Independent contractor taxes in Florida: freelancer tax management guide

There are many reasons to become an independent contractor in Florida. Enjoying the sun, sand, and sea of the America’s Sunshine State is likely high up on the list for many. 

But whether you are a digital nomad working from Miami’s vibrant beaches or a creative entrepreneur based in Tampa’s innovative hub, all freelancers face some common professional challenges. One of the most complex and confusing is navigating taxes. 

There are many elements to consider regarding independent contractor taxes in Florida, from creating invoices that are compliant with local labor laws to receiving payments from clients around the world. Then there is setting aside money for payments, making tax estimates, and filing tax returns with the Internal Revenue Service (IRS). 

But while compliance and taxes can sound a little intimidating, setting up the right systems can help you manage this part of your freelance business with ease. This comprehensive guide will walk you through all you need to know step by step to tackle taxes with confidence. 

Read on to learn how managing independent contractor taxes in Florida can be easier than you think.

How do independent contractor taxes work in Florida?

Whether you have already registered as self-employed in Florida or are considering taking the leap, you must understand your tax obligations. 

All freelancers and contractors in the US must file and pay their own tax returns to the IRS on income over $400. Contributions towards Medicare and Social Security for contractors are not handled by an employer (as is the case with employees). 

Therefore, independent contractors must pay a federal self-employment tax of 15.3% to cover these costs (12.4% for social security and 2.9% for Medicare). A freelancer is responsible for paying the totality of this tax rather than sharing it with an employer. Unfortunately, this means contractors may pay higher taxes than employees. 

While there is no state income tax in Florida, U.S. freelancers do pay a federal income tax. This is a graduated tax with rates ranging from 12% to 37%. Florida does not work with VAT (value-added tax). However, independent contractors may need to charge a state-wide 6% sales tax rate and an additional 2% local sales tax rate on relevant taxable services in the state. Individuals can report and pay sales tax using Form DR-15.

Independent contractors should prepare and file an annual tax return with the IRS using Form 1040 or 1040-SR. Contractors should also use Form W-9 to declare their earnings with each employer; you do not need to file this form with the IRS. Employers are required to report freelancer earnings over $600 to the IRS using Form 1099-NEC. Freelancers should keep copies of their 1099 forms on file. 

Contractor Management —

11 min

W-9 vs. 1099 tax forms: A plain-language guide

Learn the difference between W-9 and 1099 tax forms and when to use each form for your independent contractors and freelancers based locally or internationally

How do independent contractors pay taxes in Florida?

There are some key considerations that Florida freelancers should know to compliantly and efficiently pay their taxes. 

Withholding taxes

Unlike in a traditional employer-employee situation, employers do not withhold taxes for independent contractors. You will need to keep track of your own earnings and put aside the appropriate amount for tax each month. 

As you are unlikely to know your exact tax figures in advance, it is a good rule of thumb to put aside between 25% and 30% of all earnings. An independent contractor is also typically responsible for damages (with a few exceptions). They also cannot indemnify employers for tax unless they include an indemnity clause in their contracts. 

Quarterly tax payments 

Freelancers should make quarterly tax payments to the IRS based on an estimation of their earnings. You can calculate and pay for this using Form 1040-SR. Tax payments should be made by April 15, June 15, September 15, and January 15 each year, although the dates are subject to change if they fall on a weekend. 

Tax deductions 

Independent contractors make up for higher taxation through deductions. 77% of freelancers don’t take full advantage of the amount that can be written because they do not fully understand all the expenses they can deduct.

Make sure to write off any business-related expenses, including:

• Home office expenses

• Use of cars or vehicles

• Travel expenses and business mileage 

• Internet and phone bills

• Medical insurance 

• Advertising and marketing 

• Educational expenses

How to file Florida self-employment taxes: a step-by-step guide

Filing taxes can be methodical and easy. Here’s how to go about it as an independent contractor in Florida. 

1. Get a social security number — If you don’t yet have an SSN, apply for yours using the SS-5 form. Foreign residents and other non-eligible candidates can also file a tax return using an individual taxpayer identification number (ITIN). Apply for yours with the W-7 form.

2. Calculate tax — Make estimations for your quarterly payments using your previous year’s earnings and Form 1040-ES. If this will be your first year as a self-employed individual, you can make earning predictions instead. 

3. Make payments — Make quarterly payments to the IRS through the EFTPS electronic payment system. Alternatively, you can mail your payments to the address on the form.  

4. File your tax return — File your tax return each year online with the IRS using Schedule C.

As Florida does not collect personal state income taxes, you will not need to file a state income tax return. If Florida’s sales tax is relevant to you, you can report and pay it with Form DR-15.

Contractor Management —

8 min

Remote Contractor Management: Tax compliance for US companies just got easier

We’re excited to share the details of our new tax compliance feature for Remote’s Contractor Management platform, specifically designed to help HR and finance administrators meet IRS rules. 

What is an independent contractor according to Florida law?

The state of Florida uses 10 common law factors to determine if someone is an independent contractor. These factors are likely to indicate someone is a contractor rather than an employee.

1. Low employer control — The employer does not dictate how workers perform tasks.

2. Distinct business — The employee is engaged in a different business to the employer’s business.

3. No supervision — The employer does not supervise work. 

4. Skill — Higher skill levels are more likely to indicate an independent contractor.

5. Supplies — The contractor typically supplies any equipment needed for the job.

6. Short-term — Shorter contract or work time signifies contractor.

7. Payment method — The contractor typically receives payment per project.

8. Non-essential — The contractor typically carries out work not part of regular business.

9. Relationship Agreement — Written documents describing the working relationship.

10. Hiring party — The employer is an individual over a business. 

In Florida, self-employed individuals can choose to register in one of the following ways. 

Sole proprietorship

Most self-employed individuals choose to work under a sole proprietorship. It is one of the most straightforward ways to begin offering independent services. Operating as a sole proprietor involves legally intertwining one’s personal identity with the business. You will conduct activities under your name as opposed to a distinct business name and assume all associated risks and liabilities.

Partnership

Much like a sole proprietorship, partnerships involve a collaborative effort between two or more individuals providing business services. In this scenario, all partners collectively partake in both the profits and the shared liability. There is also an equal distribution of responsibilities.

Limited liability company (LLC)

Independent contractors also have the option to deliver services by establishing a limited liability company (LLC). Single-member LLCs maintain their distinct legal identity, but the taxation structure mirrors that of a sole proprietorship. If an LLC comprises multiple members, it does not pay tax on business income but must report taxes to the IRS via Form 1065.

The dangers of contractor misclassification in Florida

Some employers favor hiring contractors over employees to avoid legal implications, such as paying tax contributions and statutory benefits. However, according to Florida law, intentionally misclassifying a worker is a felony that carries serious consequences. If an employer misclassifies an employee as a contractor, they may face fines, have to pay back unpaid contributions, and risk the loss of intellectual property.   

There are also risks for workers, including missing out on employee benefits, lacking income and work security, and paying inflated tax rates. They may also take on more liability than they should.

Due to the nuanced and ever-changing nature of employment arrangements, distinguishing between an employee and a contractor isn’t always straightforward. While some employers purposefully misclassify workers, others may do so unintentionally. Regardless of the intention, however, it’s paramount that both employers and workers regularly evaluate working relationships to ensure they are not breaking the law.

Workers who suspect misclassification may want to discuss this with their employer and ask that they be converted from a contractor to an employee. Worried about misclassification? Remote’s misclassification guide covers how to navigate this in more depth.

How do I ask the company I’m working with to convert me to an employee?

However daunting, misclassified workers are within their rights to ask for the correct classification. If you approach it professionally, you are doing nothing wrong. In fact, employers may be glad to become aware of the issue and avoid compliance risks.

Make sure you are clear on the core differences between contractors and employees and that it is the right time to convert from a contractor to an employee. You might be misclassified if you are becoming more involved in the company and having to work in certain hours or locations. Support your case with evidence of your work relationship. It can also be helpful to relay the legal and financial implications for both you and your employer. 

If you are a remote contractor working overseas, employers might worry about the costs and administration of global employment. Hiring abroad demands creating a legal entity in the country where you are hiring — an expensive, time-consuming endeavor. However, an alternative route is utilizing an employer of record (EOR) service like Remote. This approach allows hiring global employees minus the entity setup fuss.

Remember that your employer might need additional information to understand that managing employees can be easy and cost-effective. For further advice on freelancer matters, explore Remote’s toolkit for remote workers.

United States —

14 min

How to use an Employer of Record in the United States

Learn how to use an EOR in the United States and find out how an employer of record platform like Remote can make it easy to hire globally with full compliance.

How do I get paid as an independent contractor in Florida?

As a freelancer, you’re in charge of deciding how you receive your payments: as well as your rates! However, it’s vital to grasp the benefits and drawbacks of various payment methods. This helps you receive your earnings smoothly and quickly while minimizing extra charges.

Bank transfer 

Get paid straight into your Florida bank account with a direct bank transfer or wire transfer. This is one of the most convenient ways to receive money as an independent contractor. However, depending on where the money is arriving from, it can incur fees and experience delays. This is one of the most secure methods, however, particularly with US-based employers.

Online transfer platform

Many companies like to pay independent contractors using online money transfer tools, such as PayPal and Wise. While this is a quick and easy way for companies to make instant international payments, freelancers can lose out due to high exchange fees and commissions. You typically receive money in an online account, and moving this across to a bank account can incur another set of additional fees. 

Contractor management platform

If you struggle to keep on top of issuing invoices on time and chasing payments, you might benefit from Remote’s contractor management software.

Remote’s platform has built-in capabilities to make global payments in different currencies without inflated fees and conversion rates. Remote can also help generate compliant contracts, issue, approve freelancer invoices, and automate payments.

How does Remote do all this?

1. Onboard contractors — Employers can send an invite to freelancers.

2. Sign a contract — Generate compliant contracts in the platform

3. Submit an invoice — Receive invoices directly on the platform

4. Approve the invoice — Quickly approve invoices and create payment requests

5. Pay contractors — Make payments to contractor accounts in local currency

The best way to get paid as a contractor 

Instead of spending hours studying labor laws, crafting contracts, and chasing invoices, using a contractor management tool can save you time and simplify your payment process. Remote’s Freelancer Hub is a ready-to-use platform that helps freelancers create systems in their business, all from one platform. 

From managing compliance to receiving payments, freelancers can get started in minutes. With capabilities to make payments in 170 countries and currencies, you can have peace of mind wherever your clients are. You will know your contracts always comply with local laws, and you can even get help managing taxes and insurance.

United States —

5 min

How to be paid as a remote worker abroad for a United States company

We put together this guide to help you through the process of being paid as a remote worker abroad for a US company.

Becoming an independent contractor in Florida is easy with Remote

Paying taxes are an integral part of your freelance business, but they don’t have to be a hassle. Equipped with the right knowledge and systems, managing tax will become second nature.  

Just remember these core elements to successfully manage independent contractor taxes in Florida:

• Get clear on the federal and state tax obligations 

• Set aside money regularly to pay all necessary taxes

• Implement effective systems to manage invoices and payments

• Monitor relationships with employers to avoid misclassification 

Managing taxes, avoiding misclassification risks, and navigating invoices and payments can be tricky. But with Remote's Freelancer Hub, you can automate these tasks and always get paid on time. Our system saves you hours of work by creating contracts and invoices, and taking care of payments. With Remote, you can focus on your work and stay compliant with employment laws. Get started today and learn how Remote can help you and your clients make contractor management a breeze!

United States —

14 min

How to set up as an independent contractor in the United States

Remote's global employment experts share the most important information about how to set up as a contractor in the US. Learn how to file taxes, avoid misclassification, and remain compliant with the law.