So you’ve decided to incorporate your LLC in Georgia. Great choice! Forming an LLC opens the door for tax savings, limited liability, and security to personal assets. Georgia also offers a lot of tax benefits to startups through tax credit schemes and the Georgia Enterprise Zone program, this makes it an excellent destination to incorporate your LLC.
This guide will walk you through every step in incorporating your LLC in Georgia. Keep reading to find detailed information about filing methods, costs, taxes, and anything else you may need.
Naming your Georgia LLC
Your LLC’s name gives it a unique identity and defines its brand image. It conveys your company’s core values and reputation. So finding a unique and memorable name for your LLC is a critical step in forming your LLC and creating a successful business.
The words “limited liability company” or abbreviations such as Ltd Liability Co., LLC, or L.L.C. must appear in the name of your LLC.
Do not use any name that confuses your LLC with a government agency. For instance, you cannot name your company “Central Insurance Agency” and use the abbreviation ‘CIA’ for the same.
The name should also be unique and must be distinguishable from the name of another company.
If your LLC’s name contains words like “bank”, “attorney” or “university”, you need to include the licensed individual (for instance, a lawyer, a doctor, etc.) into your LLC. You may also permission from the respective regulators before you can use the name. For example, if you wish to incorporate the word “bank” in your company’s name, you’ll need to get written permission from the Department of Banking and Finance.
Doing a name search
As mentioned before, the Regulations of the State of Georgia require that the name of your LLC must be different from that of any other company in existence. Perform a name check on the State of Georgia website to ensure that your company’s name is not already in use.
If you have decided on a name, but aren’t yet ready to start on the formalities of incorporating your LLC, you can reserve the name of your LLC for 30 days by paying a fee of $25 and filling out the application to reserve your business name. You can file the application online or mail the requisite form.
Office of Secretary of State
Corporations Division, Name Reservation Request
2 Martin Luther King Jr. Dr. SE
Suite 313 West Tower
Atlanta, Georgia 30334
Does your business require a DBA?
The term “DBA” is an acronym for “doing business as.” It is an assumed name under which your company operates. For example, if your company’s legal name is “Medicines & Cosmetics LLC,” you can apply for a DBA to incorporate its trading name as “Medicos.”
You would create a DBA if for instance you want to create a branding strategy for your business or to diversify into another market.
In Georgia, you must mail the application to the county clerk’s office of the county you do business in. The cost and method differ slightly depending on the county, but the general pattern remains the same. So, for instance, if your LLC is located in Fulton, you will have to send a trade name statement to the County Clerk’s office of Fulton in the Superior Court. You can find the list of town clerks and their mailing addresses from the Georgia County Clerks Association website.
Nominate a Georgia Registered Agent
Once you’ve picked a name for your newly established LLC, the next thing you need to do is to appoint a registered agent. Your agent acts as the LLC’s first point of contact in the event of legal action against it and for communication with the State of Georgia. A registered agent also receives legal documents on behalf of the company.
Who can be a registered agent?
Depending on your preference, you may employ the services of a registered agent service provider or be your own agent, if you own or work for a business in Georgia. You must be at least 18 years old and have a physical address in Georgia. Similarly, any other person or company member who fits these conditions might be nominated as an agent.
Individual v. Registered Agent Service
Hiring a commercial registered agent service gives you flexibility since you would need to be available during office hours all the time to receive legal papers. It guarantees that the necessary legal compliance is taken care of since a commercial registered agent will be well-acquainted with the procedures and documentation required from your end.
If you are a home-based business or are generally concerned about your privacy, having a commercial registered agent will ensure that your address is not present in the official records in the public domain.
Filing the Articles of Organization
The Articles of Organization are the legal documents that provide legal recognition to an LLC. The LLC formally comes into existence and is authorized to do business in the State of Georgia after the Articles of Organization are approved.
The Articles of Organization must detail the name, address, organization structure, and member’s credentials of the LLC. You can file the Articles of Organization by mail or online.
Create the Operating Agreement
An operating agreement is perhaps the most important document that you require for your company. It is an internal document that usually governs the following matters of the company: ownership percentage of different members; distribution of profits/loss among the members, the manner in which the company would pay taxes, and how the dissolution of the company would take place.
If your LLC does not have an operating agreement, then the aforementioned matters would be regulated by state laws. Having an operating agreement ensures that the members can regulate the business of their LLC. Moreover, some banks may require an operating agreement before they can lend credit to the company.
Writing the operating agreement yourself v. Hiring a service
You can write an operating agreement yourself using the templates online. However, given the importance of the operating agreement, you can avail the services of a professional agent to write an operating agreement for your company. Since attorneys and other professionals are constantly engaged in such operating agreements, they can foresee some complications which may arise in the course of business. It is always easier to get an agreement at the start of a business venture than it is once the company is up and running. Moreover, they can assist in ensuring that the agreement accurately reflects the company’s and members’ desires.
Limits of Operating Agreement
An operating agreement will not extinguish the obligations of your LLC to carry out its business in a fair and reasonable manner. You cannot also include anything prohibited by the State or Federal laws into your operating agreement. A court can intervene if it deems that the terms of your operating agreement are unreasonable.
Obtaining an EIN
An EIN (Employment Identification Number) is a nine-digit number that serves as a tax identification number. It is allotted by the Internal Revenue Service (IRS). An EIN is required for all LLCs with more than one member and hires others. In order to open a business bank account, you’ll need an EIN. Furthermore, when you file for an EIN, you get to choose the taxation structure for your LLC. So, how do you go about getting one? You can obtain one by applying online or by mailing or faxing your application.
To apply online, you need your individual taxpayer identification or social security number (SSN). If you don’t have either of these documents, you will need to apply through fax or mail.
Tax liability of your LLC
Depending on the type of business your LLC is engaged in, the tax liability accrued to your LLC in the State of Georgia may vary. Moreover, the federal tax accrued would also be influenced by the taxation structure adopted by the LLC. Let us look at federal tax liability first.
Federal Tax Liability
Depending on the taxation structure adopted by the members, an LLC will be treated differently for taxation purposes. By default, a multi-member LLC is treated as a partnership for taxation purposes. In such a scenario the partnership rules will apply for taxation purposes – that is partners will not be personally responsible for taxes. Sounds complicated? Let us simplify it for you. The LLC needs to file Form 1065. In a partnership, the LLC does not pay any taxes on income. However, individual members are taxed on the profits/loss that they acquire from the LLC. On the other hand, the owner of a single-member LLC would be required to file Form 1040. The profit/loss acquired by the LLC would be reflected in the owner’s personal income tax return.
If the company is a corporation, then corporate tax rules would be applicable and the company needs to file Form 1120. Unlike a partnership, the LLC is taxed on its income. If the company is an S-corporation, then the LLC is not taxed on its income but the individual members are taxed on their allocated share of income. An S-corporation needs to file Form 1120-s for taxation purposes. LLC can also change its taxation structure from partnership to corporation and vice-versa by filing Form 8832.
You can send the forms either by mail or online.
You can use the IRS e-file service to file forms online.
All the forms should be sent to the Department of the Treasury, Internal Revenue Service, Ogden, UT 84201.
State Tax Liability
If your LLC provides goods to the consumers, then you would have to register the company with the Department of Revenue. You would have to fill Form CRF -002. You can do so online by visiting the Georgia Tax Center. After registering you would receive a sales and use tax number. Taxpayers who collect more than 200$ in sales tax per month have to report sales taxes monthly, if the sales tax collection falls between 50 to 200$ then taxpayers have to report sales tax quarterly and if the sales tax is less than 50$ then taxpayers have to report annually. However, taxpayers can change the return frequency by sending an application to the Department of Revenue. The deadline for filing tax returns falls on the 20th of every month unless it is a holiday, in which case the deadline shifts to the next working day.
You may be liable for unemployment Insurance Taxes and have to register with the Georgia Department of Labor depending on if you employ other people in your company. Moreover, depending on the district/city you are based in, your LLC may incur some additional taxes as well. Consult the municipality or the local government website to find out.
Every LLC in Georgia is required by law to file an annual report with the Georgia Secretary of State every year. The annual report provides information about your LLC, such as the number of staff, members, registered agents, etc. If you fail to file annual reports, the state administration has the authority to dissolve your corporate entity.
You can file an annual report online on the State of Georgia website. All you need to do is log into the website, fill in the annual report as provided by the website between January 1 and April 1 every year by paying a fee of 50$.
Business Licenses and Permits
You need to obtain a business license for your LLC to operate in the State of Georgia. In Georgia, the state-level business license is called a seller’s permit and can be obtained online from the Department of Revenue. In certain cities, such as Atlanta, you need to obtain a separate general business license from the City.
Depending on the kind of business your LLC is engaged in, additional permits may also be required. For instance, if your company is engaged in a food processing business that might require a food permit by the state’s health department.
Once you have incorporated your LLC, you can do a search using your LLC’s name on the Georgia Secretary of State website to double-check what licenses you require for your business. For obtaining federal permits check out the U.S Small Business Administration Guide.
Business Bank Account & Phone Number for your LLC
It is critical to have a separate bank account for the LLC. It assures that the LLC and its members are treated as separate financial entities. It’s also quite handy in terms of taxation. Double-check that you have a separate corporate and personal account after forming an LLC.
When you open a bank account, you will receive a credit and debit card. The credit card helps build your LLC’s credit history, which makes fund raising and applying for loans much easier.
Instead of using your home or mobile phone, you may get a low-cost “virtual business number” specifically for your Georgia LLC. You can then forward calls to this company number to your smartphone. Utilize any service that may assist you with personalizing call forwarding, setting up pre-recorded instructions, and so on. This unique phone number also protects your privacy from intrusive public record websites.
With the last step, you will complete all the procedures required to form an LLC in Georgia. However, if you are hesitant about any procedure, you can always use a professional service that suits your needs. Georgia offers great benefits, especially to small businesses and startups. For instance, under the Georgia Enterprise Zone program, you are eligible for property tax and other tax exemptions if you locate your business in one of the designated enterprise zones. Do ensure you check your eligibility for these programs and apply accordingly. Enjoy your new LLC!