BUSINESS RENT TAX IN FLORIDA IS DECREASING JUNE 1ST

In Florida, state sales tax is charged on commercial property leases. Businesses that rent office space, retail space, or warehouses are required to pay sales tax on the amount of their lease.

The current sales tax rate for commercial leases is 4.5% plus any local county sales tax rate. Effective June 1, 2024, the tax rate is decreasing from 4.5% to 2.0% plus the local county sales tax. 

To determine the total amount of sales tax due on commercial rent, the state rate is added to the tax rate in effect in your local county. Currently, every county in Florida except Citrus and Collier charges additional sales tax ranging from .5% to 1.5% in addition to the state sales tax.

For example, Hillsborough county’s local sales tax is 1.5%. Currently, commercial leases in Hillsborough county are subject to the state sales tax of 4.5% plus the Hillsborough county sales tax of 1.5%.  Starting June 1st, commercial leases in Hillsborough county will be subject to the state sales tax of 2.0% plus the county tax of 1.5%, for a total of 3.5%. 

Rental charges paid on or after June 1, 2024 for rental periods of December 1, 2023 through May 31, 2024 are still subject to the higher tax rate of 4.5% plus the applicable local tax. Rental payments made prior to June 1, 2024 for rental periods on or after June 1, 2024 are subject to the new lower rate of 2.0% plus the applicable local tax.

Information on the proper reporting of sales tax on commercial leases is available from the Florida Department of Revenue’s website at floridarevenue.com/forms. Click the Sales and Use Tax dropdown menu and scroll to Sales and Use Tax on the Rental, Lease, or License to Use Commercial Real Property in the Brochures, Guides, and Other Information section.

MORE WORKERS WILL QUALIFY FOR OVERTIME PAY STARTING JULY 1ST

Starting July 1, 2024 employees with an annual salary of less than $43,888 ($844 a week) must be paid overtime if they work more than 40 hours in a workweek. Currently, only employees with an annual salary of less than $35,568 ($684 per week) qualify for overtime pay. This is a big change for small businesses and will entitle more workers to receive overtime pay. 

Federal law requires that employees (with a few exceptions) receive overtime pay if they work over 40 hours in a workweek. Overtime pay is 1 ½ times the employee’s regular rate of pay and is required for both hourly and salaried workers. 

There are some exceptions from overtime: Employees whose salary is above the minimum salary threshold and whose job duties meet specific tests do not have to be paid overtime. 

The salary threshold will increase again on January 1, 2025 from $43,888 to $58,656.  When that happens, employees with an annual salary of less than $58,656 ($1,128 a week) will need to be paid overtime if they work more than 40 hours in a workweek. 

It is a common misconception that employees who are paid a salary are not entitled to overtime pay. This is not true. Salaried employees must be paid overtime unless they are paid the minimum salary rate (currently $35,568) and their job duties meet the specific criteria for one of the exemptions. 

REPORT EMPLOYEES AND INDEPENDENT CONTRACTORS TO THE FLORIDA NEW HIRE REGISTRY

To help the State of Florida enforce child support orders, Florida businesses should report newly hired employees to the Florida New Hire Reporting Center. Independent contractors (individuals, not companies) paid at least $600 should also be reported.

You can report online or file a paper form by mail or fax. The website to report new hires or to print forms is: servicesforemployers.floridarevenue.com.

The information that must be reported is:

  • The name, address, and Social Security Number for the employee or independent contractor.
  • The date the employee or independent contractor began working for the business.
  • The name, address, and FEIN of your business.

Report new employees within 20 days of their hire date. You only need to report employees one time, at the time they are hired.

Report individuals working as independent contractors within 20 days of your business paying them $600 or more. Independent contractors should be reported each year that your business pays them $600 or more.

Special note on independent contractors:  You do not need to report companies that your business hires. Only individuals/sole proprietors that your business hires should be reported.

FTC HAS BANNED NON-COMPETE CONTRACTS

On April 23, 2024, the Federal Trade Commission approved a new rule that bans businesses from asking workers to sign a non-compete agreement. A non-compete is an agreement between a business and a worker where the worker agrees not to take a job with a competitor after they leave their current job. 

Under the new rule, all non-compete agreements are invalidated other than those for senior executives earning more than $151,164 a year who are in a policy-making position. Businesses that have a non-compete agreement in place must notify their workers that the agreement is no longer enforceable.

The non-compete ban extends beyond a company’s employees – it also applies to independent contractors, interns, apprentices, and sole proprietors who provide a service to a business.

The ban does not apply to non-competes signed when a business is sole or in a franchisor-franchisee relationship.

The rule is scheduled to take effect in several months, but it has been challenged in court. FUBA will keep our members updated.

It is important to note that businesses are still allowed to ask a worker to sign non-disclosure and confidentiality agreements.