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Starting a Limited Liability Company (LLC) in Georgia can be an exciting venture for any entrepreneur. This article is designed to guide you through the process of forming an LLC in the Peach State, from how to name your business to understanding the costs and benefits involved. Whether you're an experienced business owner or new to the entrepreneurial world, it's crucial to understand how to navigate the formation of an LLC.
As we dive into the details of how to start your own business, remember that creating an LLC is about more than just paperwork; It's about building a stable and profitable business that you can rely on.
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How to start an LLC in Georgia in 7 steps
01. Pick your business name
The first step in starting a business in Georgia is choosing a name for your LLC. This is more than just a creative process; it is also legal. Your business name should be distinctive and not the same as or too similar to other names on file with the Georgia Secretary of State. To meet state regulations, your chosen name should conclude with "LLC," "L.L.C.," or "Limited Liability Company."
To create a business name that stands out and meets legal requirements, follow these steps:
Use the Georgia Secretary of State's online database to search for existing business names.
Avoid restricted words that could confuse your LLC with a government agency (e.g., FBI, Treasury).
Conduct a domain search if you plan to also focus on making a website.
Tip: If you're having trouble coming up with a unique name for your business, consider using a business name generator.
02. Choose your registered agent
Every LLC in Georgia must have a registered agent, an individual or company that agrees to accept legal papers on behalf of your LLC. Your registered agent must be available during regular business hours and have a physical address in Georgia.
To choose the right registered agent, consider the following factors:
Make sure they are dependable and can handle confidential documents.
They should be consistently available at the listed address during business hours.
Verify that they meet all legal requirements set by the state of Georgia.
Need help setting up your LLC? Wix has partnered with LegalZoom, the No. 1 choice for online business formation to help you start, run and grow your business.
03. Obtain state business permits
Depending on the nature of your business, you may need specific permits or licenses to operate legally in Georgia. These could range from general business licenses to industry-specific permits.
To obtain the necessary permits in order to register your business, follow these steps:
Check with local and state agencies to determine what exact permits you need.
Fill out all required paperwork accurately and submit them to the appropriate authorities.
Be prepared to pay any associated fees for obtaining your permits.
Let’s say you want to start a party planning business in the state. First, you’ll need a business license from the Georgia Secretary of State. You may also need additional permits or licenses depending on the type of events you plan to organize, such as alcohol permits if your events will include alcohol sales.
Learn more: How to get a business license
04. File Articles of Organization
The Articles of Organization is a critical document that officially creates your LLC in Georgia. You'll file this with the Georgia Secretary of State, either online or by mail, along with the required filing fee.
The process of filing includes the following key steps:
Gather your business information: You'll need details like your LLC's name, registered agent information and management structure.
Fill out Form CD 030: This is the specific form used for filing an LLC's Articles of Organization in Georgia.
Submit and pay fees: Complete the submission process by paying the $100 filing fee.
05. Draft your LLC operating agreement
An operating agreement outlines the ownership structure and operating procedures of your LLC. This internal document outlines ownership structures, member roles and operational procedures for your type of business.
Here’s why an operating agreement is important:
Clarifies business rules and guidelines: It sets clear expectations for members regarding operations and conflict resolution.
Protects LLC status: Helps maintain limited liability status by proving that your LLC is a separate business entity.
Prevents misunderstandings: Reduces potential disputes among members by detailing policies and procedures for how the business should be run.
06. Apply for an EIN and pay relevant taxes
An Employer Identification Number (EIN) is necessary for hiring employees, opening bank accounts and filing taxes. Here's what you'll need to do to secure one:
Apply online or via mail: The IRS provides free EIN registration through their website or via mail submission.
Understand your business tax obligations: Learn about state-specific taxes that apply to your LLC, such as franchise tax or sales tax. In Georgia for an LLC owner this includes a 15.3% self-employed tax (12.4% social security, 2.9% Medicare). For more information, visit the Georgia Department of Revenue website.
07. Organize annual reports
Georgia requires LLCs to file annual reports to keep their information up-to-date with the state. These reports include current contact information and details about your business operations over the past year. Filing an annual report ensures that your LLC remains in good standing with the state government.
To ensure you’re compliant with this make sure to:
Know due dates: Your Georgia Annual Report is due by April 1st of each year it's due, but may be filed as early as January 1st.
Maintain proper records: Keep accurate records throughout the year to simplify report preparation when due dates approach.
Submit and pay fees: Complete the submission process by paying the $50 filing fee.
In addition to taxes, just about every LLC is required to file an annual report, which includes basic legal information and activities from the previous year. You may owe filing and renewal fees along with your report. Tax season is also a good time to make sure that your registered agent, licenses, and permits are all set for the upcoming year. Shylene D’Addario, VP and associate general counsel at LegalZoom
How much does it cost to start an LLC in Georgia
The cost of starting an LLC in Georgia is relatively modest, but it's important to be aware of all the potential fees involved in the process. Here's a breakdown of the costs you can expect:
Filing fee for Articles of Organization: The state of Georgia requires a fee when you file your Articles of Organization. This is a one-time cost that is mandatory for all new LLCs. For an LLC it costs $100.
Registered agent fee: If you choose to hire a professional registered agent service, they will charge an annual fee for their services.
Business permits and licenses: The cost for these will vary depending on the specific requirements of your business and industry.
Annual report fee: There's an annual fee for filing your LLC's annual report with the state of Georgia. It's $50 a year.
Legal or financial consulting fees: If you seek professional advice during the formation process, these services will add to your startup costs.
Domain registration and website creation: Establishing an online presence via a website is crucial in today's market. Costs here include domain registration and potentially hiring a web designer or using a website builder like Wix.
Business insurance: Depending on your industry, you might need various types of insurance to protect your LLC.
Learn more: Cost to start an LLC
Who can start an LLC in Georgia
To form an LLC in Georgia, there are specific eligibility criteria that need to be met. It's crucial to understand who can start an LLC in the state before you begin the process.
Age requirement
You must be at least 18 years old to form an LLC in Georgia.
Residency
There is no requirement for residency in Georgia; non-residents can also start an LLC in the state.
Legal status
You don't need to be a U.S. citizen or permanent resident to form an LLC in Georgia.
Number of members
Georgia allows single-member LLCs as well as multi-member LLCs. There's no maximum number of members.
Restricted businesses
Certain types of businesses may require additional licenses or may be subject to restrictions. It's important to check if your business type has any specific requirements.
Benefits of starting an LLC in Georgia
Forming an LLC in Georgia provides business owners with a variety of advantages that can be appealing. These include legal protections and tax benefits, making it a top choice among entrepreneurs.
Learn more: Benefits of starting an LLC
Limited liability protection
As the name suggests, owners (members) of an LLC have limited liability, meaning their personal assets are protected from business debts and lawsuits.
Launching your business as an LLC is a great way to separate your business from your personal assets. Should your company face a lawsuit, an LLC can protect your home, car, or personal bank account from being impacted. Shylene D’Addario, VP and associate general counsel at LegalZoom
Pass-through taxation
LLCs typically benefit from pass-through taxation where profits are only taxed once on the members' personal tax returns, avoiding the double taxation faced by C Corporations.
Flexibility in management
Unlike corporations, LLCs have fewer formalities and can be managed by the members or appointed managers, providing flexibility in how the business is run.
Ease of formation and compliance
Compared to other business entities, forming an LLC in Georgia is relatively straightforward, with fewer formalities and compliance requirements.
Credibility with customers and partners
Having 'LLC' after your business name can enhance your credibility with potential customers, suppliers and financial institutions. You can then choose an .llc domain for your website to reinforce this credibility.
Disadvantages of starting an LLC in Georgia
When thinking about setting up an LLC in Georgia, it's good to think about the pros and cons. Knowing these drawbacks will help you decide if an LLC is the best fit for your business. Here are some hurdles you might face with an LLC in Georgia:
Members of an LLC may be subject to self-employment taxes on their share of the profits.
Georgia requires LLCs to file annual reports along with a fee which is an ongoing cost for maintaining your LLC.
If you plan to seek outside investors or go public in the future, the LLC structure may limit your options compared to a corporation.
Why start an LLC over another business entity?
Choosing the right business structure is crucial when starting a business. In Georgia, forming an LLC is often preferred due to its unique advantages. But it's important to compare it with other types of business structures to understand why an LLC might be the best choice for your situation.
Here's how an LLC stacks up against other business entities:
Sole proprietorship: Unlike a sole proprietorship, an LLC provides personal asset protection, separating your personal liabilities from those of your business.
Partnership: An LLC offers more protection for each member compared to a partnership, where each partner can be personally liable for the debts of the business.
Corporation: While corporations also provide limited liability protection, they’re also subject to double taxation (taxes on both corporate profits and shareholder dividends). An LLC avoids this with pass-through taxation.
You've formed your LLC in Georgia, now what?
After successfully forming an LLC in Georgia, your journey of building and growing your business is just beginning. There are key steps you need to follow to ensure your LLC operates smoothly and complies with state regulations. Here are the next actions to consider post incorporating your LLC:
Open a business bank account
Keep your personal and business finances separate by opening a bank account solely for your LLC. This will simplify accounting and tax filing.
Obtain business insurance
Protect your new business with the appropriate insurance policies. Common options include general liability insurance, professional liability insurance and property insurance.
Comply with tax requirements
Understand and fulfill your federal, state and local tax obligations. This may include paying estimated taxes quarterly if you expect to owe tax of $1,000 or more when you file your return.
Develop a strong brand identity
Create a logo with a logo maker, establish a brand voice and build a professional website to present a cohesive image to customers.
Implement a good accounting system
Good financial management is essential for any business. Set up an accounting system that allows you to track expenses, profits and financial growth accurately.
Looking to start an LLC in a different state?
How to start an LLC in Georgia FAQ
How long does it take to form an LLC in Georgia?
The time it takes can vary. Online filings can be processed quickly, sometimes in as little as 7 business days, while mailed applications may take several weeks.