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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.
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:
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.
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).
There are some naming guidelines for LLCs in Georgia. Your business name:
Read more on Georgia’s naming requirements and restrictions for LLCs on the state’s Secretary of State (SoS) website.
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:
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).
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.
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.
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:
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.
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:
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.
Like with other options with a Georgia LLC, you can file your articles of organization either:
Form an LLC in Georgia, Hassle-Free
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.
Creating an operating agreement for your LLC is a smart idea, even if not mandatory. Here some of the benefits of doing so:
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:
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.
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:
Here are the main types of taxes you might be liable for:
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.
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:
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.
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%.
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:
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.
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:
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.
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.
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.
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