When you are getting ready to start a new business, you have a lot of decisions to make. One of the first and most important decisions will be how to classify your business. Will you be a sole proprietor? While for many people this seems to be the simplest path, it is not always the best path.
As a sole proprietor, you are not protected. If a customer or supplier was to file a lawsuit against you, they could take everything from you, and not just things related to the business. If you file as a Limited Liability Corporation, or LLC, you are protecting yourself from potentially costly and substantial losses.
A sole proprietorship allows you to file your profits and losses of the business as a part of your personal tax returns. With an LLC, you still have the luxury of filing profits and losses as a part of your taxes. However, you also have the choice of your LLC being taxed as a corporation. An LLC will not have the same element of government control that corporations are subject to, which characterizes the LLC as being the best of both worlds since corporate protections are in place.
In the state of Georgia, it is relatively easy to get started as an LLC. Keep reading to see how you can get started as Georgia LLC today.
If you have decided that the freedoms of a sole proprietorship with the protections of a corporation are a good fit for your new business and are ready to register your new business as an LLC, you will need to take the following steps:
While this sounds simple enough, there are some rules that you need to follow to give your business a name. When naming your new LLC, you must include one of the following terms into the name of your company:
The name of your business cannot exceed 80 characters, including spaces.
Your business cannot have the same name as any other business in the state of Georgia. The name you choose must be ‘recognizably different’ from other Georgia businesses. To make sure that the name is not taken, you can go to the Georgia Secretary of State Corporations Division business name database to search for name availability and to reserve your chosen name for 30 days. The cost to reserve your chosen name is $25.
This will serve as the legal name for your business. Sometimes, your official business name may seem somewhat cumbersome. You may choose to register a fictitious business name as a DBA (doing business as). The benefits of filing for a DBA come if you intend on your LLC acting as a parent company to a separate line of business. The DBA can be used for a separate business. To register a DBA:
The State of Georgia requires every corporation owner to choose a Registered Agent to receive service of process in the state, or in other words, papers associated with a lawsuit that might be brought against your business. The registered agent is a business or individual who agrees to accept legal papers on behalf of your LLC. The registered agent must be authorized to do business in Georgia as well as have a physical street address in the state.
You can also elect someone from your own company to serve as a registered agent. If you prefer, you can even elect yourself. If you use a registered agent service, they can help you remember due dates for important deadlines such as annual registration and license and permit renewal.
In order for the formation of your LLC to become official, you will need to file Articles of Organization with the Georgia Secretary of State Corporations Division. In addition to a filing fee of $100, the Articles need to include the name of the LLC and the signature of either an organizer, manager, member, or attorney.
Your Articles of Organization must clearly state the purpose of your business. This clarification is used to classify which industry your LLC will operate in. To find your North American Industry Classification System (NAICS) industry code, you can use the NAICS code search tool. You will want to make a note of this number as it will be used when you file your annual tax returns.
The purpose of the industry classification system is for the government to gather various statistical data for economic purposes. Within the NAICS system, there are 20 primary industry sectors. Within these sectors, there are 96 subcategories and 317 industry groups. As you conduct your NAICS code search, you will be able to find your appropriate classification using the code search tool. However, if your particular business type is not identified, then you can classify it under a generic label of “Any Legal Purpose.”
Articles of Organization can be filed either online or by mail.
If you file your articles by mail, you will need to include a transmittal information form Georgia Limited Liability Company. The form is considered to be complete if it includes:
Although it is not considered mandatory by the State of Georgia, it is recommended that you prepare your Operating Agreement. This important internal document lays out how you will run your LLC, including the responsibilities of all members and managers. An Operating Agreement is important because it can help you preserve your status as an LLC by showing that it is a separate business entity. If you fail to prepare an operating agreement, Georgia LLC law can take over and govern how your LLC operates.
The Employer Identification Number (EIN) is like a social security number for your business. You will need it to hire employees and pay taxes. It is free to get it from the IRS. You can even complete the EIN application online, and its free.
In addition to the EIN, the State of Georgia requires business owners to obtain a state taxpayer ID number and register for Sales and Use tax.
When you operate an LLC in Georgia, there are certain requirements that you will need to meet on an annual basis. To remain in compliance as a business in good standing, you will need:
The Annual Registration is known as an Annual Report in other states. LLCs in Georgia are required to pay an annual registration fee of $50 each year. The fees are due between January 1 and April 1 beginning the year following your LLC registration. The annual registration needs to include the following:
The fees that you will have to pay for your licenses and permits vary as to which ones are appropriate for your business. Some businesses will need to carry professional licenses or permits to operate. Counties throughout the state have different business licensing requirements. Business licenses can ultimately come under the jurisdiction of federal, state, and county regulations depending on the type of business you are running.
Please visit the website for the county you are doing business in to discover which licenses and permits are required for your LLC. For professional licenses, please visit the state licensing information page for more information.
The state of Georgia requires LLCs to pay a corporation income tax, which is a flat rate of 6% of your federal taxable income. They also assess a corporation net worth tax that you are also required to pay.
If you have employees, the state will also require you to pay an Employer tax. This includes the quarterly or monthly withholding taxes that are deducted from each employee’s paycheck. With employees, you will also be required to pay quarterly state unemployment insurance (UI) taxes to the Department of Labor (DOL). Your report to the DOL will need to include wages for every employee in addition to the withholding tax.
Sales and Use Tax are required if your LLC sells goods to customers in the State of Georgia. You will be required to register with the Department of Revenue and provide them with periodic sales tax payments and all sales tax returns. For more information on sales tax payments, please visit the Georgia Department of Revenue for more information on your business taxes.
The actual start-up LLC cost in Georgia is the $100 fee to file the articles of organization. If you chose to reserve the name of your company before you got your articles of organization together, then you can include the $25 reservation fee in your startup costs. The registered agent will also have a fee for their services. The cost of a registered agent is approximately $100 per year. Any other business permits and business licenses will need to be paid for upon startup. These costs will vary as to the type of business you are starting. If you require professional licenses, that may cost you more than other types of licenses or permits.
If you are filing as a foreign LLC in Georgia, it will cost you $225 to file your articles of organization.
Starting an LLC in Georgia has its benefits. The start-up fees to file your articles of organization are inexpensive. Other benefits include:
There are very few downsides to starting an LLC in Georgia; however, we do need to mention a few:
Once your LLC in GA is formed, you may consider taking the following actions:
To open your business bank account, you will need to have some documentation. The first and most important is copies of the articles of organization that you filed with the state. When the articles have been processed, the state will issue you a certificate of organization.
You may need to prepare a formal banking resolution document. This document is prepared by the members of the LLC and defines the roles and obligations of each member as they relate to banking responsibilities for the business. The banking resolution is not an absolute requirement for your LLC; however, it does further clarify the roles of each member as they are stated in your articles of organization.
You will need to provide the bank copies of the driver’s licenses for each member who is to be granted banking authority. If your LLC is not a new company, you might need to provide the bank with a certificate of good standing, which proves that your LLC is in compliance with all state regulations.
Hiring a business accountant may be one of the most important things you do as a new Georgia LLC. You may be tempted by some of the great accounting software that is out there for small businesses, but having an accountant will let you focus more on the growth of your new business.
A business accountant will ensure that you do not overpay any taxes and that you pay them on time thereby avoiding pricy penalties or fines. This is especially important at the end of the year when the LLC distributes pay for the partners/members.
If your LLC in GA has employees, an experienced accountant can take care of those pesky payroll taxes. You will not have to worry that you are withholding the right amount. Through accounting reports and being able to see exactly where the business stands financially, you may see other opportunities for your business to increase its profits and avoid previously unforeseen areas of loss.
Most businesses today require an online presence as an important aspect of their marketing and success. There are a few aspects that you need to remember when starting up a website. This aspect of a business is more than just designing a website. You will need to search for and register a domain name before you even get to the fun parts of putting your website together.
You will need to choose a monthly service provider to host your site. This provider is responsible for making sure that your information is safely stored on a server or backed up to a cloud. They will have the responsibility of keeping security programs up to date and identifying weaknesses of the system that could leave you vulnerable to hackers.
A website can give your customers easier access to the products and services you offer. a website can breathe life into your marketing plan and keep the customers coming back. You can do your updates on your own or you can find a packaged deal with site development and hosting for your site. An internet presence can do a great deal for your business as long as it is done right.
You need to make sure that you are covering all of the licenses and permits required for your business. Just starting your business by forming an LLC is only the first step. You can receive substantial fines if you fail to get the licenses and permits that you need to legally remain in compliance with the state of Georgia.
Once you file your Articles of Organization with the state of Georgia, you can expect it to take five to seven days if it was filed online and up to two weeks if it was filed through the mail.
Yes. A Georgia LLC needs an EIN to hire employees and to pay taxes. This should be one of the first things that a start-up needs to do as the EIN serves as the business’ social security number.
Aside from the Annual Registration Fee of $50, you will also be required to pay sales and use taxes, a corporation income tax that is equal to 6% of your federal taxable income. There is also a corporation net worth tax, employer tax, quarterly state unemployment insurance, and the withholding taxes from your employees that are filed with the IRS each year. Other LLC cost in Georgia annual expenses include the fees you pay for a registered agent, running your website, and paying for a business accountant.
Georgia requires an annual registration fee of $50.
While an operating agreement is not mandatory, it is an important part of documenting how you will run your organization. If you do not have an operating agreement, the State of Georgia can assign someone to oversee the running of your company.
The Georgia annual registration fee of $50 is due between January 1st and April 1st every year.
While the LLC is required to pay corporation taxes, sales and use taxes, and federal and state withholding taxes, the profits of the organization, are paid to the members where they will file their individual income taxes.
The federal tax requirements stipulate that the profits and losses are recorded as an addendum to your personal income tax. With only one member as an owner of the LLC, this will keep you in legal compliance. When there is more than one member who owns the business, the proceeds are considered ‘distributable shares’ that are reported like those of a partnership.
Yes, LLCs need to register with the Georgia Department of Revenue for sales and use taxes in the state of Georgia. You will be required to make periodic sales tax payments for the goods you sell.
To open a business bank account in Georgia, you need to have a copy of your certificate of organization which you receive from the state after your articles of organization are accepted by the state. You may be required to present a formal banking resolution that will outline the banking responsibilities of each member of the organization and the driver’s license information of those members who will have banking responsibilities. If your company has been in business for a while, you will need a certificate of good standing that will confirm that you are in compliance with the state of Georgia.
The Articles of Organization for your LLC in Georgia can be submitted either online or through the mail.
You will be required to acquire the business licenses that apply to your industry and your particular business.
To get a phone number for your LLC, you need to call your local phone provider and open a business account. Having a separate business phone line gives you an expense that can be written off for taxes as well.
There are a number of small business resources and websites in Georgia. The best ones include:
• Small Business COVID financial assistance
• Small Business tools and forms
• State of Georgia small business assistance
• Small Business Administration, Georgia District
• Better Business Bureau directory of Georgia offices
By discovering how to get an LLC in Georgia, you have taken the first steps to owning your own business. By now, you have filed your Articles of Organization and have received your Certificate of Organization from the State of Georgia. You will have your EIN and have filed with the Georgia Department of Revenue for sales and use tax. You are ready to hire your employees and get to work.
You will want to keep on top of your industry through newsletters and organizational contacts. You will want to learn about SEO to guide customers to your website and incorporate terms that will attract the algorithms of the primary search engines.
As you eventually expand your Georgia LLC, you may want to consider bringing on a marketing team that can then take on some of the responsibilities you are paying to your web development consultants. You will need to keep regular status meetings with the members of your organization. You may want to become involved with your local Workforce Development centers when you search for new employees.
Starting your LLC as a small business can give you the tools you need to grow your business bigger than your wildest dreams or to keep it as a small business that is easily controlled by you as an individual. The choices for the future are yours. Beginning as an LLC is the perfect beginning for whichever way you choose to grow.