How to Form Your
LLC in Georgia
Set up your Georgia LLC without the hassle.
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If you’re an entrepreneur starting your journey as a business owner, a limited liability company (LLC) is one of several business structure options you have in the States, especially if you’re looking to minimize personal exposure and take advantage of tax benefits.
The main advantage of registering as an LLC, for all types of LLCs, is the personal legal protection that may be provided to its members: this means that the LLC members may not be personally liable for debts incurred and, in most cases, court judgments and that creditors may not pursue the personal assets of LLC members.
While some business structures have rigid requirements regarding profits and investments, an LLC can be more flexible. In addition, an LLC structure allows you tax flexibility (read more below).
This comprehensive guide will help you understand why forming an LLC in Georgia can be a smart move for you, and break down the required steps.
Advantages of starting an LLC in Georgia
There are several factors to consider when deciding in which state to start an LLC. Some are related to your type of business, where you’re located and/or conducting business, and other reasons can be about tax benefits and financial flexibility.
Georgia has several advantages as a business-friendly state. Here are some potential advantages to forming your LLC in GA:
- Corporate tax rate of just 5.75%, as of 2019, after being at just 6% for a half-century prior.
- The state 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 has highly favorable state credit ratings, with the highest bond ratings from the three major bureaus — Fitch, Moody’s, and Standard & Poor’s.
- The state 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
- Georgia also provides exemptions for sales and use taxes for the following: *
- Manufacturing facilities’ machinery, equipment, repairs, replacement parts, molds, dies and waxes, tooling, raw materials, packaging for sales or shipping, and energy purchases.
- Distribution centers’ machinery and equipment used to move and store tangible personal propert.
- Data centers and high-tech companies’ equipment, computers, backup generators, cooling towers, energy storage
The 6 Steps to Forming a Georgia LLC
Forming a Georgia LLC can be done easily by following our six-step process. Here’s what you’ll need to take in order to get your LLC in Georgia:
Understanding how the state of Georgia manages LLC filings, the requirements necessary and the steps to take in creating an LLC are critical. Therefore, you’ll find a detailed explanation to walk you through each step below.
Step 1: Name your Georgia LLC
The first step of LLC formation is to come up with a name for your new business. It’s important to follow the state’s requirements and check the potential name against an existing database of Georgia businesses, to find those with the same or similar names to the LLC name you want.
You might also need to reserve your LLC name, register it for trademark, or get a trade name (see below).
Follow GA’s naming guidelines
There are some naming guidelines for LLCs in Georgia. Your business name:
- Must include the phrase “limited liability company” or an abbreviation (LLC or L.L.C.).
- May need additional paperwork and have a licensed professional, such as a lawyer or doctor, if it contains restricted words such as “bank,” “attorney,” or “university”.
- Must be distinguishable from any other Georgia LLC, limited liability partnership, limited partnership or corporation.
- Cannot include words that could confuse it with a government agency (such as FBI, State Department, or Treasury).
Read more on Georgia’s naming requirements and restrictions for LLCs on the state’s Secretary of State (SoS) website.
Reserve your LLC name (if relevant)
If for some reason you chose your business name for the LLC but are not ready to move on with registering it just yet, you have the option of reserving the LLC name with the state of Georgia. To do so, you have a couple of filing options:
- Online: fill out the form on Georgia’s SoS online services page and submit it with a $25 fee.
- By mail: fill out this form this form and submit it to the address on the bottom of the form with a $35 fee.
If your desired name is approved it will be reserved for 30 days, and if you need longer than that you can continue reserving your name after 30 days by reapplying (and paying an additional $25 or $35 depending on how you file it).
Decide if you need a DBA
In some business structures and in some circumstances, the business’s legal name is the one on its registration documents, while it conducts business using a different name. This is called a DBA (stands for “doing business as”) and is often referred to as the “assumed name” or “trade name”. If it’s relevant for you, you’ll probably want to register a DBA for your LLC.
To file a DBA in Georgia, businesses need to have a verified available name, along with the following: Desired trade name, names and addresses of business owners, nature of the business, notarized signatures from the business owners, necessary forms (which can vary by county and are available from the Clerk’s Office of the Superior Court), payment for filing fees and publication of a legal notice.
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.
Register your LLC name for trademark (recommended)
Once you’ve selected and registered your name in Georgia, you should consider protecting it to avoid issues later on. That’s where a trademark comes in. A trademark protects you as it prevents other companies from using your name.
On the federal level, you register it with the U.S. Patent and Trademark Office. You can use the Trademark Electronic Search System, a part of the (USPTO), to research existing trademarks.
On the state level, you will need to file an application for a trademark with the George Secretary of State office. There are several requirements and note that the mark must already be in use (offered for sale or distribution) in Georgia prior to being registered.
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.
Step 2: Choose your registered agent
As for all business entities in the state, when you form an LLC in Georgia you are required to name a registered agent. The registered agent is a person or an entity with a physical address in the state that is available during business hours and receives all correspondence from the state of Georgia and also receives service of process if the business is served a lawsuit.
In order to be a registered agent in Georgia, you need to be:
- An individual resident of this state (i.e. has a street address in Georgia, not a P.O. Box).
- A domestic corporation or another domestic LLC.
- A foreign corporation or LLC with a certificate of authority to transact business in Georgia.
You can act as your own registered agent, or hire a registered agent service that allows you to enjoy benefits such as privacy and peace of mind, letting you focus on core business objectives.
Step 3: File articles of organization
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. This is the formal act of registering the LLC in the state.
The LLC articles of organization are filed with the Georgia Secretary of State and require to pay a $100 filing fee.
Required information for articles of organization in Georgia
To fill in the form you’ll need the following information:
- Proposed name of the LLC.
- Whether the articles are effective as of the date of filing or on another date, which may be up to 90 days after the filing date.
- A signature from an organizer, member, manager or attorney, along with the capacity in which they are signing and their full legal name.
The designations “member” and “manager” are important, as they identify whether the LLC is 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, and leave it to the LLC manager.
Filing options
Like with other options with a Georgia LLC, you can file your articles of organization either:
- Online at the SoS website.
- By paper. Must include form CD 030 and a transmittal form (CD 231) with a check for $110 (filing fee + $10 paper filing fee) made payable to Georgia Secretary of State to the following address:
Corporations Division
2 Martin Luther King Jr. Dr. SE
Suite 313 West Tower
Atlanta, GA 30334
Form an LLC in Georgia, Hassle-Free
Step 4: Create an operating agreement
The operating agreement is an important document when forming an LLC. It establishes the rules and guidelines used to run the business and how its members act. It can be critical to developing operating procedures and separating business liability from personal liability.
An operating agreement typically spells out how the LLC is structured and the ownership stakes of each member, explains how disputes will be addressed and resolved, and establishes the governing rules for the business. For instance, it can include details such as how profits will be split, the workload within the business, and how membership interest is distributed.
Although not legally required in most states, including Georgia, creating an LLC operating agreement is recommended as best practice, whether your LLC is a single-person or multi-member operation. Amongst other reasons, it’s because when all members of the LLC understand the procedures being used, there are likely to be fewer misunderstandings or disputes.
An operating agreement is particularly important if you have a multi-member LLC (i.e. have more than just yourself, as opposed to a single-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 and the expectations and structures will be put in writing.
Benefits of creating an operating agreement for your LLC
Creating an operating agreement for your LLC is a smart idea, even if not mandatory. Here some of the benefits of doing so:
- It 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.
- It’s useful 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.
- 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.
Step 5: Apply for an EIN
The IRS requires any business that has employees, or files employment tax returns to have an Employer Identification Number (EIN). It acts in many ways like a Social Security number (SSN) 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.
To obtain an EIN, you can apply:
- Online: directly on the IRS website.
- Fax: by submitting a completed Form SS-4 to the appropriate fax number, based on where you file your taxes
- Mail: at the same address where you file your taxes.
Alternatively, you can hire a filing service like the one we offer, to ensure your Form SS-4 is filled out correctly and that confirmation and tracking are handled for you.
To apply for an EIN your business must have its principal operations in the States and you must, as an individual, have a valid taxpayer identification number, such as an SSN.
Step 6: Comply with Georgia's tax requirements
Georgia LLCs must comply with the state’s laws and regulations regarding taxes, and it’s important to understand exactly how to file your taxes. You’ll need to decide how you want your LLC to be taxed, and understand what taxes you’re liable for (see below in more detail).
Decide how your LLC will be taxed:
As mentioned earlier, registering your business as an LLC allows some tax flexibility. LLCs can choose how to be treated for tax purposes depending on how many members they have:
- Single-member LLCs: as a default, they are treated like a sole proprietorship, which means that profits and losses are not taxed within the business directly but rather with members’ individual tax returns. Alternatively, they can elect to be treated as a corporation.
- Multi-member LLCs: as a default, they are treated as a partnership, but can also decide to be taxed as a corporation.
Here are the main types of taxes you might be liable for:
Income tax
When it comes to federal income tax, most LLCs in Georgia are classified as pass-through entities, meaning the LLC itself does not pay federal income taxes. Instead, those taxes are paid by the members according to how they elect to be taxed, as explained above.
Georgia taxes are a 6% 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.
Sales tax
If your business sells goods to customers in Georgia, you will need to collect and pay state and local sales taxes. Doing so requires you to file for a state seller’s permit. This is usually for products, as 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.
To register for a permit, you’ll need:
- The business history, including any previous state IDs
- Basic information, including the business name and address
- Business entity type
- Business ownership and relationship information
- Business activity information
- Withholding information
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.
Self-employment tax
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%.
Payroll tax
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.
Other state taxes
Depending on your tax status with the IRS and whether you have employees, you may be subject to the following additional taxes:
- Miscellaneous tax on items such as timber, cigarettes, farming or real property
- Motor fuel tax
- Motor carrier fuel tax
What To Do After you've Formed an LLC in Georgia
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.
Open a separate business bank account
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:
- Taxes: While your LLC does not need to pay taxes as a separate entity, it still makes sense to separate your banking to make it easier when filing Georgia and federal taxes.
- Liability: Separate bank accounts help maintain a legal distinction between LLC assets and personal assets. By separating personal and business finances, it may preserve your limited liability protections.
- Reputation: Using a business bank account helps to maintain a professional approach with creditors, customers, bankers, employees, landlords and vendors.
Obtain relevant business licenses and permits
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.
Set up finances
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:
- Tax advisor: 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.
- Accountant: 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.
- 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.
Georgia LLCs FAQs
Are there any ongoing annual fees in Georgia for LLCs?
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.
Is an operating agreement required for an LLC in Georgia?
The state of Georgia does not require LLCs to file an operating agreement. However, as mentioned it is good practice to do so, and it’s a smart idea whether your LLC is a single-person operation or has multiple members.
Do you need to file an LLC annual report for your GA LLC?
Yes, LLCs in Georgia are required to file an annual report on their business operations in order to keep the LLC in good standing and continue operating in the state. The report is reviewed by the SoS and is filed along with a $50 fee. Read more here.
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.
