While it is often overlooked in the discussion of the best states for launching a new company, Georgia offers a nurturing environment for aspiring entrepreneurs. As a lack of cash flow is the main struggle for most early-stage businesses, any conditions that lighten the expense burden on business owners are more than welcome, and Georgia has several.
First, there’s the state’s low corporate tax rate, which the Tax Foundation ranks as the 6th most business-friendly in the nation. Then, there’s Georgia’s affordable cost of living, rated 11th in the country by US News.
Statistics give further proof of Georgia’s favorable business climate: the state is top 5 in both rate and opportunity share of new entrepreneurs, according to a Kauffman study. Now that you’re convinced, it’s time to get started. Read our handy step-by-step guide to starting a business in Georgia to ease the process of launching a company in the Peach State.
Georgia small business statistics at-a-glance
- Georgia’s corporate tax rate is the 6th most business-friendly in the U.S.
- Georgia’s cost of living is the 11th lowest in the country, while it’s housing affordability ranks 19th.
- The state’s rate of new entrepreneurs is 0.42%. This is the percentage of the population that starts a new business.
- Georgia’s opportunity share of new entrepreneurs is 90.92%, which is the ratio of people starting a business by choice, rather than necessity.
- 1 million small businesses operate in Georgia, accounting for 99.6% of the total businesses in the state.
- 1.6 million Georgia residents are employed by small businesses, which is 43% of the state’s workforce.
- A startup in Georgia generates an average of 5.88 new jobs in its first year.
Starting a business in Georgia in 12 steps
1. Develop an idea
Every successful business starts with a good idea. Ask yourself these questions:
- Which product or service can your business provide that doesn’t already exist on the market?
- How does your business idea refine an existing product or service?
Determine your personal strengths and interests: developing an idea that suits your personality and positive traits will provide motivation to put in the long hours necessary in addressing the myriad challenges you’ll face in getting your business off the ground.
Figure out how to market your expertise: if your business idea is not something you totally believe in and can sell effectively, it will be much harder to succeed.
2. Do the research
Once you have an idea, it’s time to put it through the wringer and decide if it’s viable in the market. Conduct market research to arrive at answers to these key questions:
- Is there a demand for your product/service in Georgia?
- Who is your target market?
- Do existing businesses in Georgia offer a similar product/service?
- What makes your business unique compared to the competition?
Coming up with satisfactory answers may require refinement, or even a total overhaul, of your original idea. Be patient: you’ll only want to proceed with the next steps after determining that a niche exists in the Georgia market for your business idea.
3. Draft a business plan
Now it’s time to write the blueprint of your business. A great business plan should chart the path of your company from infancy to success while being able to attract investors to provide financing.
Your business plan ought to include the following sections:
- Executive summary – An overview of your business and why it will be successful
- Description of business – Explain the advantages of your business and the problems it solves
- Market research – Provide research on your industry, target market, and potential competitors
- Organization and staff – Detail the nuts and bolts of your business; how it’s structured and who will run it
- Product or service description – State what you are selling or offering
- Marketing plan – Explain your strategy for attracting customers
- Fundraising – The money you’ll need in the next five years to grow your business and how you’ll spend it
- Financial forecast – Data and balance sheets providing a financial forecast for your business
- Appendix – An optional section with supporting and/or requested documents like resumes, letters of reference, permits, etc.
4. Secure funding
Every business needs money to get off the ground. In fact 82% of businesses that fail do so because of a lack of cash flow, U.S. Bank found in a recent study. Your business plan should include a detailed estimate of the funds you’ll need to cover expenses for at least a year, so now it’s time to acquire the money.
If you aren’t wealthy enough to self-fund your business, you can choose from a number of other funding options. These include a loan from the U.S. Small Business Administration, taking out a loan from a commercial bank, launching an equity crowdfunding campaign, or securing funding from an angel investor or venture capitalist group active in Georgia.
An angel investor is a wealthy individual who invests their personal finances in a startup, typically in the beginning stages, whereas a VC is a group of investors that will fund a business throughout its existence.
Which route you choose depends on the specifics of your business: angel investors typically invest smaller sums to help get a startup off the ground, while VCs invest larger sums of money in exchange for a greater say in the operations of a business. Smaller startups usually opt to pursue funding from angel investors. Plenty of both types of investors are operating in Georgia.
Georgia’s Qualified Investor Tax Credit, which offers an annual tax credit of up to $50,000 for investors in early-stage Georgia startups, provides a great incentive to angels and VC’s in the state. The climate for seeking investment in the state has never been better.
Georgia Angel Investors and VCs
- Atlanta Technology Angels – Provides large investments of $200K – $2M to tech-based startups in Georgia and the Southeastern United States.
- Atlanta Ventures – An investment group employing a hands-on approach to funding and growing area startups.
- Central Piedmont Investment Group – An accredited angel group based in Central Georgia.
Additional Investor Resources
- AngelList: Georgia Angel Investors – An exhaustive directory of nearly 5000 investors interested in funding Georgia startups. Individual listings will tell about an investor’s professional background, past investments, and fields of interest.
- Georgia Investment Network – Another directory of angel investors seeking startup funding opportunities in the state.
- Southeast Investment Group – A large network of over 60 VC funds and investors collaborating to identify and fund promising tech startups in the region.
5. Decide on a legal business entity
The form of business entity you choose will affect many factors going forward. There are 3 main options to decide from:
- Sole proprietorship – The name for running a business by yourself. Legally, you and your business are one and the same, with no separate legal entity for your business. A partnership is legally identical to a sole proprietorship, except that it comprises two or more people.
- Corporation – A complex legal structure that is a separate entity (providing legal protection to owners) from the owner and comprises directors, officers, and shareholders.
- LLC – AKA “Limited Liability Company”, this is a hybrid entity between a sole proprietorship and a corporation that possesses advantages of both. An LLCs provides the liability protection of a corporation, yet isn’t subject to double taxation as the profits go through your personal tax return.
Nowadays, LLCs are the option of choice for small business owners as they are easy to manage and provide the benefits of a corporation while lacking their complex structure. Taxwise, they operate more like a sole proprietorship.
You may want to consult with an attorney to help decide which entity works best for your business.
6. Register your business
After deciding on a business entity, it’s time to take a big step and officially register your business with the state. The process varies depending on whether you are forming a sole proprietorship, LLC, or corporation.
For sole proprietorships
Those starting a sole proprietorship in Georgia are not required to register their business with the state, although you should register your business name with state authorities if you are not operating under your own name. First, check to see if your chosen business name is available at the Georgia Division of Corporations website. If it’s good to go, you can proceed to register your name, which can be reserved for up to three years at a time.
For LLCs and corporations
For entrepreneurs forming an LLC or a corporation, you should first register your business name, and then proceed to file the necessary application for forming your business. Corporations are required to file Articles of Incorporation, while LLCs are required to file the Articles of Organization. Both forms can be found on the Georgia Secretary of State website, and the application can be either filed online or printed and mailed in. Payment of applicable fees can be done with a major credit card.
According to federal law, forming an LLC or corporation requires businesses to appoint a registered agent to receive process notifications and other correspondence from the Secretary of State. You can be your own registered agent if you have a Georgia address, but first-time entrepreneurs should consider employing the services of a professional, which typically costs $50 to $200 a year.
7. Acquire federal and state tax IDs
Now you should obtain a Federal Employer Identification Number (EIN), which is like a social security number for a business and allows you to open bank accounts, handle payroll, and file taxes.
Each state has its own laws and taxes regarding businesses. Visit the Georgia Tax Center for a list of state taxes applicable to your business, and step-by-step instructions on how to create an account and pay them.
8. Open business banking and credit accounts
Opening a bank account for your business is crucial because it allows you to separate company assets from your personal assets, and makes filing taxes a lot easier. This is a recommended step, even if you are operating a sole proprietorship.
It’s also a wise idea to obtain a credit card for your business because it will help you isolate business expenses and build up credit for your company, which may help in securing investment in later stages.
Banks operating in Georgia good for small businesses
9. Get the necessary licenses and permits
Depending on the type of business you are opening, you may need to apply for a number of permits and licenses to operate legally. For example, a restaurant will need a liquor license, and a pawn shop will need a reseller’s license. The paperwork may prove a hassle, but it’s a necessary ordeal that will protect you from fines, lawsuits, and other legal hazards.
Visit the Georgia State Government’s page on business licenses for information on acquiring the licenses and permits you’ll need to operate. They recommend that you visit your local Chamber of Commerce for more information on what licenses you’ll need as requirements vary depending on the jurisdiction.
10. Choose a location
Whether you are running an online business or opening a restaurant, location is everything. Be aware of the demographics of the neighborhood or town that you are considering: Are the local residents likely to visit your business? Will nearby competitors take a share of your potential profits?
Georgia cities offer a variety of climates in which to start a business, from the expansive metropolis of Atlanta to the hip college town of Athens. Where you choose to launch your company depends on the factors that you value, as well as a city’s local market and opportunities.
11. Get insured
No matter what type of business you form, buying insurance coverage to protect yourself in the case of property damage or legal action is a good idea. In fact, businesses with employees are required by the federal government to have two types of insurance, while others are strongly encouraged are required at the state level, depending on your business type. Consult with a licensed insurance agent to find out which types of insurance you should get.
Required forms of insurance:
- Workers’ compensation: Covers medical costs and disability benefits if an employee is injured or becomes ill on the job.
- Unemployment insurance: Provides benefits to workers after a loss of job through no personal fault.
Recommended forms of insurance:
- Professional liability insurance: Covers losses as a result of property damage, medical expenses, libel, slander, and negligence claims.
- Commercial property insurance: Covers property damage to business owned properties and possessions as a result of fire, theft, or storm.
- Disability insurance: Provides short-term benefits for employees suffering an illness or injury. Required in certain states such as California, New York, and Hawaii.
12. Develop an internet presence
Establishing an identity on the web is an important investment in a business’s future development. Here are some key steps in the process:
- Register a domain name for a company website (You can use domain.com, Bluehost, GoDaddy.com, Namecheap.com). Design the website and fill it with content.
- Create profiles on the popular social media services (Twitter, Facebook, Instagram)
- Register a Google profile for your business
- Create accounts on review sites such as Yelp, Google Reviews, and TripAdvisor
Georgia small business resources
- Georgia Secretary of State: Creating a New Entity – The state’s business registration portal providing instruction and applications for registering all types of businesses.
- Georgia Tax Center: New Business Registration – Get your business set up to pay state taxes.
- SBA: Georgia – The Georgia district office of the U.S. Small Business Administration.
- University of Georgia Small Business Development Center – Provides tools and resources to assist in advancing state small businesses.
- Startup Atlanta – A non-profit network dedicated to connecting and assisting the Atlanta startup community.
- Atlanta Inno – The Atlanta portal of the nationwide network for startups and small businesses. Features the latest local business news, as well as information on area entrepreneur events and workshops.
- Invest Atlanta – The official city economic development authority committed to boosting the local economy and its competitiveness in the global market.
- Enterprise Innovation Institute – Georgia Tech’s startup incubator program, which is the largest university-based business and industry program of its type in the nation.
- Collabtech Incubator – A thriving biotech incubator affiliated with Georgia State University and based in downtown Atlanta. Tenants of the program have access to CollabTech’s equipment and workspaces.
Georgia SCORE branches
The nation’s leading business mentorship network has a number of regional branches active in Georgia: