Georgia has experienced an explosion of new business formation recently. In 2020, Georgia experienced the 2nd highest increase in new business formations compared to 2019, with 541,490 new businesses formed (an increase of 57.45% vs 2019). This huge increase in business formations shows that Georgia is a great place to start a business. In this guide, we’ll go over the 12 steps of how to start a business in Georiga.
- Research and Plan your Business
- Choose a Business Structure
- Choose your Business Name
- Register your Business
- Get an EIN
- Complete Georgia State Tax Registrations
- Apply for Georgia Business Licenses and Permits
- Open a Business Bank Account
- Set Up Credit Card Processing
- Establish an Accounting System
- Get Business Insurance
- Hire Employees and Set Up Payroll
|Doing Business in Georgia
Key Business Stats
|Georgia New Business Formation|
|New Business Formation Rank||4|
|Businesses Formed in 2020||541,490
(57.45% vs 2019)
|New Business Formation Per Capita Rank||3|
|New Businesses Formed Per 1,000 Population 2020||51 per 1,000 population|
|Business Formation Statistics generated using data from US Census Bureau|
|Cost of Doing Business in Georgia|
|LLC Formation Cost||$100|
|Corporation Formation Cost||$100|
|DBA Filing Cost||$165 avg. (varies by county)|
1. Research and Plan your Business
You might have what you think is an excellent business idea, but it’s important not to rush into setting up your business. Before you take any further steps, you need to do some research and come up with a business plan. If you simply forge ahead without any initial preparation, you could end up with a business that has little chance of success. Start your research with some market research and competitive analysis. This will give you an idea of the industry you want to enter, your target market, and what similar businesses already exist. It will also help you to define your USP – what are you going to do differently?
A business plan tells you and anyone else who might need to know how your business is going to develop and grow. It’s helpful not just when you’re launching your business, but also as you expand your new business too. Even if you have a good idea in your head of what you want your business to be, writing it down helps to clearly define what you want to do and why. Don’t make the mistake of thinking you don’t need one, as you might regret it later.
Your business plan doesn’t necessarily have to be hugely detailed. It just needs to provide the answers to some important questions about your business and where it’s going. Define the purpose of your business, who it’s helping, and what pain points it’s addressing. Consider your business model and how you’re going to grow it, as well as what you need to set up your business and get ready to launch. If you want to learn more about writing a business plan check out our guide here.
2. Choose a Business Structure
When starting a business in Georgia, you have to decide between a choice of different business structures. There are several reasons to think about this carefully and choose one that suits your needs. A business’s legal structure influences your personal liability risk, as well as your tax status, and more.
You will most likely be choosing between one of four common business structures: LLC (limited liability company), Corporation, sole proprietorship, or partnership.
Limited Liability Company (LLC)
99.6% of businesses in Georgia are small businesses, and many of them are LLCs. A limited liability company is a type of business that is legally separated from its owner or owners. Owners of LLCs have limited personal liability, meaning that they are protected from any financial or legal disputes affecting the business. For example, a debt that belongs to the business can only be collected from the business and not the owner. Another benefit of LLCs is that they have preferred pass-through taxation. Owners are also able to choose either C-Corporation or S-Corporation taxation.
Corporations offer another option for business owners that want to make sure their business is a separate legal entity. The owners of a Corporation are shareholders, and they each hold a percentage share of the business. The shareholders are issued stock that represents their ownership interest. Setting up a Corporation has both benefits and disadvantages. One of the advantages is the extra liability protection. However, Corporations also have higher tax rates, as they have to pay corporate tax before the profits can be split among shareholders.
Many new business owners select sole proprietorship as their business structure due to its simplicity. It can be a good choice for very small businesses with a simple setup. It’s easy to set up as a sole proprietor in Georgia. Although you will need a business license, there are no formal filings or registrations required. However, the downside of a sole proprietorship is the unlimited personal liability risk. This leaves owners vulnerable to being personally affected by any debts or legal disputes.
If your business will have two or more owners, you might consider a general partnership. It’s an easy way to run a business with multiple owners, without having to set up a separate LLC or Corporation. However, like sole proprietorships, partnerships also have unlimited personal liability, not only for their own actions but also those of their business partners. This means that this informal business structure can be a greater risk compared to other options.
For a more comprehensive breakdown of each of the four entities and how to choose between them, check out our detailed guide on the types of business structures.
3. Choose your Business Name
Every business needs a name. The next step for your Georgia business should be to choose one so that you can get ready for business registration. Your business name helps to form its identity and can affect how your business is viewed, so be careful to choose something that works for your business. Your business name should help you to start building your brand identity. You also want it to be something your customers can easily pronounce, remember, and search online.
Use our guide on how to think of a business name for more help.
4. Register your Business
After deciding which business structure is best for your Georgia business, the next step is to officially register your business. The steps for registering a business name in Georgia depend on which business structure you have chosen. Keep reading to find out how to register your preferred business type.
Form an LLC in Georgia
To register your LLC in Georgia, you need to file with the Corporations Division of the Georgia Secretary of State. You can do this online or you can fill out and mail the forms. You need to file Articles of Organization, for which there is a fee of $100 for online filing and $110 for paper filing.
Check that the name you want is available before you register your business. You can do this by searching the Business Entity Database on the Secretary of State’s website. When you have done that, you can file the Articles of Organization. You will need to provide several details, including the business’s name, address, and owner contact information. You will also need to designate a Georgia registered agent. At this stage, it’s also a good idea to create an operating agreement for your business.
For a step-by-step guide, check out our How to Start an LLC in Georgia guide, where we go over all the information required to complete your Articles of Organization filing correctly.
Form a Corporation in Georgia
To form a Corporation in Georgia, you need to file Articles of Incorporation with the Georgia Secretary of State. The fee for this is the same as the fees for forming an LLC – $100 online or $110 on paper. Another necessary step is to appoint a registered agent for your Corporation. You should also consider creating a corporate bylaws document to outline how your business will operate.
Use our detailed guide for more information on forming a Corporation in Georgia.
Register a Sole Proprietorship in Georgia
If your business will be a sole proprietorship, there’s no need to file any formal papers. You will need a general business license, and you might also need a Georgia Trade Name if your business name doesn’t include your own.
Get further information on this with our How to Start a Sole Proprietorship in Georgia guide.
Register a Partnership in Georgia
As with a sole proprietorship, there’s no need to formally file anything to form a partnership in Georgia. You may still need a Trade Name if you’re planning on a business name that doesn’t include the last names of the partners. A partnership agreement document is also useful to create at this stage, helping you and your business partner to agree on how the business will operate.
For a more detailed breakdown on how to start a partnership in Georgia, check out our how-to guide here.
5. Get an EIN
An Employer ID Number (EIN) is used by the IRS for both tax filing and employment. Not every business is required to have one, but it can be useful even for businesses that don’t need one. A Corporation, Partnership, or an LLC with two or more members/owners needs to have an EIN. Even if your business is a sole proprietorship or an LLC with only one owner, getting an EIN is a good idea because you can use it on forms in place of your social security number.
To get an EIN, simply visit the IRS website and use the Online EIN Assistant, which is free to use.
For more details on what an EIN is and how to apply for one, check out our helpful how-to guide.
6. Complete Georgia State Tax Registrations
In addition to IRS requirements, you will also need to register for tax at the state level. You will need to get a Georgia State Tax ID Number from the Georgia Tax Center. You will need to report wage and tax information to the Georgia Department of Labor, and you will need to register with the Georgia State Board of Compensation. Businesses selling physical goods will need to register for sale tax.
See a list of state taxes for Georgia at the Department of Revenue.
7. Apply for Georgia Business Licenses and Permits
In addition to registering with the Georgia Secretary of State and Department of Labor, you might also need to acquire other licenses or permits. Some of the reasons you might need to apply for a special license in Georgia include if your business sells alcohol, if your business provides cosmetology or barber services, or if you run a bar, restaurant, gas station, or spa. The Georgia Secretary of State can provide you with information on licensing. It might be useful to hire an attorney to help you to determine which licenses you need.
8. Open a Business Bank Account
A separate business bank account is important to have for your business. It ensures you can avoid mixing up your personal and business finances, which can cause problems for you later. Keeping your finances separate makes it easier to maintain your accounting and bookkeeping. It also means you won’t risk losing your limited liability if your business is an LLC or Corporation. Separate business finances protect you from debt and legal issues.
Not only does this make bookkeeping and accounting much harder, but it can also result in losing your limited liability status if you’re an LLC or Corporation. If you mix your personal and business funds, you can put yourself at serious legal risk if your business is sued by piercing the corporate veil. By opening a dedicated business bank account and use it strictly for business activity, you can avoid these risks.
Take a look at our guide to opening a business bank account to find more details on how to choose a bank account provider and open up your business bank account.
9. Set Up Credit Card Processing
If your business doesn’t accept debit and credit card payments, you could miss out on a lot of business. Whether you have a brick-and-mortar business, an online business or you even have traveling staff visiting people’s homes, card processing is important.
For more information, see our Guide: How to Accept Credit Card Payments.
10. Establish an Accounting System
An accounting system allows you to track and manage your business finances in a number of ways. When you set up your accounting system, you will be able to create budgets, keep an eye on your incomings and outgoings, and create financial reports for your business.
Our Small Business Accounting 101 guide gives you more help on how to set up your accounting system, making important decisions about your accounting, and the essential steps, which you can find here.
11. Get Business Insurance
Don’t forget one of the most important steps of how to start a business in Georgia – taking out business insurance. The right insurance will protect your business in various ways. If you experience a lawsuit, an accident occurs, or a natural disaster or weather event takes place, your business is protected with insurance in place.
Check out our guide on insurance for small businesses, where we go over the six types of business insurance so that you can make sure you’re covered.
12. Hire Employees and Set Up Payroll
Hiring employees makes it easier to grow your business. When you hire employees, you’ll need to set up payroll to ensure they are paid properly and to withhold any necessary taxes. You will need to register with the Georgia Department of Labor and the Georgia State Board of Compensation to meet all of your duties as an employer.