“Should I move to Florida?”
Our clients ask this question a lot, not because they want to escape North Carolina, but because they’ve heard Florida (plus Tennessee, Washington, and Texas) is a state that doesn’t have a state income tax. It’s only natural they’d explore a move.
But is income tax freedom all it’s cracked up to be for a business owner? Let’s explore.
As a business owner, if you sell your business and move, you’ll be subject to the following taxes (more on this later):
Note that moving also does not help you with the sale of your real property. You pay taxes based on its location, too, not yours.
Now, moving to Florida does eliminate the capital gains tax upon the sale of your business, which is a big deal and why most people opt to move. Think about it this way: If you sell your company for $1,000,000, you will typically pay 5% in North Carolina. If you are a Florida resident, you’d pay nothing! This is why many of our clients, a year or two before a business sale, move their residency to Florida. The tax savings alone can help pay a big slug of the real estate they purchase.
The same is true for investment income and retirement income tax. It’s zero in FL. So, if you own a C-Corp and get paid primarily via dividend, you could potentially avoid tax with Florida residency if, like most business owners, that dividend really is your ‘ordinary income.’
Keep in mind there are some steps you need to follow to really be considered a resident. If you use Chat GPT, you can pull up a fabulous checklist of what you need to do to be considered a resident, and it’s not necessarily as time intensive as you think. It’s pesky stuff, like moving your voter registration, moving your car titles, getting a driver’s license, etc. Your CPA can be helpful in this way, too.
Interested in learning more about the benefits available to you as an owner? Download our free Guide to Owner Benefits now.