How to Start a Business in Georgia

In 2024, personal finance company WalletHub ranked Georgia as the second-best state in the country for business formation. Reasons include one of the highest rates of entrepreneurship, a prevalence of interconnected businesses, exceptional growth potential, and a low corporate tax rate. If you’re thinking about starting a business in Georgia, there are some factors specific to that state that you’ll need to consider. In this article, I’ll walk you through everything you need to know to get your business up and running.

1. Fine-tune Your Business Idea

Before you start filing paperwork and looking for workspace, it’s imperative to ensure the idea you have for your business is sound. A feasibility study, which is a detailed study that takes into account all the critical aspects of your business idea, can help you ascertain whether your venture is likely to succeed.

And even though entrepreneurs and solopreneurs tend to be self-starters with the ability to accomplish a lot on their own, it’s always a good idea to discuss plans for your business with a mentor or other trusted source. You can contact the Small Business Administration (SBA) or look for a counselor with your local SCORE chapter to help. If a more seasoned entrepreneur who has started and is running a successful business is willing to advise you, take advantage of their generosity.

2. Write a Business Plan

Regardless of where you’re planning to set up your enterprise, you should have a well-thought-out business plan in place before acting. A business plan provides a road map for the business, it will help guide your operations as you grow, and it serves as a realistic plan to help you stay focused on your business objectives and the strategies for achieving them. It can also be helpful if you decide to look for investors, lenders, or bring in partners.

Some business plans are very in-depth and detailed, while others are more basic, focusing on the most important points of how you plan to run your company. The SBA cites two types of plans: traditional and lean. While the traditional plan is comprehensive and takes more time to put together, the lean version outlines just the key elements of a plan. Keep in mind the depth of your business plan will depend on which entity you plan to establish, the nature of the business, and if the plan is just for your use or will be a tool to attract investors or partners.

While it’s unlikely to find two business plans that are exactly alike, most plans contain an executive summary that includes  a company overview and mission statement, your intended products and/or services, a market and competitive analysis, a sales and marketing plan, details on your management and operations, financial projections, and a few appendices containing additional information such as bank statements, credit histories, and resumes of key partners.

3. Select a Business Entity

The type of business entity you choose will affect how your company is taxed, the degree of personal liability you’ll encounter, how much paperwork you’ll need to do, ownership and management flexibility, and other legal considerations.

Something important to understand is that each state has its own criteria for what type of business can be registered, how it is registered, and how it is maintained. Georgia’s Secretary of State will provide lots of information on this and I’ll review your options below.

Sole Proprietorships and General Partnerships are not registered businesses in Georgia, while Limited Liability Companies, Limited Partnerships, and C Corporations and S Corporations are registered with the state. Georgia also allows registration of Close Corporations, Nonprofit Corporations, and Registered Limited Liability Partnerships. For our purposes, however, we’ll look at the most common types of business to help you decide which is right for you.

What you should know about Sole Proprietorships:

• A Sole Proprietorship is the most common type of business in Georgia, and the least regulated and easiest to form. A big disadvantage, however, is that a Sole Proprietorship is not a separate entity from its owner, the Sole Proprietor. That means the assets and liabilities of the business are those of the owner, as well. If someone sues the business or it can’t pay its bills, the owner is personally liable and risks losing personal money and property.
• Another potential disadvantage of a Sole Proprietorship is that if the owner dies, the business can only be transferred to the owner’s heirs to be continued, restructured, or dissolved.
• Sole Proprietorships have limited funding options, as investors are often hesitant to finance businesses that are not formally registered as a statutory entity.
• Sole Proprietors report their business income and losses on their individual federal tax returns. If you sell goods or products, however, you should register your business with the Georgia Tax Center, as you’ll be required to pay certain business-specific taxes.
• Because the business owner doesn’t receive a company paycheck that withholds federal income tax and Social Security and Medicare taxes, a Sole Proprietor must submit quarterly estimated federal income tax payments, which include 15.3% in self-employment taxes (similar to FICA taxes on employees’ paychecks).
• In some situations, that self-employment tax burden can become lofty and prompt a sole proprietor to look at business structures that can minimize those costs.

What you should know about General Partnerships:

• A General Partnership is basically a Sole Proprietorship with two or more partners. The business is co-owned, not registered with the state, and not considered a separate entity from its owners. It is taxed in the same manner as a Sole Proprietorship, with revenues and losses passing through to the owners’ personal tax returns.
• A General Partnership is a simple and inexpensive way to form a multi-owner business.
• There are no state, federal, or local filings to formally register a partnership, and partners can make decisions without the meeting formalities required of corporations.
• A few potential disadvantages include personal liability risk to the business owners, limited funding possibilities, a heavy self-employment tax burden, and no continuity of the business’s life if a partner leaves (unless the partnership agreement has provisions to remedy that).

What you should know about Limited Liability Companies:

• A Limited Liability Company (LLC) provides legal and financial separation between owners (known as members) and the business. That limits the liability of members and in most cases protects their personal assets in the event the business is sued or cannot meet its financial obligations.
• That limited liability protection makes LLCs a popular business structure for owners who don’t want to risk losing their personal belongings, bank accounts, and retirement savings.
• From a tax perspective, however, an LLC and its members are viewed as a single tax-paying entity. Any profits or losses are reported through the owners’ federal personal tax returns. Georgia also requires LLCs that do business or own property in the state or receive income from Georgia sources to file an income tax return with the state.
• Single-member LLCs are taxed as Sole Proprietorships, and multi-member LLCs are taxed as Partnerships.
• LLCs that elect to do so and meet all IRS eligibility requirements have the option of being taxed as a Corporation. There are pros and cons to both methods of taxation, making it a good idea to consult an accountant or tax attorney before deciding how you’ll be taxed.
• All Georgia LLCs must register with the state and submit annual reports to remain in compliance. Annual reports, which in Georgia are referred to as annual registrations, must be filed between January 1 and April 1.

What you should know about Limited Partnerships:

• A Limited Partnership (LP) is composed of general partners and limited partners.
• The general partners are owners that manage the company. Because there is no separation between general partners and the business, they have the same personal liability risks as owners of a General Partnership.
• Limited partners invest in the business and take a share of the profits, but do not manage the company. Their personal liability is limited to their investment in the company.
• Each partner in an LP is taxed directly upon their share of the profits.
• Some potential disadvantages of an LP are that it can get complicated from an accounting standpoint, Limited Partners have no real say in how the company is run after they make their investments, and it can be costly to form and operate.

What you should know about C Corporations:

• A C Corporation, known as a general, for-profit corporation, is a legal structure for a company that is authorized by the state of Georgia to conduct business. It is a separate legal entity from its owners, which provides personal liability protection if the business is in legal compliance and meets all state requirements.
• It also is considered a separate entity for tax purposes, meaning the Corporation reports and pays federal income tax on profits with a separate tax return from its owners.
• C Corporations must appoint a board of directors to oversee the company’s affairs and ensure the business is managed in tune with the interests of its shareholders and stakeholders.
• C Corporations have more financing options than other types of business entities, as they can sell stock to raise capital. Also, investors generally are more willing to work with Corporations than some other types of businesses.
• A C Corporation must pay corporate taxes on earnings before profits can be distributed to owners, who are called shareholders. Those shareholders must then pay personal income taxes on the distributions, something known as “double taxation” for C Corporations.
• Double taxation is considered a negative consequence of forming a C Corporation and sometimes dissuades entrepreneurs from choosing this entity type. Corporations that meet certain requirements can get a special tax status from the IRS and be designated as S Corporations, enabling them to avoid double taxation.
• Other potential disadvantages of a C Corporation include its higher formation costs and more extensive ongoing compliance responsibilities, including submitting annual reports and holding shareholder and board of directors’ meetings.

What you should know about S Corporations:

• As mentioned, an S Corporation is a tax election option rather than an entity type.
• LLCs or C Corporations that qualify can file for an S Corporation election by submitting IRS Form 2553.
• If a C Corporation is given S Corp status, it gets pass-through tax treatment, meaning its profits are taxed at the shareholder level only.
• If an LLC opts to be taxed as an S Corporation, it retains its underlying legal structure, meaning that compliance requirements remain minimal. It also maintains pass-through tax treatment, but unlike default LLC taxation, not all business profits are subject to self-employment taxes.
• Only an S Corporation’s owners’ wages and salaries are subject to Social Security and Medicare taxes; owner income that comes from company profit distributions is not subject to those taxes.

4. Finalize Your Business Name

You’ll need to choose a name for your business before you can register it with the Georgia Secretary of State’s office, as it must be included in your Articles of Incorporation or Articles of Organization.

Here are some important things to know about selecting a name for your business:

• Take some time when choosing your business name, as it’s important for marketing and branding purposes.
• You’ll need to come up with a name that is not already in use in Georgia.
• There are some restrictions and regulations that apply to business names in Georgia, which you can read about on the website of the Secretary of State.
• Sole Proprietorships and General Partnerships do not have to register their companies, but if they use a name that doesn’t include the legal names of the business owners, they must file a Doing Business As, or DBA, with the Clerk of the Superior Court in the county in which the business is located.
• Businesses that want to open a bank account or complete transactions using a name that’s different from the names of owners will need to file a DBA.
• Georgia permits new business owners to choose three name options and submit them to the state for approval. You’ll have to pay a fee of $25, after which the state will conduct a name search and inform you which of the names are available. Once approved, your business name will be reserved for 30 days. If you want to reserve it for longer, an additional fee is required.
• Keep in mind that registering a business protects a name only within the state. Entrepreneurs with goals of expanding their business or who want to make sure their business name is protected in all 50 states can benefit from doing a trademark search. Conducting a trademark search can help identify if the desired name is available throughout the U.S. Moreover, applying for a trademark on a business name will, if granted, ensure no other similar businesses use the name in other states.

5. Appoint a Registered Agent in Georgia

Businesses must designate a Georgia Registered Agent, which is a person or company designated to receive legal correspondence on behalf of the business. The Registered Agent must have a physical address in Georgia and be available to accept official documents, tax forms, and legal papers during business hours. Failure to designate a Registered Agent can result in fines or even disqualify a business from operating in the state.

While an owner can serve as a Registered Agent, some businesses select a lawyer or other person. You also can retain the services of a company to receive and forward all business correspondence. Commercial Registered Agents like CorpNet offer services in all 50 states, which saves businesses that may want to expand into other states the trouble of looking for a Registered Agent in each state.

6. Register Your Business With the State

If your business must be registered with the state, you’ll be asked to provide the following information:

• Name of the business
• Name and address of the person filing the business
• A valid email address
• Mailing address of the principal location
• Name and address of the Registered Agent
• Name and address of each business owner
• Any optional provisions to your Articles of Organization, such as the number of directors or any limitations on directors’ liability
• A form of payment, such as a credit card, check, or money order

Here’s a run-down of what you’ll need to do to register your business in Georgia if applicable.

Forming a Sole Proprietorship:

• As noted previously, business owners do not have to file any organization documents to form and operate a Sole Proprietorship in Georgia.
• You’ll need to file a DBA if you will be doing business under a fictitious name, and, as with any business, you’ll have to obtain any required licenses and permits to operate legally in state and local jurisdictions.

Forming a General Partnership:

• As with Sole Proprietorships, Georgia state does not require General Partnerships to register their businesses formally.
• If using a business name that does not reflect the legal names of the business partners, the partnership must file a DBA.
• Also, although not required by state law, partners should consider having a written partnership agreement to document all responsibilities and rights of the business’s partners.
• General Partnerships must obtain whatever licenses and permits are required for them to operate legally in the state, county, and local municipality.

Forming a Limited Partnership:

• Forming a Limited Partnership in Georgia requires registering the business with the Office of the Secretary of State.
• You can register a Limited Partnership online, by mail, or in person.
• The easiest method is to register online, which costs $100, payable with an approved credit card. The processing time for an online registration is seven business days, but you can expedite the process by paying extra.
• To register by mail, you’ll need to download and print out a form, fill it out, and send it, along with a $110 fee. The processing time for a mailed registration is 15 business days, also able to be expedited for additional fees.
• Registering the LP in person enables you to have processing completed in as little as an hour. You must download and print out the registration form and bring it to the Office of the Secretary of State in Atlanta. The minimum you’ll need to pay is $110, but you can pay an additional $250 for same-day processing or $1,000 for one-hour processing.
• As with a General Partnership, a partnership agreement isn’t mandated by the state, but it can help ensure all partners know their responsibilities and rights.

Forming a Limited Liability Company:

• An LLC must be registered with the Office of the Secretary of State. Note that this information pertains to a Domestic LLC, which is a business that will be formed and operated in Georgia.
• A foreign entity is a business that already exists in a state other than Georgia and wishes to extend its operations. Foreign entities must follow a different procedure to register to do business in the state.
• An LLC can be registered online, by mail, or in person. The fees for registering an LLC are the same as those for a Limited Partnership, with the same options available for expedited processing times.
• While Georgia doesn’t require LLCs to submit an operating agreement, which defines how the business will run and the responsibilities of each member, the document plays a critical role in the operations of the LLC and is highly recommended.

Forming a C Corporation:

• Requirements for registering a C Corporation in Georgia vary depending on whether the business is considered a domestic or foreign entity.
• Your registration paperwork also must specify whether the business is a for-profit Corporation or a nonprofit Corporation.
• The business may be registered online, by mail, or in person, with the fees required the same as those for an LP or LLC. The same additional costs for expediting processing times also apply.
• Profit Corporations must include the total number of authorized shares the company will have when registering with the Secretary of State, while nonprofits must state whether the Corporation will have members.
• An S Corporation must also be registered with the state, as it is simply a Corporation with a particular tax election.

7. Obtain an Employer Identification Number

Any business that hires employees must have an Employer Identification Number (EIN), which is a nine-digit ID number from the IRS, sometimes referred to as a Federal Tax ID Number. A business also needs an EIN if it operates as a Corporation or Partnership, files certain tax returns, has a Keogh retirement plan, or is involved with an organization such as a trust or estate. Often, a bank will require that a company have an EIN before it can open a business bank account, and it may be necessary when filling out other paperwork.

8. Open a Business Bank Account

Keeping a business entity’s financial accounts and records separate from those of the business owners is imperative for accurate bookkeeping and legal compliance. You should establish a business bank account and keep business funds completely separate from personal funds. Use separate checking accounts and a business-only credit card for everything you charge that’s business-related. That not only helps you establish business credit and track expenses, it will save you time and effort at tax time, as you won’t need to separate personal and business expenditures. Mingling personal and business finances is a dangerous practice for a business, as it can result in fines and jeopardize personal liability protection afforded by an LLC or Corporation.

9. Understand Georgia’s Business Taxes

The types of business taxes you’ll need to pay depend on your business structure and purpose. You can get more information about taxes, tax forms, and how to file on the website of the state’s Department of Revenue. You can also get information and assistance from the Georgia Tax Center.

Generally, most businesses will pay the following taxes in Georgia:

• State Sales and Use Tax – The state levies this tax at 4%, but counties and cities can impose additional taxes. The Sales and Use tax generally applies to all tangible goods sold.
• Corporate Income and Net Worth Tax – Corporations that own property, do business in Georgia, or generate income from Georgia sources must pay a 5.75% income tax. Corporations may also need to pay a Net Worth tax based on the value of the business.
• Withholding Tax – Employers must withhold taxes from employee wages and remit them to the state.
• Partnership Tax – Any Partnership that owns property, does business, or generates income from Georgia sources must pay a 5.75% income tax.

Certain types of businesses must pay other types of state taxes, such as an International Fuel Tax Agreement for interstate motor carriers. Businesses also are subject to county and local taxes. An accountant or tax advisor is also a helpful resource for identifying tax obligations.

10. Obtain Business Licenses and Permits

Starting a business in Georgia may require business licenses, permits, and registrations from local, county, state, or federal agencies. Depending on the type of business you operate, you may need licenses to cover the necessary education or professional certification.

More than 50 types of businesses require licensing in Georgia, including athletic trainers, childcare centers, cosmetologists and barbers, dry cleaning shops, electrical contractors, insurance agencies, mechanic shops, plumbing contractors, professional counselors, social workers, and marriage counselors, restaurants and food trucks, and used vehicle dealers.

Georgia’s Professional Licensing Boards Division oversees approximately 25,000 businesses within the state that require licenses. You can find a complete list of which types of businesses must have licenses, the fees involved, and other information on its website.

11. Research Other Business Essentials

Every state has rules and regulations that apply to businesses, and Georgia is no exception. In addition to topics already covered, there are other business essentials you’ll need to learn about. Some of them are explained here:

• Georgia requires certain types of insurance, including liability insurance for automobile owners and workers’ compensation coverage for employers with three or more full-time or part-time employees. Other types of insurance may be needed when applying for certain licenses or permits. Regardless of what type of business you have, you’ll want to make sure you keep current with policies such as property, motor vehicle, and life and health insurance.
• How you’ll fund your business is something you should consider early on, as even if you don’t need additional funds to get it up and running, you’re likely to need them if you want to expand or hire employees. Consider different types of loans, possible investors, and other sources of cash.
• If you hire employees, you’ll need to consider many human resource-related responsibilities and regulations. This includes registering, reporting, and paying for payroll taxes with the state.
• Georgia offers state tax exemptions and credits in some cases that could help you grow your business.
• You’ll also need to be aware of any rules imposed by the local municipality in which your business is located. For example, businesses physically located in Georgia must comply with the local municipality’s zoning regulations.

12. Stay in Compliance

Georgia businesses must operate legally and remain in good standing if they wish to continue operating. You’ll need to file an annual registration between January 1 and April 1 of each year and pay a $50 fee for the service. You can file the registration online at the Secretary of State’s Online Services Page, or have a filing service manage the annual reporting for you.

Also, be sure to remain in compliance by keeping your business and personal finances separate, keeping up with all licenses and permits, tax filing requirements, and following any other applicable regulations. Business owners should ask their attorneys and tax professionals if they are unsure of the obligations they need to fulfill to maintain corporate compliance.

13. Keep Learning

Keeping a list of resources handy enables you to reach out for information and insight whenever you need it. Here are a few websites I believe you’ll find helpful :

• Georgia Entrepreneurs & Small Business
• Georgia Women-Owned Small Business Resources
• Georgia Minority-Owned Small Businesses
• Georgia Mentoring and Education
• IRS Website
• U.S. Patent and Trademark Office
• Resources for Starting and Maintaining a Business in Georgia
• Georgia Secretary of State

Finally, once you’ve consulted with legal and accounting experts to determine what you need to do, CorpNet is here to help you with all your business registration and compliance filings. We’ll save you time and legal costs while ensuring your filings are completed accurately and on time.