Form the Florida LLC: $125 at Sunbiz buys the one thing a sole proprietor cannot buy at any price

In most states this is a tax question and you can leave it open for a year without much happening. In Florida construction it is a workers compensation question, it is settled on the day you file, and one of the two answers cannot be bought back later at any price.

Chapter 440 treats a construction sole proprietor or partner as an employee of the business, and an employee cannot elect himself out of coverage. There is no form for it, no fee that unlocks it, and no version of it that works if you word the operating agreement cleverly. The certificate of election to be exempt is written for corporate officers and LLC members recorded at 10 percent ownership or more. It costs $50 and runs two years under s.440.05(6), so $25 a year keeps your own labor out of the premium base.

Price the two paths across five years of trading, one owner on the tools. The LLC is $125 to file at Sunbiz, $138.75 every May 1, and three exemption filings at $50 apiece, which is $968.75 all in. A profit corporation runs the same distance at $70 to file and $150 a year and lands at $970. The sole proprietorship is $50 for a fictitious name, nothing annual after that, and a workers compensation premium on your own labor for all five years, because the door the other two walk through is shut to it. The entity forms cost roughly $194 a year. The sole proprietorship saves you about $184 of that and hands you a payroll line you cannot close.

By the end of this page you will have chosen between the fictitious name, the LLC and the profit corporation on Florida's own arithmetic, ownership percentages set at formation instead of argued about two years later, the order for moving an existing sole proprietorship into an entity without turning signed contracts into paper you cannot sue on, a May 1 date carrying $138.75 instead of $538.75, and the federal tax answer, which is that your return does not move. The figures come from the 2025 Florida Statutes, the Division of Corporations fee schedule, and the CILB's own rules.

Price both structures over five years, not over the day-one filing fee

A Florida sole proprietorship is not really a filing. It is a description of what you are already doing. The only thing you file is a fictitious name registration, $50 for a five year term, and only if you trade under something other than your own legal name. Invoice as Daniel Reyes rather than Reyes Roofing and even that is optional.

That is the whole administrative burden, and it is genuinely cheaper. Here is the money once you run it past the first week.

Read the bottom half of that table before the top half. Over five years the LLC and the corporation land within a dollar and a quarter of each other, so the $55 gap on the filing fee is noise and the choice between those two is about ceremony rather than price. The gap that matters is the one on the left, and it is not a fee at all. It is a premium on your own labor with no filing that ends it.

Between the two entity forms, take the LLC. A corporation carries officers, directors, minutes and a share register, an LLC carries members and an operating agreement, and for a shop with one to four owners that is less machinery for the same protection and the same access to the exemption. Take the corporation when somebody outside the business asks for it, a surety, an investor, or a partner who wants share certificates.

Set the ownership percentages before you file, because the exemption reads them off the state's record

This is the part people leave to be fixed later, and later is when it stops being free.

The Division of Workers' Compensation checks a claimed exemption against the Division of Corporations record. What counts is the percentage recorded at Sunbiz, not the split you shook hands on in the truck and not a clause in an operating agreement. The ownership design is the exemption design, and it is settled at formation, when moving a number costs nothing.

Three patterns come up constantly in Florida contracting shops.

Two owners at fifty each. Both are recorded well above the threshold, both hold a certificate, and the whole management payroll leaves the premium base for $100 every two years.

Four owners at twenty five each. All four clear 10 percent, and three of them can be exempt. The cap is no more than three officers or members across a group of affiliated corporations and LLCs, so it is three for the group rather than three per company. Owner number four goes on a policy, and a second LLC does not buy three more certificates.

The working partner at five percent. This is the expensive one. A long-time lead hand you are bringing in as a part owner, written at five percent because that felt like the right size of gesture, is below the line. He cannot hold a certificate, so he is a covered employee from his first hour, and construction coverage is mandatory at one employee rather than at the four that gets quoted from the non-construction rule. Writing him at ten instead of five costs the business nothing on day one and changes his premium status permanently.

The same threshold decides who you can legitimately pay as a sub. Under s.440.02(18)(c) a construction worker you pay is your employee unless he carries his own coverage or his own valid exemption, and a valid exemption means his own entity, his own recorded ownership, and his own certificate. Paying a helper on a 1099 does not de-employ him. If you want him off your payroll count, the entity decision on this page is the one he has to make for himself. The mechanics of the filing itself, the electronic DWC-250, the ordering trap and the two year renewal, are in the Florida workers' comp exemption.

Stop waiting for the tax argument, because Florida deleted the one that decides this elsewhere

Contractors stall on this decision for a year waiting for an argument that does not exist here.

In a state with a personal income tax, the reason to incorporate is often a salary and distribution split that moves income across a state rate. Florida levies no personal income tax. There is no state rate to arbitrage, so the entire tax half of the usual debate evaporates, and what is left is the comp certificate, the contracting party, and the paperwork a buyer reads.

The federal half does not move either, and that is the part people brace for. A single member LLC with no election filed is a disregarded entity for federal income tax. The IRS looks straight through it to you. Business income goes on Schedule C of your 1040 and self-employment tax on Schedule SE, exactly as it did the year before you filed anything, and the LLC files no separate federal income tax return. Two or more members defaults to partnership treatment on Form 1065 with a K-1 to each member. Once you hire, payroll runs under the entity's own EIN, because a disregarded entity is still treated as separate for employment tax.

Going the other way costs money rather than saving it. Florida's 5.5% corporate income tax reaches C corporations, so electing C treatment for a contracting business adds a state tax the LLC would not have paid. The one place it also reaches an S corporation is a year that corporation pays federal tax on line 23c of Form 1120S, which means built-in gains, excess net passive income or LIFO recapture, and that is a return the Department of Revenue expects. With nothing on line 23c you tell the Department online that the account is in business and file no corporate return at all. The S election argument is a real one, but it turns on self-employment tax at a profit level, not on anything Florida charges, and it is worth an hour with a CPA once your net is large enough to make the payroll cost of it worthwhile. What that hour cannot do is give a sole proprietor a comp exemption, which is why the entity decision does not wait for it.

Sales tax is indifferent to the entity too. The 12A-1.051 fork between a lump sum contract and a properly itemized retail sale plus installation contract works the same whichever form you filed under, and it moves more money on one job than the entity choice moves in a year.

So the entity buys four things in Florida, and none of them is a tax saving: eligibility for the certificate that takes your own labor out of the premium base, a party to the contract that is not a human being with a house, a W-9 whose first line reads as a company to an accounts payable clerk who has not met you, and a name an insurer can put on a certificate that matches the subcontract.

Move the business into the entity in the order that keeps signed contracts collectible

If you are already trading, the switch has an order, and getting it backwards is worse than staying where you are.

Florida licenses construction on the human being. The individual is the qualifying agent, and the company you just formed holds nothing at all until a primary qualifying agent qualifies it and it receives a certificate of authority under s.489.119. That agent takes supervisory responsibility for the entity's work and joint and several liability with it.

Here is why the sequence is worth money. Under s.489.128(1), contracts entered into by an unlicensed contractor are unenforceable in law or in equity by the unlicensed contractor, and s.489.128(1)(a) makes a business entity unlicensed when it has no qualifying agent for the scope of the work. Status is fixed as at the effective date of the original contract under s.489.128(1)(c). Sign a $46,000 re-roof in the new LLC's name in the week between filing the articles and receiving the certificate of authority, and that contract was signed by an unlicensed entity. Qualifying the company a month later does not reach back and repair it. You did the work, the money is owed, and the statute has taken away the enforcement.

So the order runs like this, and each step waits for the one before it.

Between step 1 and step 4, keep signing the way you were signing. A contract in your own licensed name is enforceable. A contract in the name of an entity that is not yet qualified is not, and the difference is the whole receivable rather than a fee.

Two details ride along with the switch. The named insured on your certificate of insurance has to match the entity on the subcontract word for word, which is the defect that bounces more certificates than the limits do, and the limits come from 61G4-15.003: $300,000 public liability and $50,000 property damage for General and Building, $100,000 and $25,000 for the other CILB categories, with commercial GCs routinely asking above both. And s.489.119(5)(b) puts the license number on advertisements, bids, offers and proposals in every medium, so the new number goes into the proposal and invoice templates that same week.

One thing an entity does not do is bury history. Rule 61G4-15.006 makes financial responsibility a current consumer credit report with no unsatisfied judgments or liens, covering the applicant and any entity he has previously or currently qualified, with financial stability set at a FICO-derived score of 660 or better or a 14 hour board-approved course instead. A dissolved LLC with a judgment against it follows the human who qualified it into the next application.

Give May 1 a clock, because it is the one thing the sole proprietor does not have to do

The entity adds exactly one recurring obligation, it takes a quarter of an hour, and it is the cheapest thing on this page to get wrong expensively.

The Sunbiz annual report window opens January 1 and closes May 1. An LLC pays $138.75 and a profit corporation pays $150. File on May 2 and a $400 late fee is added to the same one page form, so it becomes $538.75 or $550. There is no waiver, not for a first miss or a storm.

Then it gets quiet and worse. An entity whose report is still unfiled is administratively dissolved on the fourth Friday of September. Active status is a condition of the exemption rather than a formality, so the certificates in your glovebox stop meaning anything from that moment, while your crew is still on a roof. A $400 clerical miss becomes your comp status.

On AEC Stack that date is a clock on the business rather than a note in a phone, and it carries the consequence on its face: $138.75 by May 1, a $400 late fee that cannot be waived, then administrative dissolution on the fourth Friday of September, which also kills the construction workers compensation exemption. It sits beside the DWC-250 renewal computed twenty four months out from the certificate's issue date, because those two dates fail into each other.

What it costs

There is no monthly subscription. The platform fee is 2.5% of each invoice processed through AEC Stack, collected on payment due dates.

Everything below goes to the state or the federal government, not to us.

Registering here starts by picking Florida and then the entity form from the live US-FL registry, and each card carries the state's own facts on its face. The sole proprietorship card says in as many words that a construction sole proprietor is an employee under Chapter 440 and cannot take the exemption. The LLC card carries the $138.75, the May 1 date, the non-waivable $400 and the ordered exemption chain. The formation package is then assembled for you, and the three things it refuses to guess at are asked as questions: your registered agent and their street address, the member whose recorded ownership carries the workers compensation exemption, and the license holder who will qualify the entity. You press submit at Sunbiz yourself, so the state account, the document number and the login stay in your name.

Do the ownership arithmetic today, before anything is filed: write down who owns what, mark anyone under 10 percent, and count how many certificates the group is entitled to. That half page is the entire decision, and it costs nothing to change while it is still on paper. Then open start your business, pick Florida, and read the trap text on the two entity cards before you fill anything in.

<!-- CAPTURE LATER: the Florida entity form step of the new-market registration, side by side, showing the US-FL sole_prop card with its Chapter 440 trap text and the llc card with the $138.75, the May 1 date and the ordered exemption chain. Blocked in this wave: the demo tenant is Ontario. -->