Buying a Business: Register for Tax Certificates

The Florida Department of Revenue requires that all Florida businesses register with them for tax purposes. Since every business is completely different, they have you register for an online account first, and then you go through an application, which is a series of questions to determine exactly which tax certificates or tax program enrollments you need. Once you’ve gone through the application and enrollment process, then they will physically send all your certificates and tax identification numbers to the address you put on your account, so watch your mail about a week after you finish the online process. It’s a good idea to initiate this process at least a week before your business closing is scheduled to happen, so you have everything you need in order to take over the running the business. 

Because each business is unique, and therefore their tax needs will vary, we are just going to touch on three of the most common tax certificates/programs that businesses will need to enroll in or obtain. 

 

Sales and Use Tax

This is an umbrella term that covers many of the different taxes collected by the Florida Department of Revenue. They have a handout that helps explain how this all works. It can be very daunting for first time business owners to navigate through all of this, but just remember, your one application to the Department of Revenue should cover everything you will need, as far as state taxes go. 

Sales and Use Tax is basically exactly what it sounds like. If your business operations require you to collect and pay sales tax, you will need to register for Sales and Use Tax. The Department of Revenue breaks it down on their website, and you should be able to figure out if your business has exempt sales (like professional services, for example) or if you have to collect sales tax. If you are still unsure after reading through their website, then it would be best to consult your CPA or accountant to get their expert opinion.

Most businesses pay their Sales and Use Tax either on a monthly or quarterly basis. It’s also a bonus that it is relatively easy to report and pay online through their portal, or you can send them a physical check (they will send you a coupon book you can use to remit the sales tax). Some companies that you do business with might be sales tax exempt (like government entities, schools, churches, etc) or they could present you with an Annual Resale Tax Certificate, which means that they are purchasing the products that they will resell as part of their business operations, and in that case, they would not be charged sales tax at the time of purchase either. 

 

Annual Resale Tax Certificate

If your business will be purchasing products wholesale to resell at retail value or will purchase parts to install as part of your service, then you will want to make sure you get your Annual Resale Tax Certificate, so that you won’t have to pay sales tax when you purchase the goods you intend to resell. Remember that you won’t need to do a separate application for this. It will be included in your initial application to the Florida Department of Revenue with your Sales and Use tax application. They make it easy to get all of these items with one application, which is helpful.

 

Florida Reemployment (Unemployment) Tax

If your business will be hiring employees on a W2 basis (as opposed to a 1099 Independent Contractor), then you will need to pay Reemployment Tax as part of your payroll taxes. This is essentially the same thing as unemployment insurance or unemployment tax. The employer is required to pay this. The Florida Department of Revenue’s application will ask you if you intend to hire employees, and if you say yes, then you will be enrolled in this tax program and you will be sent a Reemployment Tax identification number to use. You will give this number to your payroll company (if you plan to use one) and then they can file these taxes on your behalf, in addition to the federal tax withholding.

In order to find your Reemployment tax rate, you need to log in to your account in the online portal. According to their website, new businesses generally start out at a rate of 2.7%, but existing businesses are capped at 5.4%. They send out a tax rate notice each year by mail, so you will know what your rate is. 

 

Consult a Tax Expert

We are business brokers, and by no means tax experts. The information presented here is offered as a courtesy and should not be considered expert tax advice. Please consult a licensed CPA or your tax accountant for specific questions or advice concerning the set-up of your business’s tax liabilities.