Multi-State Income Taxes | Companies expanding into Florida

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Florida is a smart choice when it comes to expanding your business into another state. The state comes with a talented workforce, top-ranked infrastructure and a blossoming market of start up businesses. So it’s no wonder the state was ranked fourth-best for a business tax climate in 2021, and second-best for doing business.

Multi-state Income Taxes | Companies expanding into Florida

If you have recently expanded your business into Florida, or if you’re considering doing so, you must understand the cost of apportionment. This will help you accurately report your earnings to the IRS and local governments.

  • S Corporations

    • Filing Requirements
      • Florida imposes corporate income/franchise tax on all corporations conducting business, deriving income, or existing within the state. Corporations, including entities that are taxed federally as corporations, are subject to the tax.
      • A corporation’s federal income is apportioned to Florida based on it’s activities in the state.
    • Allocation and Apportionment
      • The state uses the three-factor formula: Property, payroll, and sales
      • Florida follows the cost of performance rule for sourcing receipts for services to the state. Gross receipts are sourced if the services are performed wholly within the state. On the other hand, if the income occurs inside and outside of Florida, the receipts are only sourced if the greater proportion is performed in Florida.

  • Partnerships

    • Filing Requirements
        • All Florida partnerships are subject to the Florida Corporate Income Tax Code, and must file Form F-1065.  Partnerships here are defined as those doing business, earning income, or existing in the state.
        • A limited liability company with a corporate partner classified as a partnership for federal tax purposes must also file Form F-1065. Note that LLCs classified as partnerships must not file Form 565, Partnership Return of Income.
        • Note: A foreign corporation that is a partner or member of a Florida joint venture must also file a Florida Corporate Income/ Franchise Tax Return (Florida Form F-1120).
        • If you are a corporate taxpayer filing Florida Form F-1120, use Florida Form F-1065 to report the distributive share of your partnership income and apportionment factors.
    • Allocation & apportionment
      • The state uses the three-factor formula: Property, payroll, and sales
      • Florida follows the cost of performance rule in sourcing receipts from of services to the state. Gross receipts are sourced to Florida if the services are performed wholly within the state. Otherwise, receipts are sourced to Florida if the greater proportion of an income-producing activity is performed in the state.

Download our Multi-State Tax Filing Requirements Guide

Ensuring Accurate Tax Filing

Keeping a handle on these different laws and tax implications might be difficult for your staff members but can be accomplished by outsourcing a CPA. Allow an expert who deals with business structuring, accounting, and taxation regularly set up accounting software to factor in applicable tax laws for each US state.

Fusion CPA recently expanded into new states bringing us firsthand experience and knowledge. We have a team of certified public accountants who are highly skilled in handling multistate taxes. Our team of professionals understands the federal and state laws in various states and jurisdictions.

Fusion CPA recently expanded into new states bringing us firsthand experience and knowledge.

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This blog article is not intended to be the rendering of legal, accounting, tax advice, or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.