If you really want to enjoy the benefits of starting a small business in Georgia, you’ll need to figure out the kind of business entity structure to use. The limited liability company (LLC) is a great choice among small-business entrepreneurs because it provides more freedom, tax benefits, and less paperwork than a corporate entity. With step-by-step directions, this article explains how to start an LLC in Georgia.
Most people underestimate how simple it is to form a limited liability company (LLC). If you employ a formation service, this is especially true. I’ll walk you through the entire process of incorporating an LLC in Georgia. If you want more information on forming an LLC in any state, you can read our guide on How To Start An LLC.
The LLC is a separate legal structure that protects the business owner’s personal assets, unlike a sole proprietorship or partnership, where the business owner can be held personally liable for claims against the company.
Because of the many tax choices, ease of administration, and management flexibility, the Limited Liability Company exceeds the sole proprietorship, partnership, and corporation in terms of liability protection. The filing fee for an LLC in Georgia is $100 if done online, or $110 if done by mail.
Forming an LLC legally establishes your company, restricts your personal liability and allows you to take advantage of tax benefits. In Georgia, you must submit Articles of Organization with the Georgia Corporations Division and pay a $100 filing fee ($110 if filing by mail or in-person). Before you can file, you’ll need to choose a business name and choose a registered agent. This approach will be assisted by the following step-by-step instructions on how to start an LLC in Georgia.
Before we start, here are the top picks for LLC formation services in Georgia:
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TABLE OF CONTENTS
Why Should You Start An LLC In Georgia?
Georgia is one of the finest places in the country to establish a company. For entrepreneurs, the state provides a variety of financing alternatives, tax incentives, tax relief, and other advantages.
The liability protection provided by LLCs is one of their best features. LLCs have the same limited liability protection as corporations. This implies that the company’s debts, losses, and lawsuits are not the responsibility of the owners. As a result, your financial possessions and business obligations are legally divided.
LLCs benefit from so-called “pass-through” taxation. Unlike businesses, which pay federal taxes, LLC members pay taxes on their personal returns which facilitates the avoidance of double taxes, which is prevalent among organizations.
When it comes to the tax period, LLCs have a lot of choices. A limited liability company (LLC) has the option of being taxed as a sole proprietorship, a C corporation, or an S corporation. A tax lawyer can assist you in determining the appropriate tax status for your company. This level of tax versatility is not available in sole proprietorships.
Lastly, LLCs are easier to set up and maintain than corporations. Corporations should, for example, have board members, stockholders, and executives. Members of LLCs, on the other hand, have the option of running the company’s day-to-day activities. In the operating agreement, LLC members can also allocate duties and obligations to one another. Moreover, LLC members have more flexibility in structuring and managing their business.
- In Georgia, an LLC operating agreement isn’t legally necessary.
- Personal liability for the company’s debts and responsibilities is limited for LLC members.
- In Georgia, all LLC documents are available for filling out online
- Georgia has affordable filing and annual membership fees for limited liability companies
- LLCs in Georgia have the option of choosing their tax treatment
- In Georgia, the filing fee for overseas LLCs is relatively high
- A limited liability company (LLC) requires more paperwork than a sole proprietorship or a general partnership.
- When compared to a corporation, raising investor funds for an LLC is more complex
Advantages & Disadvantages Of Starting An LLC In Georgia
If you’re considering forming a Georgia limited liability corporation (LLC), you should evaluate the benefits and drawbacks of doing so against other options. Forming your company as a Georgia LLC, or limited liability corporation has benefits and drawbacks, based on the characteristics and types of business structures being evaluated. Here are the benefits of LLC in Georgia:
1. Flexible Ownership
In Georgia, an LLC has no limit on the number of members it can have, whereas an S company is limited to 100. A C-corporation can have more members, but its operations will be subject to double taxation and greater regulation.
2. Tax Purposes
An LLC has the most greater flexibility in terms of how it is taxed under federal law. A single-member LLC has the option of being treated as a sole proprietorship, S corporation, or C corporation. A multiple-member LLC (an LLC with two or more members) has the option of being taxed as a partnership, an S corporation, or a C corporation. It is best to consult a tax specialist before making a decision. There are no tax choices for a sole proprietorship or any type of partnership.
Unless the Georgia LLC elects to be treated as a C corporation, all profits are distributed to the members. Even if they do not earn any profits, the members must pay payroll taxes income and self-employment taxes on their portion of the profits.
3. Limitation Of Liability
LLC owners, also known as members, are not individually responsible for the company’s debts, including expenses incurred as a result of most actions filed against the corporation. A corporate creditor cannot seize a person’s financial property such as a home, car, bank accounts, etc.
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The limited partners in a limited partnership (LP) are protected, but not the general partners who founded and helps to run the company. Sole owners and general partnership partners are not protected from business debts.
4. Management Structure
With shareholders, a board of directors, and officers, a company has a three-tiered management structure. A limited liability company (LLC) can be run by its members or by management hired to conduct the day-to-day activities. Corporations are required to hold annual shareholder meetings, and board meetings, and record minutes of such sessions. There is no legal necessity for LLC members to have meetings or keep minutes.
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5. Raise Investment Capital
A limited liability company (LLC) may find it easier to raise financing than a sole proprietorship or general partnership. Although neither of these other types of businesses can accept investors without making them partners, an LLC can add new members without giving them a full manager role.
Additional information is available on the Georgia Secretary of State Corporations page, which may assist you in determining the right structure for your business. You may also want to consider taking the advice of an online service company to ensure a seamless registration process.
6. Designate A Registered Agent Service
Appointing a registered agent helps you to receive official documents handled properly for a business, such as lawsuit papers. Furthermore, the cost of Georgia LLC registration costs $100 for the first year which is the same compared for a corporation, LP, or LLLP.
Disadvantages Of Starting An LLC In Georgia
There are some disadvantages of forming an LLC in Georgia, which are as follows:
- More Complex: A limited liability company (LLC) is more complicated than a sole proprietorship or general partnership, both of which are not required to register with the state.
- Expensive: Owing to the fact that neither a sole proprietorship nor a general partnership is required to register, an LLC is much more costly.
- High Corporate Tax: If an LLC chooses to be taxed as a C corporation or an S company, it will be liable to both the corporate tax and the net worth tax in Georgia. The corporate Georgia LLC tax rate is 6% of taxable income in Georgia. If C corporation status is chosen, it is paid by the LLC, and if S corporation status is chosen, it is paid by the members.
How To Form An LLC For Free?
If you are looking for how to file a free LLC Georgia then must follow the steps to form an LLC for free:
- First, you have to gather the details of your business and provide them to the secretary of state via a formal document.
- In the next step, you have to decide on a unique business name and official address for your LLC that is not used by any other state.
- Now you have to get an official company formation document from the Secretary of State’s Website.
- In the next step, you have to appoint a registered agent for yourself and provide the details of your company formation document.
- In the next step, you have to choose and set yourself up as a professional LLC
- After you have got the formation document, you need to fill in and check for accuracy and file it with the state agency
- Finally, your LLC will be formed, and you will receive notification that it has been legally formed.
Steps For How To Start An LLC In Georgia
In Georgia, forming an LLC is simple. Here’s a step-by-step guide to incorporating an LLC in Georgia. State regulations determine the steps for forming an LLC, however, all states require particular documents to be submitted to a government entity. An operating agreement is also required in some states for LLCs. An LLC operating agreement isn’t necessary for Georgia.
For forming a Limited Liability Company, each state has its own set of rules. Let’s look at the requirements for forming an LLC in Georgia:
1. Choose A Name For Your California LLC
The first and most significant step in forming a Georgia LLC is deciding on a name. Make sure your name complies with Georgia’s naming guidelines and is easily searchable by targeted users. Before you can register your LLC, you’ll need to choose a name to use in your articles.
For instance, your business name must be distinct from all existing Georgia-registered business names. Search the Georgia Secretary of State website for the name you want to use for your business to see whether it’s available.
The following are the significant considerations to make:
- The word Limited Liability Company, LLC, or L.L.C. must appear in your company name.
- Your company name must not be similar to that of another company in the state. To see if a particular business name is in use, go to the Secretary of State’s website and run a search.
- A business name cannot include words that are used to identify a government agency (i.e., State Department, CIA, FBI, Treasury, etc.)
- Additional documentation and licensure papers may be required for certain restricted words (bank, lawyer, attorney, credit union, and so on).
- Check a complete list of Georgia Naming Guidelines
Next, check the Corporations Division’s Georgia LLC Name List to see if your name is accessible in Georgia. If your business name is available and meets the requirements, you can register it with the Corporations Division when you file your Georgia Articles of Incorporation. Always ensure that your chosen name wasn’t taken by the Georgia Secretary of State’s website.
Furthermore, it is recommended to choose a domain name, before you choose your LLC name as it is always a good idea to check whether the URL is available or not.
2. Appoint A Registered Agent
The next step in forming an LLC in Georgia is to select a registered agent. A registered agent is a person or organization who receives official mail and serves processes on behalf of your business. The administration or a legal party will contact you at the registered agent’s address, which is also known as the registered office.
An individual or a registered agent service might serve as your registered agent. Although you have the option of acting as your own registered agent, many business owners prefer to hire a registered agent service. A registered agent might be a person (such as you or an employee of your LLC) or a company that provides this function.
Before you decide to act as your own registered agent, consider the following:
- You must be present during normal business hours (9 a.m. to 5 p.m.) at the address you indicate.
- If you run a home-based business, you’ll have to make your home address public.
- A lawsuit could be filed against you in front of your relatives or workplace.
- Registered agent services should be provided by entities (or corporations).
3. File Your Georgia LLC Articles of Organization
It’s time to file your Articles of Organization with the Corporations Division to formally incorporate your Georgia LLC. You’ll file Articles of Organization to the Georgia Secretary of State if you’re incorporating a new LLC in Georgia. The process costs $100 online, plus an additional $10 for physical filings.
You’ll have to file Form CD 030 Articles of Organization with the Georgia Corporations Division to register your Georgia LLC. You have the option of applying online or by mail. Georgia’s articles of organization document are relatively short in comparison to other states. All you need to keep track of is the LLC’s name and the individual who filled out the form’s signature. It may be a member, a manager, the LLC’s lawyer, or another administrator.
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A Georgia LLC is formed by filing Articles of Organization with the Corporations Division of the Georgia Secretary of State. The following items must be included in the articles:
- Name of your limited liability company
- The person who is filling out the form must sign it. It could be a member, a manager, the LLC’s lawyer, or another entity.
- If you file online or by postal mail, the filing fee is charged $100.
You must also provide a full Transmittal Information Form Georgia Limited Liability Company if you file by mail (Form 231). The following information must be included on the form:
- Email address for LLC
- The primary mailing address for LLC
- The name of the LLC and the number assigned to it as a name reservation (if any)
- The individual who filed the articles’ name and address
- The LLC’s registered agent’s name and address
- The names and addresses of all the participants
The secretary of state will evaluate your Articles of Incorporation after you have filed them. The LLC becomes a legitimate business entity once the articles are accepted.
4. Receive A Certificate From The State
Your company formally starts when the secretary of state receives your articles of incorporation. The secretary of state will process your application and mail a certificate of organization to your business address within five to seven business days. The LLC will be able to obtain an Employer Identification Number (EIN), business licenses, and a business bank account with the help of this certificate.
5. Create A Georgia LLC Operating Agreement
The next step on your to-do checklist is to write an operating agreement for your LLC. Although an operating agreement isn’t required in Georgia for LLCs, it’s a good idea to do one anyhow. An LLC operating agreement outlines each owner’s rights, responsibilities, and profit and loss shares. An operating agreement is highly recommended even if you have a single-member LLC because it explains the LLC’s operating processes. This is where you’ll keep track of your meeting times, voting rights, and tax choices.
An operating agreement is a necessary part of your business, whether or not your state requires it. Having a formal operating agreement readily available is beneficial for a variety of reasons, including resolving disagreements about financial arrangements and other possible lawsuits. Without a contract in existence, the courts will make decisions based on federal law, rather than what is best for the corporation and its shareholders.
The operating agreement must include the following:
- Name of the LLC and its primary address
- The duration of the LLC
- The registered agent’s name and address
- Information on the Organization’s Articles of Incorporation
- The main purpose of the business
- Members and the contributions they make
- The manner in which gains and losses will be distributed
- The procedure for admitting new members and releasing departing members
- The LLC’s management
- Clauses of compensation and responsibility
6. Get A Georgia LLC EIN
A Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN) is another name for an EIN. For your company, an Employer Identification Number (EIN) is similar to a Social Security number (SSN). This number will be used by the IRS and the government of Georgia to identify your company operations. There is no charge for filing.
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An EIN’s aim is to help with the following:
- At both the state and federal levels, you must file and manage taxes.
- Open a bank account for your business.
- Employers are hired.
7. Comply With Other State Requirements
The taxation of a Georgia LLC is determined by how the members of the LLC want to be charged. By default, LLCs are treated as sole proprietorships (for single-member LLCs) or partnerships (for multi-member LLCs), with business revenue and losses reported on each owner’s personal taxes. Each business owner in Georgia pays income taxes on his or her part of the profits.
If the LLC elects to be taxable as a corporation, it will be required to pay a state corporate tax on a yearly basis. LLCs that are taxed as corporations must also submit a net worth income tax on the company’s assets.
7. File Annual Registrations
The secretary of state requires Georgia LLCs to produce an annual registration statement. The objective of this annual file is to guarantee that your company’s location, registered agent, and registered office details are current. Every year, between January 1 and April 1, an annual registration statement is required. You have the option of filing your registration document online or printing a form to mail in. An annual registration fee of $50 is required.
If any important business information changes after you submit your registration statement (for example, your registered agent), you must submit an amended yearly registration statement with a $20 fee.
8. Comply With Federal Requirements
LLCs formed in Georgia must meet not only the state but also federal criteria. For tax purposes, LLCs that are taxed as corporations, as well as any LLC with workers, must file for a federal employer identification number (EIN).
In addition, you’ll have to pay income taxes as well as payroll taxes. Whether the LLC is taxed as a pass-through entity or a corporation has an effect on federal income taxes. If your LLC is taxed as a pass-through entity, you can deduct 20% of its earnings before paying personal taxes on any business earnings under federal law. Whereas, companies are paying a flat tax rate of 21%.
Social Security and Medicare are covered by federal payroll taxes. On any distributions from the firm, LLC members normally have to pay the employer and employee portion of these taxes, known as self-employment taxes. They must also deduct payroll taxes from employees’ salaries and deposit the employer tax on their wages.
9. Open An LLC Bank Account
Opening a bank account for your LLC is critical for liability protection, as it separates the business’s funds from the member’s personal funds. To open a business bank account, you’ll need certain documents, including:
- A banking resolution is a legal document that allows LLC members to open a business bank account on the LLC’s behalf.
- Copies of the state’s certificate of organization documentation proving the LLC’s formation
- The members’ driver’s licenses.
- A Georgia Certificate of Good Standing may be required depending on the LLC’s age to demonstrate that it is operational and in good standing with the state.
10. Apply For Business Licenses And Permits
Various business licenses and permits will be required depending on what your business performs and where it is located. The following are some examples of common registrations:
- Business License: Before starting a business, several localities need it to get a permit.
- Professional licenses are required for some services such as barbershops, accountants, salons, and others.
- Sales Tax Permit: To offer products and services, you’ll need to register with the Georgia Department of Revenue.
What Are The Next Steps After Forming An LLC?
After you’ve registered your business, there are a few things left to do. To begin, you’ll want an Employer Identification Number (EIN). If your LLC plans to recruit employees or is required to file excise taxes, you’ll need an EIN. An EIN is also necessary for all multi-member LLCs.
Then, find out what licenses and permits you’ll need to run your business in Georgia. If you want to sell alcoholic beverages at your bar, restaurant, or grocery store, you’ll need to apply for an alcohol license. If you sell things that are subject to sales tax, you’ll also need a seller’s permit. The Georgia Professional Licensing Boards Division has further information regarding permits and licenses.
Lastly, even if you are a single-member LLC, you should open a company bank account. By combining your personal and corporate financial accounts, you risk losing your personal liability protection. Accepting company payments or purchasing business goods with a personal credit card or checking account, for example, can expose you to data theft. So, along with your business bank account, don’t forget about a company credit card.
Forming an LLC legally establishes your company, restricts your personal liability and allows you to take advantage of tax benefits. Georgia is one of the finest states to start a business in because it provides a variety of funding options, tax exemptions, and other advantages to tech startups.
As your LLC develops, you’ll need to show banks, consumers, and other state agencies that your business is in great condition. After all of the hard work that went into forming your Georgia LLC, don’t let a delayed annual report filing put your new company out of business.
If you need more help, we recommend seeing a business lawyer or using a company formation service like Incfile. Incfile will file all formation documents on your behalf, offer an electronic copy of the filed paperwork, and provide one year of free registered agent service for just $49 plus state filing fees ($100 in Georgia). Incfile will even write a unique LLC operating agreement for your company for an extra charge.
Frequently Asked Questions (FAQs)
1. How much does it cost to form an LLC in Georgia?
You must first get and complete the Transmittal form from the Georgia Secretary of State’s website, and then return the completed Articles of Organization, transmittal, form, and $110 filing fee to the Corporations Division of the Secretary of State.
2. Is there an annual fee for an LLC in Georgia?
The state of Georgia needs you to register your LLC on a yearly basis and pay a $50 cost. The registration should be done electronically at the SOS website. On January 1 and April 1 of the year following the calendar year in which your LLC was created, you must file your initial annual registration.
3. Is Georgia a good state to start an LLC?
When it comes to giving business incentives, Georgia is recognized as one of the best in the country. Small businesses in Georgia, particularly startups, will be able to take advantage of a variety of benefits, including tax relief, tax credits, and even funding possibilities.
4. How do I get an EIN number in Georgia?
If your main place of business is in the United States or one of its territories, you can register for an EIN online. A verified Taxpayer Identification Number is required for online applications (SSN, ITIN, EIN). Every responsible party is only allowed one EIN each day.
5. Do I have to register my LLC Every year in Georgia?
Every year your business is in existence, you must register with the Secretary of State Office, whether you own an LLC, Corporation (profit, non-profit, or professional corporation), or Limited Partnership (LP, LLP, LLLP).
6. Does an LLC need a business license in Georgia?
You must get a general business permit from the city or county in order to operate your business in Georgia. Certain professions require particular certification. LLCs with employees must also file for a state taxpayer identification number and workers’ compensation insurance in Georgia.
7. Can I form a single-member LLC in Georgia?
A single-member LLC in Georgia is treated the same as a multi-member LLC for most purposes. In Georgia, the steps to incorporate a single-member LLC are the same as those described previously. When it comes to submitting a tax return, single-member LLCs have more options.
8. Do I need an operating agreement for my Georgia LLC?
Operating agreements are not required in Georgia for LLCs, but they are strongly recommended. An operating agreement will assist protect your limited liability position, eliminate financial and management disputes, and ensure that you, not state law, choose the rules that govern your organization.
9. How long does it take to start an LLC in Georgia?
An LLC is generally approved in Georgia in 7-10 business days for online applications and 2-3 weeks for mailed-in filings, although expedited processing is available for an additional cost.
10. Do I have to pay to hire a registered agent?
Anyone over the age of 18 who resides in the state and is normally able to receive papers during regular business hours can serve as a registered agent.
11. How is an LLC taxed in Georgia?
In Georgia, an LLC is treated the same as any other state; it is a passthrough business by law, with the option to choose S-Corp or Corporation taxation if desired.
12. Do I need to form an LLC in Georgia?
There are certain benefits to incorporating an LLC. You might have protection from liability for your assets as well as tax freedom for your business. If you own a sole proprietorship and want to enjoy these benefits, you might consider forming an LLC.