-to-late 2020 check on the Florida filing economy: what the state charges, what it collects, and what happened to the filing curve once the pandemic rearranged the calendar. If you formed a Florida LLC in 2016 and have been paying annual reports on autopilot since, the dollars are the same, but the queue at Sunbiz is not.

What Florida charges in 2020

The Division of Corporations runs a flat fee schedule, and it has been running the same one for years. The Articles of Organization for a new LLC cost $100. The designation of the registered agent runs another $25. The two always travel together, because the state will not accept the articles without a registered-agent designation, which means the real price of admission is $125. An optional certified copy is $30, and an optional Certificate of Status is $5. Nothing on that list changed in 2020.

The annual report is $138.75. It is due by May 1 of every year beginning the year after formation, and the late fee for missing the deadline is $400. That late fee has been a Florida staple for long enough that registered-agent firms build their entire spring calendar around it. Miss May 1 and the bill nearly quadruples; miss the third Friday in September and the LLC is administratively dissolved, with a reinstatement fee required to bring it back.

Corporations sit on a slightly different schedule, but the order of magnitude is the same. A for-profit corporation files Articles of Incorporation for $35, a designation of registered agent for $35, and a non-optional $8.75 for each of the initial filing steps; the all-in formation cost lands in the low $70s before optional certificates. Corporate annual reports are $150. The same May 1 deadline and the same $400 late fee apply.

None of those dollar amounts is a rounding error, but none is punitive either. Florida's fee posture remains what it has been for most of the last decade: moderate to form, cheap to maintain by coastal standards, and sharp on the late fee to enforce the deadline.

The annual report, mechanically

The Florida annual report is not a financial statement. It is a confirmation that the entity still exists, its officers or managing members are as the state has them recorded, its principal address is current, and its registered agent has not moved. Sunbiz sends an email reminder to the address on file in January, February, and April. The notices go to the email the filer entered during formation, which is often a personal address someone stopped checking three years ago. A measurable share of the $400 late fees Florida collects each spring come from reminders that landed in dormant inboxes.

The report is filed online through Sunbiz.org and pays by credit card or by deposit account for high-volume filers. The state does not mail paper reports, and it has not for years. There is no partial-year proration. A Florida LLC that forms on April 29 does not owe an annual report until the following May 1, which is the one and only piece of calendar relief built into the system.

Administrative dissolution for a missed report is not the end of the line. A dissolved Florida LLC can apply for reinstatement by filing a reinstatement form and paying the reinstatement fee, which at the current schedule is $100 plus all delinquent annual-report fees. The corporate side runs similar numbers. Entities that sit dissolved for a full calendar year accumulate the fees; the state does not forgive them.

The corporate income tax, still walking down

The formation fees are one story. The state's corporate income tax is a different one, and 2020 is a live year for it.

Florida is one of the few states that has let its corporate rate ratchet down through a statutory refund mechanism rather than through a straight cut. House Bill 7093, signed in 2018, requires the Department of Revenue to compare net collections against a forecast each year and, if collections come in above the threshold, to both cut the following year's rate and issue refund checks for the overage. The formula has already done work: the general corporate rate reduced to 4.458% for tax years beginning in 2019, down from the 5.5% statutory rate, and the Department of Revenue issued refund checks that spring. Readers following the Florida corporate income tax walking down can see the mechanism in full.

The 2020 rate depends on collections that will be measured after the state's fiscal year closes, and the 2020 number is not yet final as of this writing. The pandemic complicates the calculation in ways the 2018 bill did not anticipate. Corporate income tax collections ran well below forecast during the spring, then partially recovered in the late summer as pass-through profits and financial-services revenue came in. The general direction of the rate has been downward since the mechanism took effect, but the magnitude of the adjustment for any given year turns on one annual comparison, and the 2020 comparison will not be clean.

For the LLC reader, most of this is background. Florida does not impose a state income tax on individuals, and an LLC taxed as a partnership or a disregarded entity passes through to the members without a Florida entity-level tax. The corporate rate bites only on LLCs that have elected C-corp treatment, and on corporations organized or doing business in the state. It is worth tracking because the rate trajectory is a live signal about how the state funds itself, and because an entity that elects C-corp status mid-stream will care about the rate the next time it writes a check.

What the pandemic did to the filing curve

Sunbiz is one of the better-run agencies in the country in ordinary years. It accepts electronic filings, processes them same-day in most cases, and publishes a document index that lawyers and title companies use as a working tool. In 2020 it got busier, not slower.

New LLC formations in Florida spiked through the second half of the year. The early-spring filings dropped as expected in April, when the state's stay-at-home order went into effect and a good share of the service economy paused. Formations recovered in May, ran above 2019 levels in June, and kept accelerating through the summer. By the third quarter the state's monthly new-LLC count was well above any prior year's comparable months. The annual report season, which compresses most of a year's filings into the weeks before May 1, ran on its usual curve; the late-fee pile in mid-May was the usual size.

The composition of the surge is the interesting part. A share of the new LLCs were small-business formations that would have happened anyway, pulled forward by people who lost a job and decided to work for themselves. Another share were single-purpose LLCs set up to hold PPP loans or to separate a new pandemic-era business line from an existing one. A third share, harder to size, were real-estate holding LLCs organized around the residential-market run-up that started in late summer. Sunbiz does not publish a reason-for-formation field; this breakdown is inference from the entity names and addresses in the daily index, which any reader can look at.

The registered-agent market responded the way it usually does when formation volume spikes. The commodity-end providers advertised more aggressively; the full-service firms quietly raised their renewal prices. The spread between a bare-mailbox Florida registered agent at roughly $50 a year and a full-service commercial agent at $150 or more is the same spread it was in 2019, for the same reason: you are paying for someone who will catch service of process on a Tuesday afternoon and email it to you before Wednesday. That service is worth more in a year when courts are closed and mail is slow, which is to say, in 2020.

Who Florida actually makes sense for in 2020

The Florida answer has been stable for years and the pandemic has not moved it much. A Florida LLC makes sense for a business that is operated in Florida, owns Florida real estate, or has Florida-based members who want the state's no-income-tax posture to flow through cleanly. The formation is cheap enough and the maintenance is low enough that there is no meaningful cost penalty for picking Florida when Florida is where the economic activity lives.

A Florida LLC does not make sense as a substitute for Delaware when the business is headed into a venture-backed fundraising round. Institutional investors will still ask for Delaware, and a Florida LLC will still need to be converted before the Series A closes, at a cost that exceeds several years of saved Delaware franchise tax. It also does not make sense as a privacy play; Florida's public records posture is the opposite of Wyoming's, and the names and addresses of managing members are visible in the Sunbiz index to anyone who types them.

What is worth doing, if you formed in Florida any time in the last five years and have not checked, is to confirm three things before next May 1. First, the email on file for your entity is an address you actually read. Second, the registered agent listed is an agent you still have a relationship with, and the agent's address is current. Third, the member or manager list on the last annual report matches who actually runs the LLC, because changes are easier to file on the report than through a separate amendment.

The $138.75 is not the part that will hurt. The $400 late fee is. The state has been clear about the deadline for long enough that missing it is a calendar problem, not a cost problem, and a calendar problem is the kind of problem a registered agent is paid to prevent.

Sources

Keep reading

More from the journal.