Georgia LLC: What to Consider Before Setting Up Your Corporation
Are you thinking of setting up a business in the state of Georgia as a Limited Liability Company (LLC)4 min read
Are you thinking of setting up a business in the state of Georgia as a Limited Liability Company (LLC)? Well, you are making an excellent decision. Georgia’s legal framework offers many benefits that make it a desirable state for entrepreneurs looking to start their business.
In this article, we’ll look at the top five things to consider before forming a Georgia LLC. Whether you’re based in Los Angeles or elsewhere in the United States, you’l get a better understanding of the state’s regulations, rules, and restrictions when it comes to LLCs. This will also help you decide if working with a local law firm or a lawyer versed in understanding the nuances of Georgia’s LLC regulations is essential. Let's dive in.
1. Choose Your Business Name Wisely
The first step to forming a Georgia LLC is to choose a name for your business. It’s crucial to pick a name that’s compliant with Georgia’s regulations and will allow you to use it as the entity’s legal name.
Generally, the name of a Georgia LLC entity should consist of the terms “Limited Liability Company” or one of its abbreviations: LLC or L.L.C. You can also choose a business name that’s different from the LLC name if it’s to be used as a trade name or brand name. Georgia also requires all entities to have a unique name and prohibits the use of names already on its business database.
It’s also crucial to consider where you’ll be using or registering the name for the LLC. For example, if the LLC is using its unique name only in the state of Georgia, you might not need to acquire a “Doing Business As” (DBA) name to register and protect your name on a federal level.
2. Find a Registered Agent in Georgia
Your next move is to find a registered agent in the state of |Georgia. A registered agent is an individual or entity who accepts documents related to a legal process, such as lawyers’ paperwork, on behalf of the LLC's business.
The person or entity you choose as the LLC’s registered agent must have a physical address that’s listed in the official government records. You can also serve as the registered agent for your LLC as long as you meet the qualifications.
The registered agent should always be available during business hours, too, in case they need to accept legal papers for the LLC. It’s also essential to take into account that all legal documents addressed to the LLC should be sent to the registered agent’s address.
3. Understand Your State’s LLC Fees and Taxes
Once you have found a registered agent for your LLC and chosen a name, you need to consider the taxes and fees you’ll have to pay in Georgia.
The LLCs based in Georgia have to pay the annual registration fee of $50 to the Office of the Secretary of State. You will also have to report to the Georgia Department of Revenue if your LLC is making any sales or income in the state. LLCs based in Georgia are required to pay an annual report “LLC Tax” of $50 - the fee must be received by the last day of April.
You also have to consider the Georgia state income tax. Generally, LLCs operating in Georgia do not need to pay a state income tax if they are “Disregarded Entities”, which are taxed as sole proprietorships for federal tax purposes. However, some LLCs have to pay a corporate income tax in Georgia depending on how their business is taxed federally.
4. Create a Comprehensive Operating Agreement
Most states, including Georgia, do not require LLCs to have an Operating Agreement. Nonetheless, having one in place is essential, as it helps the LLC shape its internal policies and build a legal framework. After all, membership interests among the LLC's owners and potential members will have to be established. This document serves as the foundation of the business structure.
The Operating Agreement should include how you'll split profits and losses, who will be the manager of the LLC, and how the LLC should deal with contributions, dissolutions, deaths, and disabling of a member.
Creating a comprehensive and legally binding Operating Agreement is still a good idea regardless if the state requires it or not.
5. Develop and Adopt Corporate Governance Policies
The last step in this five-point checklist is to develop and adopt corporate governance policies. These policies refer to the rules, restrictions, and regulations concerning the ownership and management of the LLC.
These policies include procedures for how the LLC should be operated. It should also include who is authorized to act on behalf of the LLC, how the members or managers should make decisions, how the LLC should receive and make payments, and what actions the LLC should take in the case of legal issues.
These policies must be applied and followed by each member and manager to ensure that the LLC stays compliant with the state regulations.
Setting up an LLC in the state of Georgia is a complex task. It takes careful planning and understanding of the LLC legislation. There are a lot of details to consider when forming a Georgia LLC.
You'll have to settle on a name, appoint a business registered agent, pay the taxes required by the state, create a comprehensive operating agreement, and adopt corporate governance policies.
Fortunately, this subject isn’t as overwhelming as it sounds. If you get in touch with a business lawyer who specializes in Georgia’s LLC regulations, you can get started on the right foot and avoid potential problems.