7 Steps to Start a Business in Georgia

Starting a small business in Georgia is exciting. The endless possibilities of taking control of your future and working for yourself are enticing, but it’s rare for people to embark on this journey. Since you’re reading this, you probably have an idea developing on how you can set up your business to take control of your own future. It's time for those dreams to turn into reality.

This blog will review seven steps to start a business in Georgia. The goal will be to give you the highlights and provide direct links to the steps below. There are websites out there that charge for every step of this process so our secondary goal will be to discuss when and where we recommend you engage with professional help.

If you prefer to watch a video overview, we also have a video that shows the steps involved to watch.

Step 1: Determining your corporate structure

The first step to starting your small business in Georgia is to determine your corporate structure. This will have an impact on your operations, your legal liability, and your taxes.

There are four main options when starting your business:

1. Sole Proprietorship – this is both the easiest and riskiest option. When you operate as a Sole Proprietor, you must be the only owner and you are wholly liable for the liabilities of the business. This means that if you get sued, your home and any other personal assets are on the line. If you stumbled into business or started part time as a 1099 contractor, you probably started this way.
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2. Limited Liability Company (LLC) –the most common method of starting a business is the LLC. An LLC can be taxed in several ways such as the single member LLC, a partnership, an S-Corp, or a C-Corp. The main benefit of an LLC is Limited Liability. When you create an LLC, you are limiting your liability to the corporate assets. In the event you are sued, your personal assets will most likely be protected.
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3. S-Corporation – an S Corporation is a tax-election. Most S-Corporations are LLCs which protect you from personal liability. The main difference from an LLC is how the income is taxed. In an S-Corp, your business profits are not subject to FICA taxes.
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4. C-Corporation – a C-Corporation is the most formal corporate structure. Whereas an LLC passes income & taxes through to your personal return, a C-Corp pays its own taxes and has its own separate tax rate. This provides the greatest liability protection and separation from you as an individual. It also incurs the greatest administrative work. There can also be tax benefits for starting your business as a C-Corp when you sell the business, so it may be worth looking into!
   

We will also have a blog live soon that goes into more detail on the pros & cons of each corporate structure. This is an area where we would recommend you speak with a professional about the ideal structure for starting your business. This could be an attorney, accountant, or financial planner who specializes in working with business owners.

Step 2: Legally Setting up your Business

Once you have determined which option is right for you, you will need to form your business legally. This means drafting and signing the documents required to form the business.

These documents fall into two main categories – formation documents and operating documents.

Formation documents create your business and determine which state it will operate in, what type of business it is, where it is located, who owns the business, and much more.

• For LLCs, these are Articles of Organization.
• For Corporations, these are Articles of Incorporation.

This is the first step in setting up your business.

After you have completed your Articles of Organization/Incorporation, you should then set up your Operating Agreement (LLC) or Bylaws (Corporations). While the articles will form your business, the operating agreement and bylaws spell out how your business will be run on a day-to-day basis. An operating agreement for an LLC will govern how the various members of an LLC can interact with each other in the event of a sale or death and can even govern how expenses and taxes are allocated. Corporate bylaws will not be able to allocate expenses and taxes as these are matters of corporate law. However, they will still apply to the daily management of the company and board.

The operating agreement/bylaws may be the single most important document you set up for your business. While this document is important for all businesses, it is doubly important for businesses with more than one owner. When there is a disagreement, these are the documents that will govern how the business should operate.

You can find samples of Articles of Organization/Incorporation and Operating Agreements/Bylaws online or use a service like LegalZoom. In my opinion, these are sufficient for Sole Owners. However, if you have more than one owner, I highly recommend hiring a corporate attorney to review the documents with you to make sure the business is organized and operated in a fair manner. It may seem expensive to start, but the attorney’s fees will pay for themselves in the event of a dispute.

Step 3: Register with the Secretary of State

Once you have started your business in Georgia, the next step is to register the business with the Secretary of State’s Office. The website has helpful information on how to properly do this and here is a quick guide:

1. Go to https://ecorp.sos.ga.gov/
2. Select Annual Registration with Changes
3. Create a Login
4. Fill out information requested
5. Pay your filing fee

Once you have done this, your business will be registered to operate in the state of Georgia.

Step 4: Check for Licenses

The next step to starting your business in Georgia is to check for industry, city, or county specific licenses. In many industries, you may be required to apply for an additional license to operate. These may require exams, additional fees, or ongoing compliance. A common example of an industry requiring additional licensing is the food & beverage industry.

Always check to determine if you need an additional license before starting operations. In some industries, there may also be federal licensing (like financial planning) so always check to make sure you are operating within the bounds of the law.

Step 5: Get an Employer Identification Number or EIN

Now that your business is registered with the state of Georgia and legally organized/incorporated, it’s time to get your Employer Identification Number or EIN. An EIN is essentially your business’s Social Security Number. Your EIN will be used to fill out W-9’s, make tax payments, and file taxes. Furthermore, it will also be required on most financial forms and applications.

You can request your EIN using the IRS’s website here.

This is a very simple process, and you should be able to do this on your own. Be warned, many business formation companies will try to add this to your cart if you are purchasing operating agreements or articles from them for a nice, easy $50-$100. I do not think applying for your EIN is something you need to pay someone to do as it can easily be done on your own.

Step 6: Setup Bank Account

Now that you have your EIN and your business has been formed, you can get to the fun(?) part! Banks will require you to have your EIN and articles before they allow you to set up a bank account. To do this, all you will need to do is fill out your bank of choice’s application and submit your organizational documents proving that you are a legitimate business entity.

Here is a quick guide from the SBA on setting up a business bank account if you don’t already have a bank in mind.

Now that you have your bank account, you can start receiving & making payments! Remember to keep your business and personal finances separate to maintain your legal shield and keep your books accurate.

Step 7: Register with the Department of Labor and Department of Revenue

After you setup your bank account, the next step in starting your business in Georgia is to register with the Department of Labor and Department of Revenue. These departments may not apply to every business owner, but you should check to see if you need to do this.

Registration with the Department of Labor is required if you have employees. You do not need to do this if you do not have any employees. However, you will be considered an employee if you are an S-Corp or C-Corp. The DOL website will allow you to set up your account and unemployment insurance tax payments.

The website for the DOL is https://dol.georgia.gov/. To register and create your account, you can go directly to their portal.

The next Department to register with is the Department of Revenue. The main purpose of this is to setup and pay the income taxes that are withheld from your employees’ paychecks through the Georgia Tax Center. The Department of Revenue will also be where you can pay business taxes. For example, this will be where you go to make your payments for the PTET Election.

The Department’s website is here and you can register for the GA Tax Center here.

You should be able to set up your accounts on your own. However, you may desire some professional assistance in properly setting up your tax withholding payments and bookkeeping. This would be a great area to speak to your accountant.

Summary

After 7 steps, you are ready to go! Your business is started in Georgia, and you should be able to operate legally. Now it’s time to get out there and generate revenue to make a profitable, long-lasting business. We hope that this guide was helpful and provided an easy, actionable process to set up your business.

If you’re a business owner or a prospective business owner contemplating starting a business, Ironclad Wealth Management is here to help. We are financial planners who work with business owners with 1-25 employees who place an emphasis on tax planning, protection planning, and investment planning.

Even if you are not in a position to become a client, we are happy to take 20 minutes to introduce ourselves and see if we can answer any questions. If we can’t help, we are also happy to refer you to an attorney or accountant we trust.

Reach out here to talk with an advisor today!