Why form a Georgia LLC?
Often times, the main reason for forming a Georgia Limited Liability Company is to create a separate legal business entity that is legally separate from the members/owners. This legal separation can provide liability protection for the personal assets against the debts of the business. Starting an LLC in Georgia is an easy step in establishing a new business, while at the same time, one of the most important. Creating a small business can create risk, and when you establish an LLC you reduce the overall risk.
Georgia LLC name requirements
The state of Georgia has requirements set in place to prevent deceptively similar LLC names and the confusion caused between similarly named companies. The name of the LLC must end in “limited liability company” or its abbreviation. If a name of the proposed LLC is the same of an existing Corporation or LLC, it cannot be used. The use of common words such as “a”, “an” or “the”, "and or &" or the use of punctuation do not provide any distinction between companies. The common use of abbreviations of certain names is not considered distinguishable. Keep in mind that words that can be spelled differently such as “Boys” vs. “Boyz” do not provide distinction. Customers who wish restricted words in their LLC name must contact the agency responsible for controlling its use. The use of “insurance”, “assurance” or “surety”, “bank” “credit union”, or “trust”, “college” or “university” is controlled by these various Georgia agencies.
Business Debts - Who is Liable?
A Georgia LLC, if operated correctly, is a separate legal entity from the individual owners. If the LLC has created debt that it cannot pay or a claim from a lawsuit, the legal entity alone will be held responsible for that debt and not the members or owners. If this were a sole-proprietorship, a limited-partnership, or a general partnership, the liability would be the responsibility of the individual owner or partners.
Maintaining compliance
One of the main annual requirements for Georgia LLCs is the filing of the annual registration / annual report. This basic form is filed with a $30 filing fee, and is simply to keep the state informed as to the current members, addresses, etc. of the specific LLC. This annual filing is also an easy way to update information and confirming that the entity still exists. Staying in "active/compliance" status with the Georgia Secretary of State is a key to maintaining liability protection.
Dissolving a Georgia LLC?
After the Articles of Organization have been filed with the Georgia Secretary of State, most LLCs have an unlimited life, unless otherwise stated.
However, when the members of the LLC decide to cease operation and close the business, a Certificate of Termination is required to be filed with the Georgia Secretary of State. This brief Certificate of Termination document requires a $20 fee. One of the most important things to understand when dissolving a LLC in Georgia is that the business must be in "active/compliance" status with the Georgia Secretary of State BEFORE it can be terminated. If your business is in "active/noncompliance" status then the LLC must file the required missing documents to regain "complaint" status.
Tax classification of a Georgia LLC
By default, LLCs have "pass-through taxation" and therefore single member LLCs will be taxed as a sole proprietorship (referred to as an entity to be disregarded as separate from its owner), and multi-member LLCs will be considered to be a partnership. However, Georgia LLCs can file IRS Form 8832 Entity Classification Election if the entity wishes to file taxes as a corporation.
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