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So you want to start a business in the state of Georgia but don’t know where to begin? As a first step, you’ll want to learn about LLCs. They’re one of the most common business types people choose when they’re establishing a new venture. This step-by-step guide will help you along the journey of forming your LLC in Georgia, one of the most dynamic markets in the country. From the idea stage all the way to paying the proper taxes after your business is already up and running, this blog will be your launch pad.
How to start an LLC in Georgia
What is an LLC?
A limited liability corporation (LLC) is a business entity that accounts for more than a third of all businesses in the United States, according to the National Small Business Association. The LLC provides liability protection for the business owners, meaning they are not financially responsible for legal claims brought against the business.
LLC owners are known as “members.” LLCs formed by one owner are called single-member LLCs, and LLCs formed by more than one owner are called multi-member LLCs.
Is an LLC right for you?
LLCs have a number of features that might make owning and operating one right for your Georgia business. Ask yourself two important questions when considering the LLC business structure:
- Do you have personal assets in need of protection? If so, creating an LLC helps you avoid having to forfeit personal assets if your company fails or is subject to legal damages. These protections can extend to creditors too—they can’t collect on any assets outside of the business to recoup losses.
- Are you looking to limit your tax liability? Unless your LLC elects to be taxed as a C corporation, it is considered a “pass-through” entity—meaning your company’s profits skip federal corporate taxes and are instead taxed a single time at the personal-income level of the LLC’s members. At the state level, Georgia tax authorities collect corporate income tax and net worth taxes on all businesses taxed as corporations.
1. Choose an idea for your LLC
The first step needed to form your LLC is deciding what kind of business you want to be. Are you looking to sell a product, or provide a service? Are you manufacturing a product, providing a direct service, or merchandising the products and services of other businesses? Once this crucial aspect of your plan is settled, you’ll then need to perform a market analysis to ensure there is sufficient demand for what you’re marketing, and whether you have a competitive edge.
2. Name your Georgia LLC
Naming your LLC is key to customer recognition. You should decide on a name that clearly communicates what it is your business does. It should be short and sweet, catchy and memorable—but it also needs to align with your business mission. There are also specific rules for naming your LLC in Georgia that you’ll have to follow:
- Your LLC’s name must contain the phrase “limited liability company,” or a variation of its abbreviation (LLC or L.L.C.).
- Your name may not include words that could cause anyone to confuse your LLC with a government agency, such as the US State Department or Georgia Department of Revenue.
- Some words may only appear in companies that bear the proper licenses or are run by members who hold them—for example, if you want to form a law firm as an LLC with the words “Attorneys at Law” in your name, you will need to form a PLLC, or “professional” LLC, which follows the same steps as a regular LLC but with documentation indicating that the members or law partners are all licensed lawyers.
- You will have to conduct a search with the Georgia Secretary of State’s Business Entity Search to ensure the name you desire is not already being used by another company.
3. Create a business plan
A workable business plan will cover all the basics: an org chart, a market analysis, and sub-plans for marketing, logistics, and finance.
4. Get a federal employer identification number (EIN)
A federal employer identification number (EIN), also known as a federal tax ID, is a nine-digit number assigned to new organizations by the IRS for tax purposes. It functions similarly to an individual's Social Security number. Having an EIN will help you stay organized when you file your taxes, keep your business in tax compliance, and allow you to get lines of credit. It will also let state tax authorities identify your business and adequately assess your Georgia LLC’s liability. You can apply for an EIN for your Georgia LLC on the IRS website by clicking “Limited Liability Company.”
5. Obtain your Georgia certificate of formation
To formally establish your LLC in Georgia, you must file articles of organization—a document that officially details basic information about your business. You can prepare articles of organization and file them with the Secretary of State’s Georgia Corporations Division.
The process entails filling out a form that can be filed online or by mail. You will have to provide your LLC name, business email address, principal mailing address, the name and address of the filer, the name and address of your registered agent, and the names and address of all other LLC members.
The secretary will review the filing, and if the articles are approved, your LLC becomes a legal business entity in Georgia. You will then receive a certification of formation.
6. Choose a registered agent in Georgia
Georgia requires that your LLC appoint a registered agent—a person or entity authorized to receive legal service of process and other official documents on your business’ behalf. A registered agent can be a person (such as yourself or an employee of your LLC), or an entity that offers registered agent service. Such agencies must have an address in Georgia and be on site and available during regular business hours to accept documents on your behalf.
7. Obtain business licenses and permits
To operate an LLC in Georgia, you will need to obtain a general business license from the city or county you’re operating in. Certain industries, such as liquor or tobacco, will require additional licensing. To find out who regulates business licenses in the county or city where you’ve set up your LLC, you can contact the Georgia Chamber of Commerce or use the Georgia Municipal Association’s handy search tool.
8. Understand Georgia tax requirements
For tax purposes, Georgia treats LLCs as sole proprietorships for single-member LLCs andpartnerships for multi-member LLCs. This means the state taxes earnings at LLC members’ personal income levels unless the LLC has elected to be taxed as a corporation. As mentioned above, Georgia collects corporate income taxes on all corporations in Georgia.
Other special taxes to be aware of in Georgia include:
- Taxes on film productions. Qualified productions in Georgia can get an income tax credit of up to 20% of earnings. These can include feature films, television series, documentaries, commercials, or music videos—independently funded or produced by big studios.
- Motor fuel tax. If you run a gas station or any other business that dispenses fuel, you’ll have to be sure to apply this tax to your customers’ purchases.
- Alcohol and tobacco taxes. These apply to purchases from retail shops or purchases from distributors. If you own a restaurant or bar, you won’t have to apply a liquor tax to your customer’s bill.
- State hotel-motel fee. These are applied to bookings at any hospitality business, big or small, in Georgia.
If your Georgia LLC plans to hire employees, you will need to withhold taxes from their wages to pay the state, as well as pay the whole cost of unemployment insurance benefits. If your business regularly employs at least three employees, including those who work part time, you will also need to pay workers’ compensation insurance. Retail LLCs should also figure sales taxes into their financial plans. The sales tax in Georgia for non-excise (heavily regulated) goods is currently 4%.
9. Prepare an operating agreement
An LLC operating agreement is a legal document that outlines the manner in which your Georgia LLC will conduct business. It may detail, without limitation:
- Your LLC’s name and primary address
- How long you intend to operate the LLC
- Information regarding the LLC’s registered agent
- Information about the above articles of organization
- The business’ purpose and mission statement
- An organizational chart, listing members and their respective investments in the LLC
- The manner in which profits and losses will be divided between the members
- The process for admitting new members and offboarding outgoing ones
- An overall management plan for the LLC
- Various indemnification and liability provisions
An operating agreement is not required in order to start an LLC in Georgia. But it’s nevertheless extremely useful to have a document that memorializes an LLC’s rules and procedures, both for the sake of organization and internal accountability.
10. Examine business insurance options in Georgia
Business insurance helps protect your LLC and personal assets in the event something with your company goes awry. Some common kinds of insurance favored by Georgia businesses include:
- Liability insurance: Covers your business for any legal actions resulting from accidents, injuries, or negligence.
- Commercial property insurance: Protects your business from costs associated with fire or weather damage, or theft.
- Professional liability insurance: Protects manufacturers, wholesalers, distributors, and retailers from liability in connection with unsafe products.
- Cyber liability insurance: Protects Georgia businesses from costs associated with suffering a data breach.
- Umbrella insurance: Helps cover anything that may exceed policy limits on other insurance plans.
The only two kinds of insurance that are required of a Georgia LLC are, as previously mentioned, worker’s compensation insurance should your LLC employ at least three people, and commercial auto insurance for any vehicles used in connection with your business.
11. Understand financial considerations
Aside from buying a thorough insurance plan or plans, you will probably want to make a number of business investments to get your Georgia LLC up and running. This could be renting a brick-and-mortar retail location, building a professionally developed website, running ad placements, buying raw materials and/or equipment, or subscribing to payment processing software and accounting programs. You may also want to hire lawyers, accountants, or other specialty professionals that can be helpful when starting and operating a small business.
12. Market your LLC
Successfully marketing your LLC in Georgia requires that you identify and develop your brand. A brand is more than just a catchy name and eye-catching logo—it’s the idea of your business that occupies peoples’ minds. Important branding and marketing elements include:
- Brand logo. An effective logo expresses your LLC’s function and mission.
- Company colors and fonts. Working within a set, limited group of colors and fonts creates brand cohesion, and by extension, easier recognition for your LLC.
- Visibility. No brand in 2022 is successful without a robust web presence. This is more than just a functional website—consider investing time and resources into building out your LLC’s social media presence as well.
Starting an LLC in Georgia FAQ
How much does it cost to start an LLC in Georgia?
Starting an LLC in Georgia costs, at minimum, $110, which is the fee required to file your articles of organization with the Georgia Secretary of State. An additional annual fee of $50 is charged thereafter.
Do you need a registered agent for your LLC in Georgia?
Yes, all LLCs incorporated in Georgia must name a registered agent with an in-state address.
How do state taxes for work LLCs in Georgia?
Unless LLCs elect to be treated as corporations, state taxes are applied to them in the same way federal taxes are: one time, at the personal income levels of its members. Georgia applies an LLC tax on all LLCs taxed as corporations of 6%.