Starting a Business in Georgia
What You Need to Know
When starting a business in Georgia, there are many relevant issues you need to take into consideration but which you may not be aware of: different tax advantages available to you, indemnification and covenant not to sue, federal, state and local filing requirements, name protection, choices of entity structure set up, available agreements and the importance of maintaining corporate and LLC company formalities and complete records, lease reviews, and contracts. There are many different types of business entities; the main categories include corporations, limited liability companies, partnerships, and non-profits. I’ll go into detail about what you need to know of each one so that you can make an educated decision when starting a business in Georgia.
What is a Corporation?
A corporation is a legal entity that is granted certain powers by the state. It is owned by shareholders that partake in the profits and losses of the corporation. It is guided by directors that act as a kind of legislature and decide important business decisions on a periodic basis. These decisions are carried out by the president of the corporation and officers such as the secretary and treasurer.
What is a Partnership?
A partnership is an unincorporated organization of two or more individuals or entities. It consists of partners that invest in and manage the operations of the business while sharing the profits and losses. It is essential that the partners are comfortable with each other’s business decisions—considering that if one partner enters into an agreement, it binds the other partner as well. A general partnership does not have limited liability, which means creditors can reach the business and personal assets of the partners. For this critical reason, we recommend that clients form a limited liability partnership, a limited liability company or a corporation. A general partnership is also not subject to direct taxation—instead, the partnership must file a return and the partners assume liability for their share of the partnership’s gain or loss on a form and in their individual returns. Avoiding the entity level tax ensures that income flowing into a general partnership is taxed only once.
What is a Non-Profit Corporation?
A non-profit corporation is a business entity incorporated at the state level where there are no equity owners that hold shares of stock. Also, none of the corporate income is distributable to members, directors, or officers. Instead, such non-profit corporations typically are controlled by members that elect a board of directors.
What is a Limited Liability Company?
The main advantage of the Limited Liability Company (“LLC”) is that it isn’t burdened with the ownership restrictions imposed on a small business corporation (also known as a Sub Chapter S Corporation). An LLC may have more than 100 Members or as few as one. Its interests may be held by corporations, partnerships, non-resident aliens, trusts, pension plans, and charitable organizations. The LLC may make special allocations, thereby avoiding the single class of stock requirement applicable to an S corporation. It may own more than 80% of the stock of a corporation and therefore, be a member of an affiliated group.
The LLC is a hybrid entity that is very flexible and may be taxed as a partnership, corporation or as a sole proprietorship while providing limited liability protection for all of its Members. For federal tax purposes, an LLC—like a partnership or sole proprietorship—is a pass-through entity and its income and losses are taxed only at the member level. However, all members of an LLC have limited liability for the debts and claims against the LLC; no member will be burdened with personal liability.
Benefits of Incorporation
No Personal Liability
When starting a business in Georgia, you are forming a legal entity that is separate from yourself as an individual. The Corporation is granted powers that allow it to make decisions that an individual may make. For example, the corporation may enter into leases, borrow money, buy goods and services on credit—and in all cases, you are not personally liable for the transaction. If a problem arises, the only recourse would be against the Corporation. Similarly, if anyone were to file a lawsuit for an action arising from the corporation’s business, that party would not be able to go after your personal assets.
Business Tax Deductions
Entrepreneurs will want to attribute as much of their expenses as possible to reasonable and necessary business expenses. Why pay more taxes than necessary? Many taxpayers overlook legitimate deductions for business expenses. To the extent possible, entrepreneurs will want to ensure to deduct the following business expenses:
- Vehicle expenses
- Travel expenses
- Start-up and organizational costs
- Certain types of entertainment expenses
- Payments to charitable organizations
- Advertising costs
- Rent for the use of a property
- The cost of materials and supplies
- Interest and other borrowing charges
- State local and sales taxes
- Salaries and other compensation for personal services
- The cost of insurance may be deducted as a business expense
- Repairs, maintenance, replacement and improvement expenses
- Attorneys’ fees, court costs, and other legal and accounting expenses
- Setting up a reserve account can create a legitimate tax deduction.
Minimize IRS Audits
Sole proprietors must file an IRS Form 1040, Schedule C (Profit or Loss from a Business). Unfortunately, the IRS audits sole proprietors that file the form at a higher audit rate than returns for an incorporated micro business. Also, sole proprietors with home office deductions face even more risk of audit by filing the IRS Form 8829 (Expenses for Business Use of Your Home) for home office deductions. S or C corporations avoid such scrutiny.
The Corporation or LLC can be established in such a way so that shareholder/owners remain anonymous, many times the same anonymity can be accomplished for officers and directors.
Use of a Marketing Framework
The use of a Marketing Framework allows you to present your business to the public as a Corporation or LLC, giving your business the appearance of being much bigger than it is—which makes it easier to attract investors.
Because of the ease of transfer of ownership and the “separate entity” concept of the Corporation or LLC, it is much easier to attract investors than otherwise.
Easy Transfer of Ownership
You can place real estate into the Corporation or LLC and transfer through a private agreement (i.e. stock transfer) rather than a formal real estate transfer, and closing. You can also re-title an asset to a Corporation or LLC yet continue to maintain control.
Why Choose Us To Incorporate in Georgia?
At Spiegel & Utrera, P.A.
We provide you with information, guidance and counsel based on our 175 years of legal experience. There are no hidden attorneys’ fees. No Credit Card is required to place your order.Using a reputable law firm to incorporate or organize your Corporation, LLC, Non-profit, or Partnership will ensure that all your bases are covered—preferably with one that provides you with legal advice and assistance beyond incorporation.
Each Corporation or Limited Liability Company is COMPLETE
INCLUDES State Filing Fee, “YES! Includes State Filing Fee”
INCLUDES Corporate or Company Seal and Book
INCLUDES Certificate or Articles of Incorporation or Organization
INCLUDES Company or Corporate Minutes
INCLUDES Corporate By Laws or LLC Regulations
INCLUDES Corporate or LLC Ownership Register
INCLUDES Banking Resolution
INCLUDES Membership or Stock Certificate
INCLUDES Preliminary Name Search
INCLUDES 110% Lowest Price Guarantee !
Yes, even INCLUDES Attorney’s Fee (No Hidden Attorney Fees).
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