Articles of Organization

The formation of a Georgia LLC means that you have to file articles of organization with the Corporations Division of the Georgia Secretary of State. The new LLC's articles of organization must list the LLC's company name, all the organizers' names and addresses, the LLC registered office's street address, the LLC's registered agent's name, and street address of the LLC's primary place of business. It can also list other items that are also included in the operating agreement if the members so designate, so long as they don't conflict with state law. An example of such a provision is setting forth whether authority will be vested in one or more managers, or if the LLC will be member-managed. The filing fee is $100.

Your new LLC is officially deemed as "organized" after one original and one copy of the LLC's articles of organization are delivered to the Georgia Secretary of State's office (Corporations Division) with the filing fee, and that office then verifies that the articles are in compliance with state law. The articles must be signed by an organizer if the LLC has not yet been formed, a manager, a member if no organizer or manager has yet been selected.

The organizer is allowed to be any natural person, or it may be a legal or commercial entity. The organizer is not required to be a member of the LLC, but there must be at least one organizer of some type.

The organizer who signs the articles must also list his or her name and title (the office by holding which he or she is entitled to sign it, such as organizer, manager, etc.). The Georgia Secretary of State will certify both copies, but will then retain the original and return a signed copy to the LLC or its authorized representative. The articles of organization are effective as of the time and date they are filed, unless otherwise indicated.

Registered Agent and Office

All Georgia LLCs must have designated a registered agent in the state-someone to receive official state correspondence, whether legal or administrative. An LLC registered agent may be an individual who resides in Georgia or a corporation (whether originally formed in Georgia or not) that is registered to conduct business in the state. The registered office may be a place of business for the LLC, but a post office box or mail drop is not allowed to be used as the agent's address.

Operating Agreement

The LLC's second most important document is its operating agreement, which can be changed b y the members as specified by the agreement itself or state statute. Having an operating agreement is not legally required by the state, but it's a vitally important internal document that sets forth how the LLC will run. The operating agreement needs to list the LLC's members, how much each one has invested, how any profits will be distributed, and how much relative weight each member has when voting.

The operating agreement may also include requirements for meetings (notice, quorum, voting rules, etc.) and similar functions, but it doesn't have to. Usually, though, it does include operating constraints and allowances already contained in state law and policy. It also may contain constraints on the members' authority to change or repeal the operating agreement or a provision thereof. If there is more than one member, the operating agreement must initially be unanimously approved in writing.

Membership in the LLC

LLCs in Georgia must have one or more members, and each member must be a natural person or a recognized business entity. A member can acquire an interest in the LLC when it is formed, or by a method specified in the operating agreement. Becoming a member usually requires a contribution of cash or property to the LLC, or it may take to form of services rendered to the LLC. However, a person may be admitted as a member of the LLC without acquiring a membership interest if the articles of organization or operating agreement allow it, or if all the members agree and the new member's admission is recorded in the LLC's records.

An LLC member can only resign as permitted in the articles of organization or operating agreement, which usually specify a minimum amount of time before a member is allowed to resign. LLCs have the right to pursue remedies for damages suffered by the LLC that are the result if a member's resignation.

Ongoing Requirements

Georgia LLCs must file a yearly report with the state Secretary of State that includes:

• The LLC's name and the street address and county of the LLC's registered office
• The jurisdiction where it was organized
• The LLC's registered in-state agent's name
• The mailing address of the LLC's principal place of business
• Any other information deemed necessary by the Secretary of State

They also must keep available the following types of records open to inspection at their office:

• Members' and managers' names and addresses
• Any records which would enable a member to determine the members' relative voting rights
• A copy of the articles of organization, as well as any amendments
• Copies of the federal, state, and local income tax returns for the LLC for the past three years
• A copy of the operating agreement, along with any amendments
• Financial statements for the LLC's the three most recent years

It's also a good idea to keep copies of the minutes of the various proceedings and committees meetings of the owners or members.

Dissolution

An LLC is dissolved when any one of the following events occurs:

• Event(s) specified in the articles of organization or operating agreement
• Agreement to dissolve by the number or percentage of members specified in the operating agreement
• Event that makes it illegal for the LLC to continue
• When a member leaves the LLC, unless the remaining member agree to continue the LLC within 90 days, or the company continues under specifications set out in the operating agreement
• Judicial decree ordering dissolution

Taxes

An LLC by its nature does offer some tax advantages over a corporation structure, including access to more deductions, since the LLC is not required to be a separate tax entity like a corporation. Instead, it is considered a "pass-through entity" for tax purposes, meaning LLC owners report business profits and losses on their individual tax returns.

Unless you decide that your LLC should be taxed in the same way as a corporation, the IRS looks at single-member LLCs as sole proprietorships. This means that the LLC itself does not pay taxes as such and does not have to file a tax return. The IRS treats multi-owned LLCs as partnerships for tax purposes. Therefore, LLC owners each pay taxes on their lawful share of the profits on their personal income tax returns, not the LLC itself.

The tax rate for Georgia LLCs varies, based on the amount of Georgia taxable net income per reporting period.

Articles of Incorporation

New Georgia corporations must file articles of incorporation with the Georgia Secretary of State's office before they can start conducting business as a corporation. The articles must be delivered by at least one of the incorporators, accompanied by the filing fee of $100 and a "transmittal of articles" form. The following information must be included in the articles of incorporation:

• The street address and county of the corporation's initial registered office
• The name of the new corporation's initial registered agent at that office
• The mailing address of the corporation's initial principal office (if it's different from the registered office)
• The number of shares the corporation is authorized to issue

Georgia law allows a corporation to be formed for any lawful business activity. There is no requirement for a specific corporate purpose to be stated in the articles of incorporation.

Georgia law also allows (but does not require) optional items to be included in the articles of incorporation for those corporations who wish to formally specify additional information, such as:

• The names and addresses of the initial directors of the corporation.
• The corporate purpose.
• The powers and constraints of the corporation, its board of directors, and shareholders.
• The number of authorized shares or classes of shares.
• Provisions for or limitations on shareholder and/or director personal liability for corporate debts in certain situations.

Since Georgia law does not use the concept of par value for stocks, you do not need to state a par value for your shares. The filing fee is a flat fee, rather than being based on your authorized shares, so you can authorize as many as desired. Most incorporators authorize common shares with equal voting, dividend, and liquidation rights and no special restrictions.

Directors of the corporation must be "natural persons" (as opposed to business entities) who are at least 18 years of age. Directors do not have to be Georgia residents nor shareholders, unless so required the articles of incorporation. The articles of incorporation or bylaws may also specify additional qualifications for directors.

Georgia law requires publication once a week for two consecutive weeks of a notice of the filing of the new corporation's articles of incorporation in the newspaper that serves as the official "county organ" where the initial registered office is located. This notice must be published no more than one day after the articles of incorporation are filed. The charge is $40 for the required filing.

Registered Agent and Office

Every Georgia corporation must have a registered agent in the state-someone designated to receive official state correspondence, including notice if the corporation is "served" with a lawsuit. The registered agent must be either a Georgia resident whose business office is the same as the registered office, or a corporation with a business office identical with the registered office.

Bylaws

Bylaws describe the corporation's basic managerial and legal operating principles. A Georgia corporation must keep a copy of its bylaws at its main executive office, but is not required to file them with the state. At its initial meeting, the board of directors should adopt corporate bylaws, and then keep them updated as time goes on.

The board of directors of a corporation may adopt, amend, or repeal bylaws, unless the articles reserve this right to the shareholders. Bylaws normally address:

• Shareholders and directors meetings
• The authority, number, and tenure of directors
• Voting procedures
• The duties, responsibilities, and tenure of officers
• How stock is issued
• How and when annual financial information is provided to shareholders

Directors and Officers

Officers are appointed or elected by the board in compliance with the corporation's bylaws, or elected by shareholders in compliance with the articles of incorporation. One officer has the responsibility of preparing minutes of director and shareholder meetings, and for authenticating corporate records.

It is permissible for an officer to hold more than one office in the corporation unless otherwise prohibited by law or by the corporation's bylaws. One person may hold all or any combination of offices when all of the issued and outstanding stock of the corporation is owned by this same person.

Required Reports

The Georgia Secretary of State requires that Georgia corporations file an annual report each year that species:

• The corporation's name and the state or country of original incorporation.
• The street address and county of the corporation's registered office.
• The name of its registered agent at that in-state office.
• The mailing address of the corporation's principal office.
• The names and addresses of the corporation's chief executive officer (CEO), chief financial officer (CFO), and secretary, or those individuals holding functionally similar positions.

Taxes

A "subchapter S" corporation (frequently referred to as an "S corp") is treated as a "pass-through" entity for tax purposes in the same way as a sole proprietorship or partnership. The S corp does not file a tax return on its own behalf; instead, all tax-related data for the S corp is filed as part of the owner's individual income tax.