Are you looking to form a limited liability company (LLC) in the state of Georgia, but you’re not sure how the formation process works? There are several important steps when it comes to creating a Georgia LLC that is compliant and able to do business in the state.
What is a Georgia LLC?
The Georgia LLC is one of the most popular business structures in state. It's a more casual and flexible type of business than a corporation, but includes the same personal asset protection you get with a corporation. That means you aren't personally liable for debts or lawsuits against your business. This is a critical protection that is lacking from sole proprietorships and general partnerships.
LLCs in Georgia have simple formation and maintenance requirements, several options for how they can be taxed, and flexible management. From one-person businesses to multi-member LLCs with several owners, the LLC is a popular choice for a reason.
Forming an LLC in Georgia (in 6 Steps)
Step One) Choose an LLC Name
Your LLC’s name is often the first impression you get to make on potential customers, and therefore it goes without saying that this is an important step. There are a few different aspects to take into consideration when selecting a name for your business:
Legalities: In the state of Georgia, every limited liability company is required to have either the initials “LLC” or the phrase “limited liability company” in the name. In addition, you cannot include any words that refer to other business types (like “corporation” or “incorporated”), and you also can’t use words that are typically used to refer to specific kinds of businesses (like “bank” or “law office”).
Explanatory Naming: Another aspect to consider is including language that explains what your business does ― for example, if you’re a plumber, put the word “plumber” or “plumbing” in your LLC name. Additionally, if your business has strong values like being environmentally friendly, you can indicate that by including the word “green.”
Do You Like It?: At the end of the day, this is your business, and you should choose a name that makes you proud. You should also make sure your LLC name both sounds good when spoken out loud, and looks good when written down.
The most important consideration for naming an LLC is to not get too attached to any one business name until you have either reserved the name with the state of Georgia, or you’ve officially formed your business. Georgia makes it easy to see if your desired name is still available: simply search the database of business names at this link. If you’re not yet ready to form your LLC, you can reserve your desired name with the Secretary of State. You can learn more about naming requirements and reserve your name here. Reserving your name gives you 30 days to file your formation documents without losing your business name to someone else.
Step Two) Designate a Registered Agent
Every LLC in Georgia is required to designate a registered agent, which is the individual or registered agent service that receives government correspondence on behalf of your business, then forwards those documents to you.
According to the Georgia Secretary of State,
The registered agent is the “mailbox” for the corporation. The registered agent is the person or entity located in this state designated by the entity to receive any service of process, documents, or other official communication on its behalf. The registered agent may or may not be an owner, shareholder or officer of the entity. Many entities use their attorney or a professional corporate service company for this service. The registered agent’s address must be a street address in Georgia, and the agent must be located at that address.”
Without a registered agent, you could lose your good standing with the state of Georgia, and the state also has the right to dissolve your LLC if they decide to. In a worst-case scenario, the state could fail to alert you regarding a lawsuit against your company, which could even lead to a judgment against your business because you didn’t defend yourself.
Our Recommendation: At the end of the day, we recommend designating a Registered Agent service to handle these requirements. Doing so will help eliminate junk mail and more importantly, keep your personal and/or business address off public record. Incfile and Northwest Registered Agent both offer a free Registered Agent service when you utilize their services to form an LLC. Both are fast and affordable. In fact, they’re the best available.
Step Three) File Formation Documents with State
Once you are ready to form your Georgia limited liability company, you will fill out the articles of organization.
This is THE document that will register your LLC with the state. You’ll want to ensure all of the following information is correct on the form:
- Your chosen business name
- Name and address of your registered agent
- Management style (member-managed or manager-managed)
- Name(s) and address(es) of the LLC’s manager
- Name and address of the LLC’s organizer
- Signature of organizer and registered agent
- Effective date
Cost to Form an LLC: The state of Georgia charges a $100 fee to form an LLC.
Processing Time: It can take up to 12 business days for the state to process your Georgia LLC formation paperwork and get your finalized documents in the mail to you. However, you can elect to pay $100 to expedite your processing; if you do, your filings will be processed in approximately two days. Please note that the estimate of business days begins once ALL required paperwork is in order and filed correctly.
Step Four) Create an Operating Agreement
After you register an LLC in Georgia, create a detailed outline that explains how you will run and manage your new business. Even though it doesn’t need to be filed with the state, put one together and keep it for your records.
When you open a bank account, you may be asked for this document in order to open an account. You’ll also want to keep in mind that any future business partners or managing members may also be interested in seeing your Operating Agreement before joining your company. After all, this document essentially serves as your overall plan for success.
An attorney can help you outline your Operating Agreement or create one from a free template online. You can read more about Operating Agreements here, but some of the basic information you’ll want to have includes:
- Individual members' ownership percentages
- Rights and responsibilities
- Voting powers and meeting guidelines
- Allocation of profits and losses
- Management rules for the LLC
- Provisions for buying a member owner out, or transferring their shares in the case of illness or death
Step Five) Handle Taxation Requirements
The vast majority of LLCs require a federal tax ID number, or EIN. An EIN is basically the business version of a social security number, and it’s used for a variety of important LLC functions.
For instance, you’ll need an EIN if you want to hire any employees, and many banks require them to open business bank accounts as well. You’ll also need one for tax purposes, hence the name federal tax ID number. Get an EIN for your LLC for free through the IRS.
When it comes to state-level LLC taxes, Georgia levies these taxes based on the nature of your business. The most important of these is income taxes. If your LLC is considered a pass-through entity—usually a sole proprietorship or partnership—you’ll pay income taxes on your individual tax returns. However, LLCs which choose to be taxed as corporations will be subject to the state’s corporate income taxes. You can learn more about Georgia’s corporate income taxes here.
Georgia also requires sales and use taxes for businesses in retail. To learn more about filing requirements, deadlines, and tax rates, check here.
Another important tax for Georgia LLCs with employees is withholding taxes. As an employer, you are responsible for withholding these taxes from an employee’s paycheck and paying them directly to the state. You can learn more about withholding taxes in the 2019 Employer’s Tax Guide. Georgia employers are also responsible for funding unemployment insurance through the state’s unemployment taxes. You can learn more about the expectations and regulations for unemployment taxes here. Register for unemployment taxes at this link.
Some other taxes, such as fuel, tobacco, and alcohol taxes may apply to your LLC. You can browse Georgia’s business tax resources here to get a grasp on what items or services have special taxes in Georgia. You can also register for your taxes at the Georgia Tax Center.
Depending on where in Georgia your business is located, you could also need to pay some local taxes. For example, some cities in Georgia require additional sales taxes; you can conduct a sales tax distribution search to see what applies to your business. In addition, you’ll be subject to your city or county’s property taxes, which you can learn more about here. You won’t want to overlook this potentially crucial step.
Step Six) Obtain Business Licenses and Permits
The state of Georgia does not have a general business license that each LLC needs to acquire in order to do business.
However, Georgia upholds the licensure required by the federal government for certain occupations, including agriculture, aviation, and more. Please consult the Small Business Association’s listings for federally-regulated industries requiring licensure.
Georgia’s cities and counties often require licenses and permits for businesses in certain industries. Georgia has a wide variety of these licenses ranging from aviation to boxing to dietetics. There’s a good chance at least one of them applies to your LLC.
We recommend that every LLC owner search through the state database of occupational permits and licenses to identify which licenses they’ll need. You can get more information on county-level licenses at this link.
Would you prefer to have a professional form your LLC?
If you would prefer to have a professional handle the paperwork for you, consider hiring an online incorporation service like LegalZoom and Incfile. To see which is the better option for you, check out our side by side comparison.
Next Steps: What to do After Creating a Georgia LLC
Open a business bank account: We highly recommend that you establish a separate business banking account so that your business and personal finances are maintained completely separate. This is important because it helps protect your personal assets and also makes filing taxes much easier. Once you receive your EIN from the IRS, you’ll be able to use it to establish an account at the bank or credit union of your choice.
Get Business Insurance. Every Georgia business with employees is strictly required to acquire workers’ compensation insurance. For more information on either of these policies, check out the State Board of Worker's Compensation. After you obtain these legally required policies, it’s probably also a good idea to pursue general liability insurance, as well as some industry-specific policies.
Understand income reporting. Income reporting is just what it sounds like – reporting the income you made from your business. It’s important to note that you must file this form whether you made or lost money over the course of the year. The state of Georgia has several forms based on how your business is set up that you can access depending on how you’re taxed. Sole proprietorships fill out Form 500, partnerships file Form 700, and corporations file Form 8453S.
Understand annual reporting. Georgia is unique in its annual reporting system; technically, it doesn’t require an annual report. That said, the state requires an annual registration each year. This form must be filed online or by mail. There is a $50 filing fee. You can get started here.
Find an accountant. We don’t recommend that you attempt to manage your business finances without the help of a professional. There is too much room for error, and a professional can ultimately save you time and money by guiding you on how best to manage your business finances. At a minimum, enlist professional help to set you up with software and the steps for keeping up with your finances on a regular basis. Then, consult back with your accountant at least a couple of times per year – and especially at tax time – to ensure you’re keeping track of everything correctly.