Limited Liability Company (LLC)
A Limited Liability Company (LLC) is a business entity that offers certain limited personal liability on the part of the owner, like a corporation. It also offers the possibility of certain “pass-through” tax benefits, like a partnership. Therefore, an LLC is essentially a cross between a partnership and a corporation.
Limited Partnership (LP)
A Limited Partnership (LP) is composed of general partners and limited partners. An LP allows limited partners to invest in the business and take a share of the profits without becoming personally liable for partnership debts and obligations. A general partner has unlimited liability. An LP pays no entity-level income tax or net worth tax. Instead, each partner is taxed directly upon his or her share of the profits.
A sole proprietorship is the simplest, least regulated, and most common form of business organization. Legally and for tax purposes the individual owner is the business. The sole proprietor has total control of the business. However all of his or her personal and business assets are at risk. Income taxes are reported on the sole proprietor's personal income tax forms, but the business will have to collect and/or pay taxes in the same manner as other businesses. Sole proprietorships are not registered with the Georgia Secretary of State.
A corporation is a business entity that is separate from its owners, the shareholders. It is composed of three different groups: the shareholders, directors, and officers. A corporation has limited liability. Debts incurred by the corporation generally cannot be collected from the officers, directors, or shareholders. For-profit corporations pay tax on earned income and shareholders pay tax on dividends received. Certain smaller corporations may also elect with the Internal Revenue Service to be an S-Corporation. An S-Corporation can help a business avoid double taxation since it is taxed more like a partnership.
Starting a Business
Starting a Business
Registering with state agencies is just one part of establishing your business. You may have to interact with local governments and private vendors to set up your business. To help you navigate the process, key steps are outlined below. Each new business owner’s process will vary depending on your situation.
- Get Professional Advice
- Make a Business Plan
- Select a Business Structure
- Reserve Your Business Name
- Register with the Secretary of State
- Get a Federal EIN
- Open a Business Checking Account
- Register with Department of Revenue
- Register with Department of Labor
- Get Funding
- Insure Your Business
- Apply for Permits and Licenses
Get Professional Advice
If you're starting a business for the first time, you may feel overwhelmed. Government agencies, such as the federal Small Business Administration, and non-profit groups provide resources for small business owners just starting out.
- Get Business Counseling with local partners of the U.S. Small Business Administration.
- Find a Mentor with SCORE.
- Resources for Georgia Small Businesses from the Georgia Department of Economic Development.
Make a Business Plan
Your business plan will be the road map your business follows for its first several years. It can assess the market, estimate costs, and outline how your business will grow. A business plan may also help you acquire financing, since lenders and investors will want to evaluate your plan before they provide funding. Research and seek out advice to develop a business plan that fits your needs.
- Write a Business Plan with help from the U.S. Small Business Administration.
Select a Business Structure
As you start your new business, you will have to choose a business structure. A business structure determines how your business is organized. It affects the type of taxes you pay, your level of liability, and other legal considerations. A specialized attorney may be able to help you determine which is right for you.Business Structures Accordion
Reserve Your Business Name
If you already have a business name in mind but you’re not yet ready to register with the Georgia Secretary of State, you can reserve your name while you finish the process of making your business official.
While not legally required, reserving your business name means you can file your entity’s formation documents without the fear of someone else taking your name for 30 days.
Before deciding on your business name, you may want to do an online search and make sure the corresponding domain name is available.
- Learn How to Reserve a Business Name with the Georgia Secretary of State.
Register with the Secretary of State
Once you’ve chosen a business structure, you will probably have to register your business entity with the Georgia Secretary of State. There are some exceptions, such as sole proprietorships. However all limited liability companies (LLC), limited partnerships (LP), and corporations that conduct business in Georgia are legally required to register with the Secretary of State.
Get a Federal EIN
Depending on your situation, you may need to obtain a federal employer identification number (EIN) for tax purposes. You can apply for an EIN with the Internal Revenue Service (IRS). The IRS provides resources to help you determine if you need an EIN. You do not need an EIN to register your business entity with the Georgia Secretary of State.
Open a Business Checking Account
Opening a business checking account has many benefits. A business checking account may help separate your personal and business assets, simplify filing business taxes, and make it easier to manage business-related finances.
To open a business checking account, you'll likely need a social security number, federal employer identification number, and articles of organization or incorporation. Depending on the financial institution, sole proprietorships may not qualify for a business checking account. Be sure to evaluate all associated terms and fees before selecting an account.
Register with Department of Revenue
Any entity that conducts business in Georgia may be required to register with the Georgia Department of Revenue. Many factors determine whether you must register. These include — but are not limited to — businesses that employee workers, sell goods, or sell specific products such as alcohol or tobacco.
Registering with the Secretary of State beforehand is not mandatory. However it may make the process simpler since you will need to have chosen a business structure.
If an EIN is necessary for your business, you must have it to register with the Department of Revenue.
Register with Department of Labor
Many businesses in Georgia are liable for payment of unemployment insurance taxes, even if they don’t yet have employees. Once you obtain your business’s federal employer identification number (EIN) and you know the exact name and structure of your business, you are ready to register with the Georgia Department of Labor.
You can access the Online Employer Tax Registration on the Department of Labor’s website. After you fill out your business information, you will receive a determination stating if you’re responsible for paying unemployment insurance taxes. If you are, you will receive instructions for setting up an account.
Savings, loans, grants, private investors — there are many ways to fund your business. The type and amount of funding you can obtain will depend on many factors, including your business plan, the market, and your business structure. For example, sole proprietorships may have fewer funding options than LLCs and partnerships.
Your industry or personal background may open up financing options. Many organizations provide funding to small businesses run by women, minorities, veterans, or the alumni of a specific college. Do some research to discover all the available sources of funding for your business.
- Explore Funding Options with the U.S. Small Business Administration.
- Find a Georgia Lender with the Georgia Department of Economic Development.
Insure Your Business
The term “business insurance” encompasses a wide variety of policy types that may or may not apply to you. Some of these include:
- Property insurance
- Liability insurance
- Workers’ Compensation Insurance
- Motor Vehicle Insurance
- Life and Health Insurance
Some types of insurance are legally required in the State of Georgia. Automobile owners are required to have liability insurance or be a qualified self-insured. All employers with three or more full- or part-time employees must have workers’ compensation coverage. Other types of insurance may be required when applying for specialized permits or licenses.
Other parties may require evidence of insurance, such as product suppliers, customers, investors, and those leasing space to a business.
The Office of Insurance and Safety Fire Commissioner has resources for those seeking business insurance. The agency’s Business Guide to Insurance (PDF) outlines some available policy types, legal requirements, and tips for insurance shopping.
Apply for Permits and Licenses
Some businesses may need to acquire specialized permits or licenses at various levels of government. Alcohol licenses, for example, must be obtained at the federal, state, and municipal levels. Both salons and the cosmetologists or barbers who work there must be licensed in the State of Georgia. Bars, restaurants, gas stations, and spas are just a few of the businesses that must obtain special permits to do business.
You may need a specialized attorney to help you determine the laws for your business and location. You can refer to the Georgia Secretary of State’s information on licensing.