For a long time, Florida has been the retirement capital of the U.S., but entrepreneurs are beginning to discover that it has some great incentives and resources that also make it an ideal place to do business. While the warm climate, lack of state income taxes, and favorable business environment make it an attractive place to invest in an existing business, they also make it a great place to be selling a business. This is the right time to decide to list your company for sale, and even better if you are a business owner in Florida.
Beneficial Trends in Florida
There is a major shift in wealth and population to Florida right now. Previously the state was more heavily dependent on retirees and tourism, but new arrivals are becoming permanent residents and bringing higher incomes. Florida lead all states in 2019 with an influx of over $17 billion in adjusted gross income, while Texas was a distance second at $4 billion. One of the driving factors behind this is the favorable tax environment as new residences are coming mostly from high tax income states.
Florida’s economy is one of the strongest in the U.S. Economic expansion is taking place across all sectors and consumer confidence is high. As the country’s economy recovers from the pandemic, Florida is ahead of most states in the recovery process.
Climate and Geography
Warm climate, theme parks and beautiful beaches attracts over 100 million Americans and foreign visitors to Florida every year. Owning a business in Florida gives you a customer base that consists not only of a growing number of permanent residents, but also tourists coming to Florida for family vacations, corporate gatherings, golf, sporting events and destination weddings. You don’t have to own a hospitality business to benefit from tourism. The huge annual influx of people benefits a broad spectrum of industries.
Geography is not only good for the climate, but also industry. Florida’s coastal infrastructure allows it to expedite shipments up the East Coast, across the country and around the world. The state is in a prime position to benefit from bilateral trade deals with Europe and Latin America.
Business Tax Incentives
One of the biggest perks Florida offers are its business tax incentives. The Tax Foundation ranked Florida as having the 4th best business tax environment, behind only Wyoming, South Dakota and Alaska. The major difference is that the climate in Florida is much more desirable than the other three. There is also no state income tax. Florida ranks as the number one destination for residents leaving high-tax states. Some of the other major incentives include the following:
- There is no corporate tax at the state and federal levels on dividends if the owner decides to be a subchapter S corporation
- Start-up expenses are deductible
- Professional fees for banking, legal or accounting services for the business, business lease and rental expenses, are fully deductible
- Overhead expenses for running a business and interest paid on capital loans are deductible
- Medical insurance for your family is deductible
- Expenses or loses are fully deductible for corporations. Sole proprietorship or partnerships have to prove that there was a profit motive before deducting their losses
- Manufacturing equipment, machinery, commercial space activities, and R&D machinery and equipment are all exempt from the Sales and Use Tax
Other significant business development tax credit programs are available to select companies, meeting specific criteria. These include the following:
- Rural and Urban Job Tax Credits offer incentives for businesses located within one of 15 urban areas and 13 rural areas to create new jobs. The credit ranges from $500 to $2,000 per qualified employee and can be taken against either the Florida Corporate Income Tax or the Florida Sales and Use Tax.
- The Jobs for the Unemployed Tax Credit Program (JUTC) gives incentives to businesses that hire qualified employees who were previously unemployed.
- The Qualified Target Industry Tax Refund (QTI) is a program providing tax refunds of $3,000 per job ($6,000 in a rural county) to qualifying companies that create at least 10 new jobs in one of Florida’s targeted industries. Businesses meeting certain industry and wage requirements could also be eligible for bonus awards.
- The Capital Investment Tax Credit (CITC) is an annual credit available for up to 20 years in an amount equal to 5% of the eligible capital costs generated by a qualifying project. Eligible capital costs include expenses from the acquisition, construction, installation and equipping of a business from the beginning of construction to the start of operations.
- The Local Government Distressed Area Matching Grant Program (LDMG) is designed to assist local governments in attracting and retaining targeted businesses. These targeted businesses are required to create at least 15 full-time jobs and the project must either be new to Florida; expanding operations in Florida; or leaving Florida unless it receives local and state government assistance. The grant amount will equal $50,000 or 50% of the local government’s qualified business assistance amount, whichever is less.
Additional Benefits for Businesses in Florida
There are several other incentives, which make it easier to do business in Florida. There are 34 Small Business Development Centers throughout the state, all of which provide one-on-one counseling, training and other assistance to entrepreneurs at every level. Economic development organizations throughout the state work together to help existing and prospective businesses find the right location(s) to match their needs. Quick Response Training (QRT) provides grants for customized training to new or expanding businesses. Incumbent Worker Training (IWT) addresses retraining workers to meet changing skill requirements caused by new technology, retooling, new product lines, and new organizational structuring. The state also has a business friendly government that helps with expediting permits and minimal requirements for incorporation.
The same characteristics that make Florida an ideal place to buy a business also make it an ideal place to sell one. Migration to the state is at an all-time high, and it is evident by the huge influx of people and development, particularly in Southwest Florida. This is creating an increase in demand for businesses in the area. Rarely is there a market for business sales and acquisitions that favors both buyers and sellers, but Florida is experiencing this right now. It has become the optimal location for business investment, which buyers and sellers can take advantage of.
If you are considering selling your business to retire or move on to a new chapter in your life, contact Corporate Investment Business Brokers (CIBB). We can help you decide if selling is right for you through a free, no-obligation consultation. Conversely, if you are looking to invest in an existing, proven Southwest Florida business, browse our listings and let us connect you with a company that fits your goals.
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