Georgia LLC Tax: Everything You Need To Know
Georgia LLC tax is a requirement after becoming a limited liability corporation in Georgia.3 min read
2. Corporate Income Taxes
3. Paying Business Taxes in Georgia
4. Federal Income Taxes
Updated November 12, 2020:
Georgia LLC tax is a requirement after becoming a limited liability corporation in Georgia. There are certain taxes and fees that are required to be paid. However, an LLC does not always treat taxes and taxable income the same as other corporation types, such as a regular corporation, an S corporation, a partnership, or sole proprietorship.
Like many other states, there are a few different types of taxes in Georgia. There is the state sales tax, which is 6 percent, and the use tax, which is 9 percent. There may be additional taxes owed, based on the type of business.
Limited Liability Corporation Tax Benefits
There are a few benefits to being a limited liability corporation in Georgia, especially when it comes to paying state or federal taxes:
- The LLC is not required to pay income taxes
- Any business expenses can be written off
Since a limited liability corporation is a pass-through entity, the LLC will not be required to pay the same federal or state taxes as a corporation. Instead of the taxes being paid for by the company, the taxes are essentially passed to the owner of the business.
For example, say there is a limited liability corporation that has two partners who own equal parts of the company and its profits. If the LLC earns a federal taxable income of $1 million for the year, the two partners will split the income and each will get $500,000 in earnings from the company. Each of the partners is then required to pay taxes for the $500,000 on their individual Georgia tax returns. This amount will be taxed in addition to any other income that is taxed for the individual.
Since the income from the LLC is accounted for on the owner's personal filings, the owner must also pay self-employment taxes on this income. Self-employment taxes include FICA, Social Security, and Medicare tax. These taxes must be paid for all of the owner's earnings and is usually paid at a rate of 15.3 percent of the taxable income.
However, since the owner is filing as self-employed, they have the ability to deduct or write-off certain business expenses that they incur. These deductions can help to reduce some of the taxable income for the individual.
Corporate Income Taxes
Partnerships and sole proprietorships in Georgia are also subject to some of the same tax filing rules as an LLC. Net income for these types of business should also be claimed by the owner or owners and accounted for on their personal tax filings. However, corporations are required to pay corporate income tax in Georgia, which is set at 6 percent. All Georgia corporations must pay the income tax as well as net worth tax.
For example, say the corporation had a taxable income in the amount of $1 million and the corporation's net worth was $2 million. All else equal, and not including adjustments, the corporation would owe the state of Georgia $60,000 for state income taxes. In addition, the corporation would owe the state of Georgia money based on the IT 611 tax table.
Paying Business Taxes in Georgia
In order to pay taxes in Georgia, a company will need to request a State Tax Identification Number or STIN. The STIN is a way to reference the tax license, credits, and liabilities of the business. You can apply for a STIN online on the state of Georgia's website or in person at a Georgia Tax Center.
Federal Income Taxes
Business taxes are to be paid quarterly. The payments are expected to the IRS by the 15th day of the fourth, sixth, ninth, and 12th months of the year. Businesses must pay these quarterly estimated tax payments by using Form 602ES in the State of Georgia.
Typically, an S corporation will use the Form 1120S and file it by the 15th day of the third month following the end of the tax year. For corporations following the calendar year, the due date to the IRS will be March 15th. S Corp annual taxes due on the 15th day of the third month, including a net worth tax (Form 600S), must be submitted to the State of Georgia.
If you need help with Georgia LLC tax, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.