Are you about starting a business in Georgia and want to form an LLC? If YES, here is the legal requirement to start an LLC in Georgia and how much it cost. Georgia is a unique and lucrative place to start a business in the United States. Georgia over the years have become an innovator’s dream due to it’s growth into one of the main technical hubs in the U.S. with access to international trade and the world’s busiest airport (Atlanta).
Also with great universities, access to talent and a rich culture helps to establish the perfect backdrop for successful business ventures. This state is already home to the headquarters of the most famous brand in the world (Coca-Cola); other businesses, including The Home Depot, UPS, Delta and SunTrust, are also proud to call the state home. Note that for most entrepreneurs, the fastest and easiest way to start a business in Georgia is by creating a Georgia LLC.
A Limited Liability Company (LLC) is a type of business entity that’s perfect for start-ups and small- to medium-sized businesses. You will benefit from the advantages and protections of larger Georgia corporations but with much simpler rules and regulations.
Over the years, LLCs have grown in popularity for many reasons but that does not mean an LLC is always the best choice. Understanding some of the reasons people choose LLCs can help entrepreneurs decide if this is the right structure for their new businesses.
It’s very important to say that simplicity may be one of the key benefits that attract people to the LLC structure. Experts explain that from both a day-to-day operational and a taxation perspective, the paperwork and logistical requirements of an LLC are generally much less onerous than those associated with corporations, especially C corporations. It also includes an easier process whereby new members or partners may be added to the business. Also, when it comes to taxation, LLCs offer great flexibility.
Instead of both the business and the members given taxes, only the members pay taxes. This is why LLCs are called pass-through entities because tax liabilities are passed through the company to the individual members. Also, members who work in an LLC business can also deduct business losses on their personal tax returns which may help them reduce their tax burdens.
An LLC can also choose to be run as a Limited Liability Company but taxed like a C or S corporation. This may offer the owners benefits when it comes to Social Security or other employment-related taxes and deductions. If you plan on starting a business in Georgia, it’s advisable that you form your business as an LLC to reap the various benefits of this structure. Below are the various stages of forming an LLC in Georgia, if you’re interested.
A Detailed Guide to Starting an LLC in Georgia and the Cost
- Create a Name for Your LLC
Have it in mind that Georgia LLCs must contain one of a number of designators in their name: “limited liability company” or “limited company,” which can be abbreviated, or “L.L.C.,” “LLC,” “L.C.,” or “LC.” The name you choose must be unique; that is, it must be different from the names of every other business entity that is formed in Georgia or has been authorized to do business in Georgia.
Note that the name cannot be longer than 80 characters, including spelling and punctuation. Names may be checked for availability by searching the Corporations Division business name database. You may reserve a name for 30 days online or by filing a Name Reservation Request form. The reservation fee is $25.
- Choose a Registered Agent
A registered agent is a person or business entity responsible for receiving important legal documents on behalf of your business. Your registered agent is more like your business’ point of contact with the state. Every Georgia LLC must have an agent for service of process in the state.
A registered agent may be either an individual resident or business entity that is authorized to do business in Georgia. The address that a Registered Agent uses must be a street address located in Georgia. Note that the state of Georgia does not allow the use of PO Boxes. If your Registered Agent will be a person, that person must be a resident of Georgia.
- File Articles of Organization and Transmittal Form
Immediately you’ve gathered all the information for your Georgia LLC, you’re mandated to file a formal document with the GA Secretary of State. This document is known as your “Articles of Organization,” and filing the document creates your Georgia LLC.
A Georgia LLC is established by filing Articles of Organization with the Georgia Secretary of State Corporations Division Corporations. The articles must include the LLC’s name and, optionally, the names and addresses of the LLC’s managers. The filing fee is $100. The articles of organization can be filed online or by mail. Also, if you file by mail, you must also file a completed Transmittal Information Georgia Limited Liability form.
The form must include: the LLC’s name and address; the name and address of the person filing the articles; all the organizers’ names and addresses; and the LLC’s registered agent’s name and address. If filing by mail, you must send 2 copies of the Articles of Organization. Only 1 copy of the Transmittal Form is needed though. Disregard this if you are filing online.
- Compile an Operating Agreement
An operating agreement is simply a written or oral agreement that is meant to govern the affairs of your LLC. This agreement will bind the LLC, whether or not it is actually executed. This agreement can also provide rights to people who are not members of the LLC.
An LLC Operating Agreement is essentially an agreement between the owners (called “members”) of an LLC. It spells out who owns the business, how much each person owns, how profits are split, how taxes are paid, and more. Note that even if your LLC has 1 member (called a single-member LLC), it’s still advisable that you draft an Operating Agreement. This helps keep the liability protection granted by the LLC.
- Obtain an Employee Identification Number (EIN) From the Internal Revenue Service
Note that you will need an EIN to identify your business to the IRS. You use this number when filing and paying taxes or when submitting payroll information and payments for your employees. An EIN can be obtained in 1 of 3 ways: by mail (using Form SS-4), by fax (the number is 855-641-6935), or via the online application (the fastest and preferred method).
Meanwhile, if you are not a US citizen or you don’t have an SSN (social security number), you can still get an EIN from the IRS. You just can’t get it via the online application. Instead, you’ll need to mail or fax Form SS-4 to the IRS and enter “Foreign” on line 7b.
But if your LLC is owned by another company or another LLC, you cannot obtain an EIN online (the system will give you an error message). But, you’ll need to mail or fax Form SS-4 to the IRS. It is recommend that you use faxing as the approval time is much faster (days vs weeks).
- File Annual Registrations
It’s very necessary to note that all LLCs doing business in Georgia are mandated to file an annual registration with the Secretary of State and pay a $50 filing fee. The first Annual Registration is due between January 1st and April 1st of the year after your LLC’s year of formation.
Although the Georgia LLC Annual Registration fee can be filed online or by mail, the state prefers online fillings as they are faster and more convenient. There is a $25 late fee if you submit the Annual Registration Fee after April 1st. And continually ignoring this requirement is a bad idea for you and for your business.
The state will soon administratively dissolve (shut down) your LLC. Note that once you successfully make payment and submit your report online, you’ll be able to download a receipt in the eCorp dashboard. You will also receive an email from the state with your receipt.
Forming an LLC in Georgia is more or less advised because it provides entrepreneurs with the exact same limitation of liability as a corporation, but with less complexity. But have it in mind that the business licenses and/or permits your Georgia LLC needs will depend on your location and the industry you plan to engage in.
Meanwhile, to know more about these requirements, contact the city, town or county where your LLC is located and the government agencies that regulate your LLC’s industry. LLCs in Georgia (and all states for that matter) have “pass through” taxation, meaning the income/losses from the LLC will be listed on a Schedule C, which is a part of your personal tax return (Form 1040) filed with the IRS.
Note that after your LLC is formed, you should register with the Georgia Department of Revenue (DOR). You will also likely need to register your LLC for tax purposes with your local municipality (county, city, town, etc.).