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Starting a limited liability company (LLC) in Georgia is a smart move for those business owners looking to minimize personal exposure and take advantage of state tax benefits.
Understanding how the state of Georgia manages LLC filings, the requirements necessary and the steps to take in creating an LLC are critical. This comprehensive guide to starting an LLC in Georgia lets you plan, organize, and act decisively.
An LLC is one of several options you have for a business structure. As with all LLCs, an advantage of filing as a Georgia LLC is the personal legal protection members may be provided. Members may not be personally liable for debts incurred and, in most cases, court judgments. That means creditors may not pursue the personal assets of LLC members.
In addition, an LLC structure allows you tax flexibility. LLCs can choose to file either as a:
Georgia has several advantages as a business-friendly state. First, its corporate tax rate of just 5.75 percent, as of 2019, after being at just 6 percent for a half-century prior.
The state also calculates income tax using a single-factor apportionment formula. That practice means that income is based on the ratio of in-state sales to total sales. There also is no throwback rule which is used in some other single-factor tax states, meaning your sales elsewhere are not “thrown back” into your tax calculations. Companies organized as an LLC in Georgia will pay less in income tax than in other states.
Georgia also has highly favorable state credit ratings, with the highest bond ratings from the three major bureaus — Fitch, Moody’s, and Standard & Poor’s.
Georgia offers a job tax credit between $1,250 and $4,000 per year for five years for every job created for companies located within the state. To qualify, the jobs must be in companies in particular business sectors, and the business must create a minimum number of jobs each year. The jobs must be maintained for the full five years.
The state also provides exemptions for sales and use taxes for the following:
Forming a Georgia LLC can be done easily by following our six-step process. Here are the steps you’ll need to take in order to get your LLC in Georgia:
Below, you’ll find a detailed explanation to walk you through each step.
The first step is to create a name for your new business. It’s important to check the potential name against an existing database of Georgia businesses. You’ll be asked to enter a business name to find those with the same or similar names to yours.
Note that naming guidelines exist. Your business name:
With some business structures, including an LLC, the business’s legal name is the one on its articles of incorporation. However, some businesses may also want to file paperwork that registers their “doing business as” or DBA name.
Registering a DBA name, often referred to as the “assumed name” or “trade name,” lets the public know it’s conducting business under a name other than its legal name. Registration is required so the public knows the legal name of the business with which it is doing working.
Registering a DBA name is NOT the same as forming a business and filing the formal paperwork to become an LLC. It’s an additional step that many companies in Georgia and other states take.
To file a DBA, businesses need to have a verified available name, along with the following:
The paperwork and payment are filed with the Clerk of the Superior Court in the county where the business is located. You may need to fill out an application form and pay a filing fee.
Notice of the DBA must be published in your local newspaper (the one the sheriff’s office uses for legal ads) at least once a week for two consecutive weeks. You will be responsible for payment to the newspaper where the notice appears, and you should keep a copy of the publisher’s affidavit of publication as proof.
Processing times may take up to several weeks and will vary by county. If you want to change your trade name, you will need to submit a new registration form with amendments and pay a fee.
Once you’ve selected and registered your name in Georgia, you need to protect it. That’s where a trademark comes in.
A trademark prevents other companies from using your name. You can use the Trademark Electronic Search System, a part of the U.S. Patent and Trademark Office, to research existing trademarks. Some businesses choose to hire a professional trademark services business to do the search on your behalf.
The next step is to file an application for trademark with the George Secretary of State office. The application requires:
The mark must already be in use (offered for sale or distribution) in Georgia prior to being registered.
The application must include the following:
The Georgia Secretary of State office will review the application and determine if the mark is suitable for being registered in the state. If approved, the office will issue a certificate of registration, which is effective for ten years.
Like most states, Georgia requires new companies to file articles of organization, which provide a general description of the business and when it begins operating.
Articles of Organization are filed with the Georgia Secretary of State and require completing form CD 030. The cost to file is $100.
The form requires the following information:
The designations “member” and “manager” are important. They identify how the LLC is managed–member-managed or manager-managed.
A member-managed LLC usually has a small number of members and those members are able and willing to be involved in the day-to-day business operations. A manager-managed LLC has a larger number of members who do not want to be involved in day-to-day decisions.
Like with other options with a Georgia LLC, you can file your articles of organization in several ways:
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A registered agent is required by Georgia for all formal business entities. The registered agent receives all correspondence from the state of Georgia and also receives service or process if the business is served a lawsuit.
A registered agent is an important consideration for any business. Registered agents fill several crucial roles, including:
A registered agent should maintain a compliance calendar, manage when annual reports and other filings are due and assist in the filings. Failure to file the required paperwork can result in legal issues, penalty fees and other complications. A registered agent can ensure that all the paperwork is prepared, ready for signature, and shared with you electronically.
If you act as your own registered agent, your personal information, including your address, becomes a matter of public record. Using a separate agency as your registered agent protects your privacy.
A registered agent must be available every day during normal business hours. Hiring an external registered agent allows you to work from home, take a vacation or otherwise not be in a physical office.
Being served with legal documents in the workplace is an unpleasant situation. Protect your business reputation and eliminate the risk of legal papers being served at your place of business by using a registered agent service instead.
Storage and Organization
A registered agent will maintain a repository of all your legal records related to incorporating as an LLC in Georgia. Digital copies of these records are critical and protect them from theft or natural disaster.
If your business operates in multiple states, using an external registered agent service makes sense. With one source for your registered agent management, you’ll be able to keep your registration paperwork and scheduling coordinated.
You can act as your own registered agent. However, hiring a firm such as ours makes more sense, letting you focus on core business objectives.
An operating agreement is an important document when creating a Georgia LLC. It establishes the rules and guidelines used to run the business and how its members act. They are critical, even if not legally required in some states, to develop operating procedures and separate business liability from personal liability.
An operating agreement is particularly important if you have a multi-member LLC. With multiple members, there is a greater likelihood that disputes may arise, especially if there are no clear lines of communication among the members. It’s best to work out those issues among the members at the beginning, ensuring that everyone has a voice in what is wanted and then have those expectations and structures put in writing.
The operating agreement spells out the following:
Business structure details include how profits will be split, the workload within the business, and how membership interest is distributed. While some business structures have rigid requirements regarding profits and investments, with an LLC, you have more flexibility.
An operating agreement is a smart idea whether your LLC is a single-person operation or has multiple members.
The operating agreement may protect you should legal issues come up, whether they be court cases, partner disputes or investor disagreements. The operating agreement can clear up misunderstandings and demonstrate to courts that there was a plan and regulations in place when you started your business.
Operating agreements are also useful tools for when your business grows. As you bring on new partners, members or investors, or decide to take your business public, it’s a helpful piece of information and framing document.
Another plus: Once the operating agreement is done, it’s complete. There’s no need to update it.
An operating agreement is particularly important from a liability and tax perspective. Remember, if you are a single-member LLC, the IRS treats your business as a sole proprietorship from a tax basis.
However, the LLC structure may protect your personal assets — where a sole proprietorship would not — in the case of a legal dispute. Courts generally have looked favorably on businesses that are single-member LLCs if there is an operating agreement in place … and the business has been run according to the document details.
An operating agreement may also protect you from being subject to Georgia’s default LLC rules, which are one-size-fits-all, generic guidelines. With an operating agreement in place, you can choose how your business is operated, how profits are managed, and who is responsible for what.
The state of Georgia does not require LLCs to file an operating agreement. However, it is good practice to do so. A standard operating agreement includes the following items:
An Employee Identification Number (EIN) is an IRS requirement for any business that has employees, operates as an LLC, or files employment tax returns. It acts in many ways like a Social Security number does for an individual — a unique identifier used on official tax forms.
An EIN is also often necessary for completing other key business functions, such as applying for a bank account, hiring employees or managing state taxes.
You can apply for an EIN directly from the IRS website. To apply, your business must have its principal operations in the United States and you must, as an individual, have a valid taxpayer identification number, such as a Social Security number.
You can apply online or by fax by submitting a completed Form SS-4 to the appropriate fax number, based on where you file your taxes. You can also file for an EIN via the mail at the same address where you file your taxes.
We offer filing services for your EIN number as a third-party administrator. Using our services ensures your Form SS-4 is filled out correctly and that confirmation and tracking are handled for you.
Georgia LLCs must comply with the state’s tax laws and regulations and it’s important to understand exactly how to file your taxes.
If your business sells products, for example, you will need to collect and pay state and local sales taxes. Doing so requires you to file for a state seller’s permit. To register for a permit, you’ll need:
A Georgia LLC is classified as a partnership when it comes to income tax purposes (unless classified differently for federal income taxes, in which case it must follow the federal classification).
Most LLCs are also classified as pass-through entities, meaning the LLC itself does not pay federal income taxes. Instead, those taxes are paid by the members.
However, owners may choose to have their business treated like a corporation for tax purposes.
Georgia taxes are a 6 percent flat tax on federally reported income tax. Georgia also assesses a corporate net worth tax, sometimes called a franchise tax. Franchises must pay both the income tax and network tax to the state Department of Revenue on Form 600.
If you have a seller’s permit in Georgia, you are required to file a sales tax return by the due date, even if you have no sales tax to pay or report. The sales tax rate varies by city and county.
If you sell goods to customers in Georgia, you’ll need to collect and pay a sales tax. Most services are exempt from sales tax, with notable exceptions being selling accommodations, in-state transportation, admissions and participating in games or amusements.
A use tax is placed on non-exempt items brought into the state, generally referring to taxable goods and services that were not taxed at the original point of sale.
All LLC members or managers who extract profits from an LLC have to pay a self-employment tax. The self-employment tax covers Social Security, Medicare and other federal benefits. The tax is administered by the Federal Insurance Contributions Act (FICA).
Currently, the self-employment tax rate is 15.3 percent.
If your LLC has employees, you will need to pay employer taxes at both the federal and state level. In Georgia, that means withholding and paying state income taxes to the state Department of Revenue (DOR). You’ll need to register with the DOR either online or by mail using Form CRF-002. Once your business is registered, you will need to file your taxes periodically, usually monthly or quarterly. You’ll also need to file paperwork at the end of the year (Form G-1003) that reconciles your withholding taxes.
You will likely also need to register to pay state unemployment insurance taxes via the Georgia Department of Labor. You can register using Form DOL-1A and report wages each quarter using Form DOL 4N and pay the unemployment insurance tax.
Depending on your tax status with the IRS and whether you have employees, you may be subject to the following additional taxes:
After you’ve filed all the necessary paperwork to launch your LLC in Georgia, it’s time to think about some of the other important financial and operational considerations.
While state and federal laws do not require you to have a separate bank account for your LLC, it’s a smart idea. Mingling your personal and professional accounts can be problematic and cause complications down the road. Here are three of the main reasons to open a separate account:
In Georgia, you’ll also be required to pay an annual registration fee with the Secretary of State. If there are no changes to your business information, all you need to file and pay are the business name and form of payment.
You can file for one year or up to three consecutive years. Registration can be done either online or by mail.
When your LLC is established, you’re ready to do business.
To keep your business running properly, it’s important to have a financial system in place. The finance set-up should include a process for managing your accounts payable and receivable, payroll, human resources and taxes. There’s also the important matter of managing the myriad annual fees, registrations and renewals necessary to keep your business in compliance.
It’s always a good plan to have three key advisors in place. The first is a tax advisor, who can help with the structure and ongoing financial decisions of your business as they relate to your tax situation at the federal, state and local levels.
The second is an account, who can assist with the day-to-day mechanics of running your business and audit your business to advise on best practices and ensure that your finances are in order.
Finally, an attorney can help with the many legal issues that are sure to arise when you launch your own business and the financial implications of each.
When your business is ready to go, there are still local and state business licenses and permits that need to be obtained. Many professions — from lawyers and doctors to tradespeople — must be licensed by the state to conduct business.
In addition, there are permits at the state and local level necessary to occupy spaces, host the public and provide certain goods and services. Checking and securing these necessary licenses and permits is an important step to allow you to open the doors.
At Tailor Brands, we help businesses get their Georgia LLC in three easy steps. Enter your business name, answer a few questions, and let us submit your LLC application on your behalf.
To learn more about our hassle-free LLC name availability, filing, annual compliance and operating services, contact us today.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.