Last Updated on October 18, 2022 by Fair Punishment Team
You might already know that starting a business is a great way to earn extra income. If you don’t have a business idea yet, you should consider creating a new LLC in Georgia. This is a simple step that can help you get started.
LLCs are often confused with corporations. They are similar, but there are some key differences between them.
In this article, we’ll discuss the basics of LLC formation, including the advantages and disadvantages of each type of entity. We will also explain how to form an LLC in Georgia.
What Is An LLC?
An LLC (Limited Liability Company) is a legal structure for businesses. It offers limited liability protection for owners and their personal assets.
The main advantage of forming an LLC over other types of entities is that it allows members to protect their personal assets while still having access to the profits from the company.
Why Form An LLC In Georgia?
There are two main reasons why people choose to form an LLC: tax benefits and asset protection.
Every state has different requirements for starting a business. You may want to consider what type of company you want to start before choosing a state. Some states require more paperwork than others.
Some states allow foreign companies to operate within them while others do not.
The most obvious reason to form an LLC is so that your personal taxes are lower. When you own a corporation, you pay corporate taxes on any profit earned by the company.
However, when you’re the sole owner of an LLC, you only pay personal income taxes on the profit made by the company.
The second major benefit of forming an LLC is asset protection. By forming an LLC, you can protect your personal assets from lawsuits or creditors.
For example, if someone sues you personally, they cannot attach your home or car as part of the lawsuit. Instead, they must sue the LLC itself.
This means that even though you may lose everything in a lawsuit, the assets of the LLC are protected.
Disadvantages Of An LLC
While an LLC has many benefits, it does come with some drawbacks. Here are three things to keep in mind before choosing to form an LLC.
Limited Management Options
One of the biggest downsides of operating through an LLC is that you won’t be able to hire employees. As an individual member, you can only manage the day-to-day operations of the company.
LLCs are much more complex than C Corporations. While C Corporation forms are fairly straightforward, LLCs require a lot of paperwork and filing fees.
Unlike C Corporations, which operate at no cost, LLCs need to maintain certain minimum levels of insurance coverage. These costs add up quickly, especially if you plan to do a lot of traveling.
Forming An LLC In Georgia
In order to form an LLC in the state of Georgia, you first need to make sure to file Articles of the Organization directly with the Secretary of your State. Once this is done, you can open an account with the bank where you want to hold funds.
You then need to appoint officers and directors who will run the business. This includes appointing one person as president, secretary, treasurer, and one director.
Finally, you need to select managers who will oversee the daily operation of the company. If you have multiple managers, you should make sure that each manager has equal voting rights.
Steps To Form An LLC In Georgia
To form an LLC in Georgia, you’ll need to follow these steps:
- Get Started – Name Your LLC
- File of Articles of Organization
- Filing For Your Articles Of Organization
- Choosing Your Operating Agreement
- Apply for Employer Identification Number
- Start Operating
Naming Your Georgia LLC
Deciding on a name for your company is an important task. You should take into consideration the following factors:
- Is there any trademark conflict?
- Does the name sound good?
- Do you want to use a brandable domain name?
- Is the name memorable?
- Will the name be used by others?
- Is the name unique?
The name of your LLC must distinguish it from other companies registered with the Georgia Secretary of State. The name may end with the abbreviation “LLC,” “LC” or “L.C.,” but it may not start with those letters.
Your LLC name cannot contain the word “company” or “corporation” or any word suggesting that the company is another kind of business entity. Georgia does not recognize PLLCs as a legal business structure, but it recognizes PCs. Doctors and lawyers can form PCS in Georgia.
Once you narrow down a name, you can go to Georgia’s Business Name Search site to see if the name you want is available.
If it’s available, you can reserve the name for up to 30-days by filling out a Name Reservation Request Form. You’ll need to pay a $25 fee for each name you want to reserve. Make sure you check with a lawyer before using this service.
You can choose any name you want, but make sure it complies with the naming laws in Georgia. Also, make sure you have a separate name for your LLC. The business name must be spelled correctly.
Certain restricted words (banker, lawyer, attorney, etc.) may require more information and licenses.
Deciding On A Registered Agent
Choose a registered agent who is a resident of Georgia. Make sure he/she is available to accept mail during regular business hours.
Your Georgia LLC should have a Registered Agent who receives important tax forms, legal notices, and official government correspondence. This person is also responsible for filing these documents with the State of Georgia.
Georgia requires you to appoint a Registered Agent directly for your LLC. An LLC is a business organization that allows individuals to form a new company. You can choose to register the LLC as a domestic corporation or a foreign corporation.
The LLC is considered a separate legal entity from the individual who owns it. To protect the rights of the owners, the LLC must have a registered agent who accepts legal papers sent to the LLC.
This agent must be located in Georgia. The agent must be on-location and available to receive documents during normal business hours.
You need to select a good registered agent directly for your brand new LLC. This person will accept legal mail and service of papers for the LLC for you.
If you are willing to put your name and address on the public records, and you can maintain normal business hours to accept service in person, you can register as your own registered agent in GA.
To maintain your privacy, many business owners choose to hire a registered agent style service who will put your name and business address on public record instead of yours whenever possible.
Hire a registered agent service also guarantee that you won’t miss important legal notices when you’re away from the office.
Filing Your Articles Of Organization
Until you file your articles of incorporation, your Georgia limited liability company isn’t officially established yet.
Your articles of organization contain basic formation and contact information about your company and authorize your company to operate in Georgia. You can file the Articles of Organization online or by mail, together with a filing fee of 100 dollars.
The appropriate forms for domestic LLCs are those that are organized under the law of Georgia. Compared to other states, Georgia’s articles of incorporation documentation is very short.
All that you need to write down is the LLC‘s name and the signature of the person filling out the forms.
That could be a Member, Manager, Lawyer for the LLC, or another Organizer. Businesses must register before starting operations. To start an LLC or corporation, the owner needs to provide certain documents to the Secretary of State.
These include Articles of Organization, Certificate of Good Standing, and the Transmittal Form. This document is filed when registering a new company. You should file a separate application for each state in which you wish to conduct business. The cost is $225 per state.
Choosing Your Own Operating Style Agreement
In order to protect yourself from lawsuits, you need to draft a certified operating agreement for your company. You may also want to include a simple set of rules or bylaws. These documents are important as they lay out how your company operates.
Your operating agreement will detail who owns what percentage of your business, what happens when the company needs to make a decision, who gets paid first, etc.
This LLC operating agreement provides a clear picture of how the company operates. Ownership rules are laid out. There are provisions for managing the company finances. In addition, there are provisions for resolving disputes among the members.
An operating agreement is important to any LLC because it provides a legal framework for how the LLC should be run. It also helps protect the interests of the owners of the company by outlining who owns what.
Without an operating agreement, a court could decide things differently than what was agreed upon.
The duration of the LLC is three years. The registered agent is listed as the owner of the LLC. The purpose of the LLC is to provide services. There are two members who each contribute $100.00. The LLC is managed by the owner.
All members agree to indemnify the LLC for any claims made against them. Liability is shared equally among the members.
Obtaining An EIN Number
An EIN number is actually strictly a nine-digit style number, the employer identification number is used to identify any businesses for just tax-related purposes and to open bank accounts.
The IRS actually requires that the Sole Proprietorship obtain a brand new one when they are converting straight to LLCs.
An employer identification number is used to identify your company in order to file taxes and open a business bank account. There is also a nine-digit number you must use when filing taxes.
The purpose of this number is to help you file and manage taxes at both the state and federal levels. This number helps you hire employees and open business bank accounts.
When applying for an employer identification number, you must provide proof of legal existence as a corporation. In addition, you must submit a Form SS-4, Application for Employer Identification Number.
While only LLCs that have employees or are taxed as corporates are legally required to have an EIN, pretty much any LLC needs an EIN to open its company bank account.
Having an EIN also helps save business owners from having to give out their social security numbers to vendors and other businesses.
Frequently Asked Questions
Do I Need A Business License?
To operate a business in Georgia, you’ll need to obtain a general license from the city or town. You’ll also need a state taxpayer ID number and workers’ compensation insurance coverage. Like most states, Georgia doesn’t require filing a DBA registration.
But if your business uses a different name than its legal name, then you’ll need to register your business with the county superior court clerk.
Business insurance helps you manage risks. You should buy general liability insurance, business auto insurance, commercial property insurance, and workers’ compensation insurance.
What Do You Need To Know About Tax Requirements?
Taxes for a Georgia LLC depend upon how the LLC’s members choose to be taxed, and whether the LLC chooses to be treated as a corporation or a partnership.
An LLC taxed as a corporation must pay a state corporate tax, but may still report its business income and losses on the individual member’s tax returns. An LLC taxed as either a sole proprietorship or a partnership does not pay any additional taxes. Payroll taxes range from 0.04% – 8.1%.
Georgia LLCs must file an Annual Registration Statement with the Secretary of State. Your business address, registered agent, and registered office must be updated annually.
The filing fee for Annual Registration Statements is $50. Once you register, you need to update your filing every year. You will be charged a fee each time you do this.
You’ll be required to pay sales tax if you sell something within the state of Georgia. To do this, you must first obtain a Seller Permit. This is done online via the Georgia Department of Revenue.
You must register your employees’ unemployment insurance tax if you employ more than 10 people in Georgia. You must register your employer’s withholding tax if you employ more than 100 people in Georgia.
Most LLCs will need to file a partnership return and a separate individual tax return, but some LLCs may choose to file a combined return with their shareholders.
In addition, most LLCs will be required to pay self-employment tax on any earnings made by owners.
The process of starting a new business can be daunting, especially when it comes to getting all the paperwork together. However, once you’ve decided to go through the process, there are many ways to get started. If you’re ready to start a business in Georgia, get started today!