What is a Limited Liability Company (LLC)?
A limited liability company (LLC) is a business agreement in the United States that provides limited personal liability on the part of the owner for the debts or liabilities of the company.
Limited liability companies are a legal business structure for an organization where a business loss will not exceed the amount invested in an LLC.
In other words, the private properties of investors and shareholders are not at risk if the business fails. They are hybrid companies incorporating a corporation’s features with those of a partnership or sole proprietorship.
Although the limited liability advantages are close to those of a company, the flexibility of flow-through taxation to the members of an LLC is a partnership business model and not an LLC.
How to Start An LLC in Georgia (GA)
As per the article published by the official website of the State of Georgia, there are 4 main steps in setting up an LLC in Georgia.
Initially, you need to prepare yourself by doing research to ensure that a Georgia LLC is the right structure for your business.
To start an LLC in Georgia you need to determine if you are a foreign or domestic entity as a foreign business must follow a different procedure. A domestic business is one that is being made without precedent for Georgia.
A foreign business is one that as of now exists outside of the State of Georgia whether in another nation or basically another U.S. state.
Next, you need to select a registered agent. Registered agent is a term many business owners may never heard before. According to United States business law, a registered agent (also known as a resident agent or statutory agent) is defined as a business or individual designated to receive Service of Process (SOP) when an LLC, corporation, or other formal entity is a party in a legal action such as a lawsuit.
A Registered agent in Georgia is responsible to receive any documents or other official authority correspondence on behalf of the business for your Georgia LLC. The registered agent must be situated in Georgia.
A registered agent allows the client business to remain on top of important compliance obligations. However new business owners need to be aware that a registered agent in Georgia can be costly to a newly formed LLC.
It is also important to have any documents on information about the business that are not required by law, such as 501(c)(3) language arranged ahead of time.
The second step is to gather all the information required to start an LLC such as:
The Georgia LLC name or a valid name reservation number. Make certain to pick a name that fulfills the Georgia naming requirement and is promptly accessible by expected clients.
*Georgia LLC naming guidelines:
- Your name should include the term “limited liability company,” or one of its prefixes (LLC or L.L.C.).
- Your name cannot include terms that could link your Georgia LLC with a government agency such as FBI, Treasury, State Department.
- Restricted terms for examples Bank, Solicitor, University may require additional documents and a licensed person to be part of the LLC, such as a doctor or lawyer.
- Your name should be recognizable from some other Georgia restricted obligation organization, restricted risk association, restricted organization, or partnership.
- Ensure the name you need isn’t now taken by doing any business.
- Check online to check whether your business name is accessible as a webspace. Regardless of whether you don’t plan to make a business site today, you might need to purchase the URL to keep others from acquiring it.
- Name and address of the individual filing for the LLC
- An email address for the LLC
- The official mailing address of the LLC main office
- The registered agent name and the registered agent Georgia address
- Each organizer name and address
- Any optional provisions to add to your articles of organization
- A form of payment whether credit card, check, cashier’s check, or money order depending on how you apply.
Next, you need to register an LLC, by means of mail, or face to face. Applications can be expedited for an additional charge. Each LLC registration method has distinctive handling times and accelerate options
Registration is possible through the Georgia Secretary of State’s online administration’s page by registering a client account and choosing “make or register a business. At that point round out the necessary information about your business. There will be a $100 documenting charge which can be paid by Visa, MasterCard, American Express, or Discover Mastercard.
It will take a processing time of 7 business days however you can expedite the process to 2 business days by paying an additional $100. Handling on the same business day (whenever submitted before an early afternoon on a workday) costs an extra $250.
Register by mail
You may either write your own Articles of Organization or download and complete the Articles of Organization for LLC (CD 030) form from the website of the Secretary of Georgia State.
An operating agreement is a legal document defining an LLC’s ownership and it’s operating agreement. This operating agreement helps ensure that all LLC owners are on the same page and diminishes the risk of future conflict.
You’ll be expected to give the name of your Georgia LLC, select a registered agent, list the services your LLC will offer in the articles. You will need to download and complete the Transmittal Form — Limited Liability Companies (231) and mail the completed all the completed papers together with a $110 filing fee by check or money order to the following address and mail to the following address.
Office of Georgia Secretary of State
2 Martin Luther King Jr. Dr. SE
Suite 313 West Tower
Atlanta, Georgia 30334
Registration via mail takes about 15 business days to process. However, you can speed up the cycle to 2 business days by paying an extra $100 or preparing in a similar business day (whenever submitted before an early afternoon on a workday) for an extra $250. Preparing in one hour costs an extra $1,000.
Register in person
Registration can be done face to face as well which provides you with more expediting options and the shortest processing time without considering the option to expedite.
Similar to registration by mail you need to either compose your own Articles of Organization or download and complete the Articles (CD 030) system from Georgia State web. You would need to download and round out the Transmittal Form — Limited Liability Companies (231) from the Georgia State site as well. At that point present the finished Articles of Organization, transmittal, structure along with a $110 recording charge to the
Office of Georgia Secretary of State
2 Martin Luther King Jr. Dr. SE
Suite 313 West Tower
Atlanta, Georgia 30334
Processing time for in-person registration varies. You could speed up the cycle to 2 business days by paying an extra $100. Preparing in a similar business day (whenever submitted before an early afternoon on a workday) costs an extra $250 and handling in one-hour costs an extra $1,000.
As all of your information is valid and your name has not been taken, within the predetermined processing period, you get your organizational papers. Every year, you must submit an annual registration for your LLC between January 1 and April 1. In the event that you don’t, your Georgia LLC will be administratively dissolved for inability to submit your annual registration.
If you face any issue regarding the formation of LLC in Georgia you can contact Georgia Call Center at 1-800-GEORGIA (1-800-436-7442) or visit the Secretary of Georgia State Office which is open from Monday to Friday, 8:00 am – 5:00 pm. It is essential to take note that registration isn’t the only step you should take before starting a Georgia LLC.
After that, we suggest you acquire an Employer Identification Number (EIN) in the event that you intend to hire employees and open a business bank account.
What is an EIN? The Employer Identification Number (EIN) is a nine-digit number issued by the Internal Revenue System (IRS); an Employer ID Number is utilized to recognize a business entity and monitor the business’s tax reporting. It is basically a Social Security number (SSN) for the business.
Why do I need an EIN? An EIN number is needed to open a business bank account for the company, for Federal and State tax purposes and to hire employees for the organization.
A Georgia LLC and acquire an EIN from the Internal Revenue Service free of charge after forming the company by means of on the web or via mail.
The Cost of Starting an LLC in Georgia
In total, it cost between $100 and $145 to form a Georgia LLC.
This includes the expenses to file your Articles of Organization $100 and a $10 service fee if you file by paper rather than online. If you register your LLC business name in lieu of filing, you will have to pay an extra.
In addition, all LLC in Georgia is required to register annually. The report must be filed between 1 January and 1 April of each calendar year starting the year after registration of the company and the filing fee is $50.
How long does it take to register an LLC in Georgia?
The time relies upon the manner in which you document your LLC administrative work. In the event that you record your Articles of Organization on the web, it takes five to seven business days for the state to process.
If you file with paper it can require as long as 15 days. Furthermore, if you want to request for a company name, it will take five to seven business days for the request to be filed. It is worth noting that the time needed to form Georgia LLC would rely totally on the Georgia State’s office.
If you want to set up a Georgia LLC at the earliest opportunity you ought to consider utilizing Priority Processing or Expedited Processing that will significantly reduce the time required to form your LLC.
Priority Processing places the processing of your LLC before non-priority processing and sends your documents electronically or via overnight delivery service to the state office.
While Expedited Processing abbreviates the handling processing time of your Articles of Organization and Transmittal Form by the state office for an additional charge.
Yes or No: Series LLC in Georgia
The state of Georgia does not, at this time, permit the agreement of a Series LLC. Series LLCs are a relatively recent business concept where unrestricted segregation of membership interests, properties, and operations into separate series is specifically considered in the articles of creation.
A master or umbrella LLC is included in Series LLC and the other LLCs are divided for liability purposes from each other. Each series works as an individual entity with a different name, bank account, and separate accounting records.
A series LLC may have various individuals and administrators in every series. The rights and commitment of these members and managers contrast from series to series. Each series may be part of a contract, can be held accountable in court, and hold title to individual property.
The most important aspect of a series LLC is the liability protection that is applicable to each series. The properties belonging to one series are protected from the possibility of liability of other series belonging to the same LLC series.
In definition, A series LLC is analogous to a company with many subsidiaries. The LLC concept of the series, however, is intended to isolate risk within different business entities without the cost of setting up a new organisation.
Many states, including Georgia, do not allow series LLC to be formed, as this is a new idea, there are still many legal issues to be resolved; one is how individual LLCs may be treated in bankruptcy and unresolved tax issues with respect to series LLCs, mainly as to whether each series is a separate tax entity.
This topic has been addressed by the state government of Georgia, but the law allowing series LLCs to be organized is still in various stages of development. Therefore check back with Georgia state government’s official web page from time to time if this is an issue that concerns you.
The Benefits of Setting Up a Georgia LLC
The LLC legal framework it provides offers the protection of individual members from liability. A member of an LLC loses just what they have invested in the business and there is no risk to their remaining personal properties.
Besides that, even in the event of a member’s death, LLC can continue as a company. Ownership interests may be moved in the same LLC from one member to another.
Georgia LLC has a membership that is flexible. There is no limit to the number of members, and individuals, associations, trusts, or companies may be members.
Members can manage the LLC themselves or hire a management group to do so. Corporations are, on the other hand, run by a board of directors, not by the member (shareholders).
Georgia LLC does not need to pay taxes. All LLC income or loss is passed-through to owners and recorded on their tax returns for their personal income tax expenses. LLCs face less standards and continuing formalities of state-imposed compliance than sole proprietorships, general partnerships, or corporations.
Starting a Georgia LLC will help a new company develop more legitimacy than if the company is run as a sole proprietorship or partnership.
Understanding How is an LLC Taxed in Georgia
One of the advantages of a Georgia LLC is that the LLC does not need to pay income tax as a business. Earnings are shared to the owners or members, and they pay their personal income taxes. The IRS can collect federal taxes which usually has to be paid quarterly.
Georgia embraces the federal policy which categorizes LLCs as a sole proprietorship (for single-member LLCs) or a partnership (for multiple-member LLCs) and would not tax net worth unless the entity has opted to be treated as a corporation. You will need a State Tax Identification Number (STIN) to get started with state taxes.
However, income tax may not be the only tax that your LLC would be expected to pay.
If you intend to sell goods or services, you will need to pay sales and use taxes at a 4 per cent rate. Additional taxes such as film tax, motor fuel tax, alcohol and tobacco tax and state hotel-motel fee are also applicable to LLCs that operate in such industry in Georgia.
If you intend to hire employees for your business, you will also need to be mindful of employment-related taxes such as :
- Withholding taxes. There are taxes deducted from the salaries of the employees to be billed to the state. Employers deduct salaries, pension and annuity benefits, and others from income.
- Unemployment taxes. Employers in Georgia pay the full cost of unemployment insurance coverage. Unemployment insurance is temporary income for workers who, without being at fault, find themselves unemployed. At a rate determined for their business, employers pay the tax quarterly.
- Workers’ compensation insurance. You would need to pay workers’ compensation premiums if the company routinely hires three or more staff (including part-time employees). You may visit the State Board of Workers’ Compensation page for more details on workers’ compensation benefits.
The Georgia LLC Legal Compliant
To operate LLC in Georgia you must meet with federal, state, and local government legislation. For example, restaurants are required to have health permits, building permits and signage permits.
Fees for a business license and permit in Georgia can differ depending on what type of license you are trying to acquire.
By April 1, each year, Georgia requires all LLCs to file an annual report with the Secretary of State. This can be done electronically and a non-refundable filing fee of $50 is applicable. Georgia charges a penalty of $25 for late filings (after April 1) if you miss the filing deadline. If you fail to file an annual report within 2 years Georgia will revoke your LLC.
When this occurs, LLC owners face the risk of loss of limited liability protection. A quality registered agent service will help avoid this scenario by alerting you of forthcoming filing deadlines, and even send reports on your behalf for an additional fee.
The Georgia Foreign LLC
Building a foreign LLC enables the company to function as one entity in various states.You’ll need to register as an international LLC if you have an established LLC and want to do business in Georgia.
This can be accomplished by mail to the following address: Office of Secretary of State, Corporations Division, 2 Martin Luther King Jr. Dr. SE, Suite 313 West Tower, Atlanta, GA 30334 for a fee of $225.
Importance of Obtaining a Certificate of Good Standing in Georgia
A Good Standing Certificate, known as a Certificate of Life in Georgia, confirms that your LLC has been legally established and has been handled properly. You can submit a Certificate Good Standing Online with a $10 fee. Several situations in which you will need to get one include:
- Taking financing from banks or other creditors
- Starting the company in another state as a foreign LLC
- Acquiring or renewing particular business licenses or permits in Georgia
How to Dissolve an LLC in Georgia
If you no longer plan to do business with your LLC at some stage in the future, it is necessary to dissolve it officially. Failure to do so in a reasonable timeframe can lead to tax liabilities and fines, or even legal difficulties. There are three steps for your Georgia LLC business to be dissolved.
For most LLCs, the measure for discontinuation will be defined in the operating agreement signed by the member at time of business formation. In the operating agreement, the measures for dissolution will be defined for most LLCs.
Some standard dissolution measures included in an operating agreement are holding a referendum to dissolve the business with LLC members, documenting the dissolution vote in the minutes of the meeting of the LLC, deciding the official dissolution date, distributing assets of the LLC, informing creditors and resolving any business debts.
You can contact the state for further guidance if your LLC does not have any set dissolution procedures in its operating agreement.
Next is to close your accounts for company tax. Usually, closing the tax accounts simply includes filing a final return to the appropriate agency. Some accounts, however, require the submission of other official documents.
You need to submit the Articles of Dissolution (also known in Georgia as Certificate of Termination) to voluntarily dissolve your LLC. Once this document has been submitted and reviewed by the Georgia State agency your LLC can longer legally exist.
This can be done by mail for a filing fee of $10 by mail, or online for free.