There are many benefits to starting a corporation in Georgia. Some of them include protecting your personal finances and assets by limiting your liability, reducing the self-employment tax you pay, and the flexibility for creating, transferring, and selling stock.
The following step-by-step guide will show you how to start a corporation in the state of Georgia.
1. Select a name for your corporation
Naming your Georgia corporation is one of the first steps in legally incorporating in the state. There are a few Georgia corporation naming requirements that you need to meet.
General corporate name guidelines
The following naming guidelines must be adhered to when deciding on a suitable name for your Georgia corporation:
- If you intend on using the words “university or college” in your Georgia corporation name then you should seek approval from the Georgia Nonpublic Postsecondary Education Commission
- If you plan on using the words bank, Banque, banc, banker, company, banking, banking house, bankruptcy, Bancorp, savings, credit union, trust, or trust company, then you need to get approval from the Georgia Department of Banking and Finance
- Approval must be sought from the Georgia Office of Insurance and Safety Fire Commissioner in order to use the following words: assurance insurance, fidelity, surety, reassurance, reinsurance, or indemnity
- Your Georgia corporation name cannot exceed 80 characters
- Your Georgia corporation name must not contain terms, phrases, or language that may mislead the public into believing that the corporation is formed for any unlawful purpose other than what is included in the Articles of Incorporation
- Your Georgia corporation name must be different from all other entity names on file with the Georgia Secretary of State
- Your Georgia corporation name must contain the following abbreviations of words: corporate Inc. Co, ltd, corporation, company, Inc., or limited
You may want to consider trademarking your Georgia corporation name. As your business grows, this will help you protect your company’s name from intellectual property theft or misuse. The trademarking process may be initiated on the US Patent and Trademark Office’s website. Alternatively, you may submit an application for registration with the office of the Secretary of State.
A Georgia corporation’s entity name is the legal name under which the business is registered. It’s also the name that must be submitted with all formation documents.
DBA (Doing-business-as) name
It is a state requirement that all individuals, general partnerships, sole proprietorships, and corporations that regularly transact business in the state of Georgia under a different name from the entity name file a DBA with the clerk of the Superior Court. This needs to be done in the county where business is conducted.
2. Nominate a registered agent
A registered, resident, or statutory agent acts as your corporation’s main point of contact with the Georgia Secretary of State. Therefore, the individual is tasked with receiving important tax notifications as well as compliance documents from the state.
The main role of the statutory agent is to accept service of process, which is an action that informs a business when there’s a pending lawsuit against one’s company.
Anyone may be nominated as a registered agent, including yourself, however, certain requirements must be met:
- The agent must be at least 18 years old
- The agent must have a physical address in the state of Georgia and not a PO Box address
- The agent needs to maintain availability during regular business hours at the stipulated address
3. Appoint initial directors at the organizational meeting
The next step in the process is holding the first organizational board meeting. During this first meeting, the company will need to handle a few formalities such as:
- Recruiting initial directors or board of directors
- Appointing corporate officers
- Selecting a business bank account
- Issue stock
- Adopting bylaws
- Approving the official stock certificate form
- Deciding on the corporation’s financial or fiscal year
Every Georgia corporation needs to have at least one initial director who will serve on the board until the first annual meeting of shareholders.
You will also need to nominate an incorporator who is responsible for signing the organization’s Articles of Incorporation.
4. File Articles of Incorporation
In order to legally and officially form your Georgia corporation, you need to file the Articles of Incorporation. It’s also referred to as a Certificate of Incorporation. It’s a document officially creating a Georgia corporation.
The state of Georgia does not provide a fillable form or template for the Articles of Incorporation, so you need to draft your own. Ensure that the document covers the following basic information such as:
- The names and addresses of the incorporator or incorporators
- The number of authorized shares the corporation intends to issue
- The name and physical street address of the resident agent
- The name and principal address of the business
- If your business plans on issuing more than one authorized share class or series, this must be stated in the Articles of Incorporation
Once you have the necessary information compiled, feel free to file online with the Georgia Corporations Division or alternatively mail it to the following address:
Office of Secretary of State
2 Martin Luther King Jr. Dr. SE
Suite 313 West Tower
Atlanta, Georgia 30334
An important note when filing the articles by mail is that you must submit a Transmittal Information Form as well.
An additional step required in the state of Georgia is filing a Notice of Incorporation. All Georgia corporations or corporation business owners must publish a Notice of Intent to incorporate on any notable newspaper in the county where the corporation’s initial registered office is to be located. The notice must be sent to the newspaper no later than the next business day after filing the Articles of Incorporation with the Secretary of State.
5. Create and approve bylaws
Bylaws are rules and regulations that lay down how the organization will be operated. The corporate bylaws must be created in such a way that it makes the rules clear to all members of the corporation.
Additionally, the bylaws should supplement any existing rules laid down by the federal government or the state and should include the following information:
- How the corporation will be run
- The role of officers and directors
- How corporate records will be stored and maintained
- The process of holding meetings, electing directors and officers as well as voting procedures
- The process of handling company disputes
- The date of the annual shareholder meeting
- The process of amending or adding bylaws in the future
- How contracts will be negotiated as well as the fiduciary duties to the corporation
6. Select a share structure
A share of stock represents the unit of ownership of a corporation. Therefore, each share of stock is an indication of the percentage of ownership of the business. For example, if a corporation decides to issue one share of stock, then the shareholder or stock owner owns 100% of the company.
Additionally, shares may be structured into classes, and each of these classes is termed a shared class. Furthermore, each share class holds a different set of rights and privileges. A corporation is allowed to have multiple classes holding any number of shares.
7. Obtain an EIN
An EIN is required by all Georgia corporations, irrespective of whether you registered your new business as a separate legal entity or not. An EIN stands for Employer Identification Number and is a unique nine-digit code assigned by the Internal Revenue Service to all business entities in the states. It is used as a form of identification and is essentially a Social Security number for your corporation.
Obtaining an EIN is completely free of charge, and you need to apply for it online on the IRS website. Alternatively, you may download the EIN form, also known as Form SS-4, and submit it to the following address:
Internal Revenue Service
Cincinnati, OH 45999
Once you’ve received your EIN, it will allow you to open a business bank account for your corporation, assist with federal tax and state tax purposes, and hire employees for your business.
8. File Georgia state taxes
Your Georgia corporation may be liable for the following state taxes:
- Estimated taxes: Most corporations in the state of Georgia will need to pay estimated taxes throughout the financial year. Ultimately this depends on the amount of income and profit that you expect to make.
- Employee insurance tax: If you plan on hiring employees for your Georgia corporation, then you need to pay insurance and taxes to the state for each employee. Refer to the Georgia Department of Labor website for more information.
- Corporation tax: All Georgia corporations registered as a C corporation, must our corporate tax returns to the Internal Revenue Service and also pay corporation taxes on profits. Additionally, shareholders are liable to pay tax on dividends received from a Georgia C corp. This ultimately results in double taxation.
9. Georgia business licenses and permits
Your Georgia corporation, based on business structure or type of business may need the following licenses and permit to conduct business in the state:
- Occupational tax certificate: The state of Georgia does not have a general business license. However, many cities require corporations to apply for an occupational tax certificate to legally operate in the state. The rules for business registration will vary depending on where you are doing business as well as the nature of your business.
- Sales tax certificate of exemption: If your corporation plans on buying merchandise for the purposes of resale, then you’ll want to obtain a Georgia sales tax certificate of exemption. The benefit of having this sales tax certificate is that you will not be liable for sales tax for merchandise that is being resold to customers
- Professional license: Interior designers, home inspectors, plumbers, accountants, landscapers, and all other businesses considered professional corporations may need to apply for a professional license in order to legally operate or conduct business in the state.
10. Annual report requirements in Georgia
Georgia state law dictates that all corporations in the state file a Georgia annual registration report or annual report each year with the Georgia Secretary of State Corporations Division. The purpose of submitting an annual report is to provide public disclosure of the corporation’s operations and financial activities each year.
Failure to submit an annual report to the Georgia state’s office means that your corporation’s status could be revoked or fortified.
11. Costs of starting a corporation in Georgia
The filing fees below apply to all Georgia corporations:
- Name reservation: $25
- DBA name: $172
- Articles of Incorporation: $110
- Annual report: $50
- Georgia Certificate of Good Standing: $10
Next steps after forming a corporation
After filing the relevant paperwork and taking the necessary steps to get your corporation off the ground, there are a few additional steps that you’ll need to comply with in order to keep your corporation in good standing and bring in profits.
Obtain business insurance coverage
While forming a corporation does come with its own set of benefits, such as limiting your personal liability, you’ll still need to apply for business liability insurance coverage. This is because the personal liability that you’re afforded when creating a corporation is not unconditional. Your personal assets could still be at stake. So ensure that you have liability protection from personal injury or property damages in the event of a lawsuit.
Prepare for business
In addition to opening up a corporate bank account in your business name to separate your personal finances from your corporation’s financial transactions, you should prepare for business opportunities. If you plan on working with employees, customers, and contractors, then you should have the relevant paperwork to document each of these relationships. For instance, an independent contractor agreement is necessary if you plan on using independent consultants. Alternatively, a non-compete form is required prior to hiring any employees.
A Georgia Certificate of Good Standing is a legal document confirming that your business is compliant with Georgia state regulations. In the state of Georgia, it is also called a Certificate of Existence.
In order to form an LLC or limited liability company in the state of Georgia, you’ll need to file Form CD – 030, also known as the Articles of Organization, with the Georgia Corporations Division. This is a legal document that officially creates your Georgia limited liability company.
While an LLC does come with its own set of benefits, if you plan on having multiple people involved in your business, then it is better to register as an S Corp, as opposed to an LLC. This is because there will be oversight by the Board of Directors.
While a sole proprietorship is beneficial for low profit, low risk, and small-scale businesses, it does not offer protection for your personal assets. An LLC, on the other hand, is beneficial for most small business owners due to the liability protection that it offers.
Georgia corporations enjoy various advantages, including tax benefits and limited liability protection, as well as ownership interests that are easier to transfer.