Creating a new business or starting a business in a different state is always exciting. And if you’re reading this then you’ve either decided to start a Limited Liability Company (LLC), or you’re thinking about starting an LLC in Georgia. Congratulations!
I’m going to give you a thorough explanation of how to form an LLC in Georgia, but first I’m going to give you an overview of what a Limited Liability Company (LLC) is and go over some of the benefits of starting an LLC so that you can decide if a Georgia LLC is the right business structure for you.
(If you want to skip to the ‘how to form an LLC’ section, click here)
Table of Contents
What Is A Georgia LLC?
A Georgia LLC is a Limited Liability Company formed in the state of Georgia that is governed by the laws, regulations, and statutes of the state of Georgia.
Why choose An LLC?
You’ll likely find that there are many advantages to forming an LLC in Georgia rather than choosing another business structure. But here are the three main benefits that typically sway small business owners’ decisions about what sort of business entity they want to form.
1. Limited Liability And Asset Protection
The first benefit that we’ll discuss is arguably the most important to many business owners: personal liability protection and asset protection. The owner of an LLC in Georgia cannot be held responsible on a personal level for the debts and liabilities of their LLC.
If your Georgia business is to declare bankruptcy or be sued and it happens to be an LLC then the creditors of your Limited Liability Company can’t come after your personal assets in order to seek legal compensation for the debts of your LLC. As an LLC owner, you will have personal liability protection as well as asset protection which means that things like your house, car and personal bank account funds are all protected.
We’ve seen a lot of unexpected calamities over the past few years in America (like wildfires, hurricanes, floods, horrible winter storms and a global, viral pandemic, just to name a few), so we’ve learned that even the most successful businesses can be toppled overnight by an unexpected event. Because of this, many small business owners place a lot of importance on the personal liability protection and asset protection that a Georgia LLC can provide. Even if your business in Georgia fails, you’ll still be able to keep your assets which is just enough security to provide peace of mind to many business owners.
The second benefit of forming an LLC in Georgia is the privacy and protection of your personal information you can choose to utilize.
Unfortunately for everyone, cyber criminals have become adept at what they do over the past decade. With the smallest most seemingly insignificant bits of information they can quickly steal your identity and thousands of dollars in debt in your name.
If you were to choose a different business structure such as a sole proprietorship or a sole trader, you would be forced to register your information with the Georgia Secretary of State on the public record for everyone to see. This means that cyberpunks and scam artists can easily access your information simply by searching the Secretary of State’s website.
However, forming an LLC in Georgia means you have the option to protect your information and keep it off of the public record away from criminal eyes.
As an LLC owner in Georgia protecting your information is a simple as hiring an LLC formation service. An LLC formation service will register their own information with the Georgia Secretary of State rather than your own so that their information is put on public record. This is a win-win situation because you still maintain ownership of your LLC while also protecting your personal information.
The last benefit of forming an LLC that I will discuss are the taxation benefits that LLCs receive.
The tax benefits of LLCs are most significantly seen when compared with corporations. You see, corporations are subject to what is known as “double taxation”.
You may ask what double taxation is, so I will explain. A corporation’s profits are taxed at special corporation rates and dispersed shareholders as dividends which are taxed differently from personal income. Therefore, a corporation’s profits are taxed twice before they even make it to the shareholders which is why it is called “double taxation”.
If you form an LLC in Georgia you won’t be bothered with “double taxation”.
Taxation for an LLC in Georgia works differently from taxation for a corporation in Georgia. All profits from a Limited Liability Company are taxed at any rates (not corporate rates) and are then dispersed to LLC members as personal income (not dividends). In this way profits from your LLC are not taxed twice before you even get your hands on them the way they are with a corporation.
But wait, there’s more!
Avoiding “double taxation” is not the only tax benefit that an LLC in Georgia will receive. In 2017, the Tax Cuts and Jobs Act was established and provided LLCs with a tax benefit known as the Qualified Business Income Deduction (QBID). QBID provides a 20% tax deduction that is exclusive to LLCs.
How To Start An LLC In Georgia
Now you should know what an LLC is as well as the reasons to start an LLC, so we can now discuss how to form an LLC in Georgia. If you still believe that a Georgia LLC is right for your business then keep reading to learn the five steps you will need to take to form an LLC in Georgia.
*IMPORTANT* If you would like a guide to help steer you through the sea of red tape, mountains of paperwork, and neverending form filing associated with LLC formation then I have a bit of good news for you. There are professional services in Georgia that are designed to help with exactly this process. They’re called LLC formation services.
The fees charged by LLC formation services start as low as $0 plus state filing fees. (However, my favorite LLC formation service is ZenBusiness and they charge $49 plus any state filing fee you incur.) LLC formation services will help you obtain and file each document necessary to establish your Georgia LLC.
If you’d like a helping hand to direct you as you form your Georgia LLC, check out my guide on the Best LLC Service.
1. Obtain Articles Of Organization Form
The first thing you need to do is to get your hands on an Articles of Organization form from the Georgia Secretary of State Corporations Division.
You can get a PDF Articles of Organization form here.
Once you’ve filled it out, you’ll submit it to the Georgia Corporations Division.
Because the Articles of Organization is the primary form you’ll need to file, the rest of the steps will refer to this form.
2. Choose Your Business Name
The first bit of information you’ll input on your form is the name of the LLC.
Regrettably, you cannot simply jot down the first LLC name you think of on this line. One of the Georgia Secretary of State’s laws regarding businesses is that each one must have a different business name. To comply with this law, you’ll have to ensure that you aren’t using an LLC name that someone else is already using for their business.
You can check to see if the desired name of the LLC is available by using the business name search on the Georgia Secretary of State’s website.
If the name you want has already been taken, you can use a suffix like “LLC” or “L.L.C.”. Adding suffixes to the end of your LLC name is a bit like adding numbers to the end of an online username when you’ve discovered that the one you originally wanted is unavailable.
Once you’ve created a unique name for your LLC, you’ll need to file a Name Reservation Request form. You can submit the form online or by mail. If you submit the request form online the filing fee is $25, while the filing fee for submitting the form by mail is $35.
If you don’t like the officially registered LLC name you’ve created, don’t worry. You can register for what is known as a Fictitious Name, Trade Name or DBA Name (Doing Business As).
This trade name is the name that you’ll use for your Georgia LLC and will show to the world via signs, advertisements, flyers and more. You’ll need to register your trade name with the Clerk of Superior Courts in your county. You can check this link to find the appropriate Clerk for you here.
3. Choose A Georgia Registered Agent
Every Georgia LLC must have what is known as a “registered agent”.
A registered agent in Georgia is someone who will be available on business days during business hours to receive mail from official government agencies (like the Georgia Corporations Division), as well as important legal documents and notices (like service of process) on behalf of your business in Georgia, as a registered agent must.
You have two options available to you when it comes to choosing a registered agent for your business: you can either take on the task of registered agent yourself or use a registered agent service. I’ll list the pros and cons of both below.
If you choose to become the registered agent for your Georgia LLC then you’ll need to register your name and address with the Secretary of State Corporations Division which means that your personal information will be put on the public record. This totally negates the protection of your personal information you can receive when you form an LLC and also use an LLC formation service. It leaves your information vulnerable to people who would use it for criminal purposes.
Being a registered agent in Georgia will also take up a lot of your time and it’s a lot of work. You have to be available during normal business hours on business days to accept mail and service of process for your business. The unfortunate thing here is that most LLCs also operate during normal business hours on business days, and you can’t be in two places at once.
Missing a service of process or important mail correspondence from a government agency like the Georgia Corporations Division could be catastrophic for your Georgia LLC. If you miss a service of process your company could be sued and you’ll have no way to defend yourself. And if you miss something from the Corporations Division, you could land yourself in legal hot water for not adhering to Georgia state laws regarding registered agents for LLCs, which could threaten your “good standing” status.
The only real upside to taking on the role of registered agent for your company yourself is that you won’t have to pay any registered agent fees to a registered agent service.
However, by using a professional registered agent service you are practically guaranteed to receive any mail, correspondence, or service of process that is sent to your business and you can rest assured that your personal information will remain protected as well. Registered agent service fees range between $99 – $299.
Because there are so many risks involved with taking on the role of being your own registered agent for your business, it’s well worth the cost of hiring a registered agent service simply for the peace of mind that comes with knowing that a professional service is handling this task for you. When it comes to new LLC owners, I always recommend that they use a registered agent service.
If you’re interested in decreasing your workload while also keeping your personal information protected, click here to read my guide on the best registered agent in Georgia.
4. Choose Your LLC Address
The name of your LLC is not the only important information that you will have to include on this form. The address that you add to this form is just as important as the name you enter for your LLC because, just like the name, the address will also be registered with the Secretary of State and put on the public record for anyone to find. The address that you attached to your Articles of Organization form is also the address where you will receive mail for your Georgia business.
If you have decided not to use a registered agent service you could enter the physical street address of your business here. However, if your business does not have a physical street address, you’ll be forced to use either your home office address or your personal home address. No matter which address you choose to use, you cannot use a PO Box address on your Articles of Organization form.
If you have decided as a registered agent service then your registered agent will register their address with the Georgia Secretary of State to be listed on the public record. Furthermore, it will be an address that cannot be traced back to you or your home address and therefore keeps your personal information and you safe.
5. Sign And File Your Articles Of Organization
Once you have filled in each section of your form and checked multiple times to make sure that the information you have input on the form is accurate, it is now time to sign and file your Articles of Organization form.
You can sign and file form yourself, but it would register your information with the Secretary of State to be put on the public record. If you use an LLC formation service, they will sign and file the form on behalf of your business in the state of Georgia.
You have two options when it comes to filing your articles in Georgia. If you choose to file your articles by mail then you will need to attach payment for the $100 filing fee by check or money order as well as a transmittal form.
The transmittal form asks for several bits of information such as the LLC’s name, the email address for the LLC and the name and address of the person signing and filing the Articles of Organization. You can get the PDF document for the transmittal form here.
Once you have gathered all of the necessary attachments can mail your articles to the following address:
Office of the Secretary of State
2 Martin Luther King Jr. Dr. SE
Suite 313 West Tower
Atlanta, Georgia, 30334
You also have the option to submit your form online along with the payment for the filing fee. You can pay the filing fee online with a credit or debit card. Click here for the link to file online.
After you have filed your Articles of Organization form Secretary of State will contact you by mail or email once they have processed your forms and payment. The filing process can take weeks if it was submitted by mail and a few days if it was submitted online. For faster processing you can either pay for expedited processing through the Secretary of State or an LLC formation service.
Other LLC Activities
Once your LLC is formed there are a few activities you must partake in so that your business entity remains in compliance with Georgia law. However, these activities have nothing to do with LLC formation. Here are just a few of the activities that you may have to take part in for your Georgia state LLC.
According to Georgia law every LLC in the state of Georgia must file an annual report which is referred to as the annual registration each year. The annual report for annual registration is a way for the Secretary of State’s office to periodically confirm or update information about your LLC. You must file your annual registration each year between January 1 and April 1 along with a $50 filing fee and you can file online using this link.
It is also quite possible that if your LLC is to do business in the state of Georgia, you need to register for various business licenses. Inquire about local business licenses in the city or county your LLC is in. To learn about state business licenses, check out the Georgia state business guide here.
If your LLC hires employees or collects sales tax then you’ll need to register your business in the state with the Georgia Department of revenue. Registration is easy and you can either file online or by mail. To register online click here and a register by mail click here.
You can form an LLC in Georgia from another state, which is called a foreign LLC. A foreign LLC must register with the Secretary of State and much of the formation process is the same as that of a domestic Georgia state LLC. To register as a foreign LLC, you must file an Application for Certificate of Authority for Foreign Limited Liability Company which you can do by mail or online by submitting the application along with a $225 filing fee.
Along with these activities, you will also have to pay any federal tax that your LLC is charged, obtain an EIN (more on that later) and receive a Certificate of Good Standing as well as a Certificate of Organization from the Secretary of State.
Of course, this is a lot of filing and registration, deadlines and payments for any one person to keep up with. If you would like some help to alleviate some of the paperwork burden, you could consider hiring a Georgia state PEO service and utilizing some online legal services.
Georgia LLC Fee Summary
How much does it cost to form an LLC in Georgia? Whether you’ve chosen to form your Georgia LLC on your own or use an LLC formation service, you’re going to encounter some filing fees. Here’s a list of some of the more common fees associated with LLC formation in Georgia.
Articles of Organization filing fee: $100
Name Reservation filing fee: $25
Registered Agent Fee: $99-$299 per year
Annual Registration filing fee: $50
State Personal Income Tax: 1%- 5.35%
State Corporate Income Tax: 4.55%
After Starting Your Georgia LLC
Once your LLC is formed you can relax and celebrate a bit because this is a monumental achievement. So go out and enjoy a nice dinner with your loved ones, go out on the town, go on a weekend trip or simply have a glass of champagne or wine to commemorate this victory. But, you can’t relax for too long because there is still work to be done to make sure your LLC has all the proper foundations needed to operate as a successful business.
Here are the steps you will need to take once your LLC is formed.
Step 1. Create An Operating Agreement
The state of Georgia does not require LLCs to create an LLC Operating Agreement but I highly recommend that you do anyway.
To illustrate the importance of an Operating Agreement for your LLC, I want you to visualize your LLC as an animal. It can be any animal you want so long as it is some sort of land animal, maybe even your favorite animal. The LLC would function as the animal’s skin or outer shell because it protects it, while the Operating Agreement would function as the creature’s central nervous system because it tells it what to do and how to react to things.
An LLC Operating Agreement both acts as a contract between LLC members and provides crucial information and instructions about how the business will run. Your Operating Agreement should start out by listing each of your LLC members before going on to describe in detail all the financial, structural, operational and managerial facets of your business.
Your LLC operating agreement should list each LLC member individually, stipulate which members have the authority to make decisions about the business, and then clearly define the percentages of profits and losses as well as the ownership percentages of each member. Furthermore, your Operating Agreement should explain in detail the roles of each LLC member and employee, how they should interact with other members or departments, who their supervisors are, which department or members they should most closely interact with and the tasks and jobs that each department should perform. This should not only tell everyone what their job is and who they should report to thus avoiding petty, workplace squabbles.
One very important aspect of the Operating Agreement is the section that gives explicit rules regarding what will happen when an LLC member leaves or if a new LLC member joins. Many people leave this bit out, but Operating Agreements with this design will come complete with instructions for what to do if there is a disagreement or falling out between LLC members. It’s invaluable to have a set of plain and logical instructions during a time when emotions are running high.
Operating Agreements are important for any budding LLCs during their early stages because they lay down what each LLC member’s job is, detail their compensation and ownership percentages and supply in-depth instructions for how the business will run.
To clarify: the instructions you provide in your Operating Agreement become the rules that your business has to follow and operate according to, so writing a poorly thought-out Operating Agreement could stifle the growth of your business. It’s easy to botch an agreement simply by not leaving room in the document for things such as business growth, change or innovation. But if you create a good agreement, you should be able to relax, sit back and watch as your business prospers without being held down by a poorly-written Operating Agreement.
If you’re inexperienced with creating Operating Agreements, it’s quite logical to be concerned about drafting a good one for your business. There are a few options available to you that will ensure that you get your agreement right.
The first option is to use the free Operating Agreement template from Northwest Registered Agent. Second, many LLC formation services in the state of Georgia will draft and file an Operating Agreement for your LLC on your behalf which removes a lot of the pressure and guesswork. And third, if you want to create the Operating Agreement yourself and simply want some guidance about the legal wording of the document, you could sign up for online legal services to guide you through all of the legal aspects of the document.
Step 2. Apply For An Employer Identification Number
If you plan to either hire employees or open a bank account for your LLC then you’ll need to obtain an Employer Identification Number (EIN). Among other things, an EIN can qualify your business for certain permits and licenses that it wouldn’t qualify for without one. Of course, you aren’t required to hire employees for your small business to obtain an EIN – an EIN is just a federal tax identification number that identifies businesses much like a Social Security Number.
An Employer Identification Number (EIN) is a number used to identify individual businesses much like a Social Security Number is used to identify individual people. You can apply for an EIN through the IRS which is a simple and painless process.
Most LLC formation services in Georgia will apply for an EIN on behalf of your LLC as part of their services. But you can easily apply for an EIN for your LLC online without the aid of an LLC formation service. All you have to do is log onto the IRS website on Monday-Friday between 7 am and 10 pm, fill out the application and submit it.
Step 3. Open A Business Bank Account
The last step you’ll need to take to ensure that your LLC has the proper foundations to operate and function as a business is to open a bank account that is strictly dedicated to business transactions.
A lot of business owners skip this step and underrate its importance, but it’s an important step nonetheless. Many small business owners choose to use their personal bank accounts for both personal and business transactions, believing that having one account for both purposes is less complicated somehow. But there are two very good reasons you shouldn’t do this.
The first is that when you have a bank account used only for business transactions, filing taxes becomes a lot easier. A lot of people assume that they’ll be able to remember what each transaction was for and be able to discern the difference between a personal and a business transaction. But tax season typically rolls around several months after these transactions were made and remembering things is made much more difficult with the passage of time.
The second reason is your personal liability and asset protection. If you run business transactions for your LLC through your personal bank account then you leave your personal information vulnerable as well as all of the funds in your bank account. So even though you enjoy some level of personal information and personal asset protection because you’ve formed an LLC, that protection is negated when you conduct business this way.
So if you want to make filing your taxes easier and ensure that your personal information and assets remain secure then you should open up a dedicated bank account for your business.
You’ll need what’s known as a “bank kit” to open an LLC bank account. This kit contains copies of many of the formation documents I’ve discussed here, like your Articles of Organization, Certificate of Organization, Certificate of Good Standing, Operating Agreement, EIN and initial resolution.
Of course you can collate all of these documents yourself. But if it sounds like too much trouble to gather up all of these documents and get copies of them, LLC formation services will typically create a bank kit for you as part of their services.
You took a giant step forward when you made the decision to form an LLC, so congratulations!
If you’ve chosen to form your LLC on your own without the help of an LLC formation service (which charges fees as low as $0 plus the state filing fees), here are the five steps you’ll need to complete to form an LLC in Georgia.
- Obtain the Articles of Organization form
- Name your LLC
- Choose your Registered Agent
- Choose your LLC address
- Sign and file your Articles of Organization
You can quickly become overwhelmed by the mountains of documents, sea of red tape and never-ending form filing associated with the LLC formation process. But completing the process and forming an LLC on your own leaves you with a sense of pride and accomplishment that’s worth every second of the work that you put into it.
Congratulations again on your decision and good luck on your business journey!