Georgia is a wonderful place to start a business — access to international trade, the world’s busiest airport (Atlanta) and one of the main technical hubs in the U.S. make it an innovator’s dream. Great universities, access to talent and a rich culture combine to create the perfect backdrop for a successful business venture.
Georgia is already home to the headquarters of Coca-Cola (the most famous brand in the world), and many other large businesses including Home Depot, UPS, Delta and Suntrust are proud to call the state home.
Should You Form an LLC, an S Corporation or a C Corporation in Georgia?
Most entrepreneurs will have a choice of starting an LLC, an S Corporation or a C Corporation in Georgia. We’ll help you select the right type of business entity, as each one is treated differently by the GA Secretary of State Corporations Division, the law, the IRS and other official bodies.
Here’s a quick overview of each type of business entity.
Georgia Sole Proprietorships and Partnerships
These are the simplest type of business and will be the “default” type of GA business you have if you do not choose to form a separate business entity. These types of businesses do not provide you with any special protections or benefits and can leave your personal assets vulnerable. We do not recommend them.
Georgia Limited Liability Companies (LLCs)
LLCs are a great option for smaller GA businesses. LLCs are quick and easy to create, inexpensive to administer, light on regulations and have simple taxation and rules. You can learn how to create an LLC in Georgia here.
Georgia S Corporations
A GA S Corporation is the middle-ground between a simple LLC and the more complex C Corporation. They have more complex regulations, taxation, compliance and legal requirements than an LLC, but they do provide tax advantages for their owners.
Learn about forming an S Corporation.
Georgia C Corporations
If you plan to start a large business or want to trade your shares on the public stock market, a GA C Corporation is your only choice. Be aware that Georgia C Corporations are subject to many rules and regulations, and they have a substantial amount of administrative overhead. Additionally, the tax rules for a Georgia C Corporation are not as advantageous as for a GA S Corporation or LLC.
Learn about forming a C Corporation.
There are some other business entity structures like nonprofits, Limited Liability Partnerships (LLPs) and B Corporations, but they will not be relevant for the majority of entrepreneurs.
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Advantages of Incorporating in the State of Georgia
Georgia corporations have several benefits for business owners.
Georgia corporations provide the strongest form of liability protection possible. They insulate your personal assets and finances from those of your business.
This means that any liabilities created by your corporation (debts, obligations, damages, bankruptcy or other liabilities) should not impact your personal money, property or assets — they are considered completely separate from a legal perspective.
The Advantages of Filing a Georgia S Corp or C Corp Over an LLC
There are several reasons an entrepreneur might choose to form a GA corporation instead of a Georgia LLC.
Taxation Benefits of a Georgia S Corporation Over an LLC
A Georgia S Corporation will often pay less self-employment tax on owner earnings than an LLC. Note that a GA LLC can choose to be treated as an S Corporation for tax purposes by filing Form 2553 with the IRS, which removes this restriction. Georgia C Corporations do not have this advantage over an LLC.
Learn about the tax benefits of S Corporations.
File Form 2553 with the IRS via Incfile
Georgia S Corporations and C Corporations Make It Much Easier to Transfer Stock and Ownership
Georgia S Corporations and C Corporations make it much easier to buy, sell and transfer stock. C Corporations also allow you to file an IPO and list stock on the public stock market.
If You Want Maximum Flexibility for Buying and Selling Stock, Choose a Georgia C Corporation
C Corporations provide certain benefits when it comes to buying, selling and transferring stock. Here are the rules for both S Corps and C Corps:
If you want up to 100 shareholders who are U.S. citizens or residents and want to issue one type of stock, you can be an S Corporation or a C Corporation.
If you want more than 100 shareholders, want to issue more than one type of stock or have international shareholders, you will need a C Corporation.
If you want to allow the public to buy and sell shares in your company after an Initial Public Offering (IPO), you will need a C Corporation.
Learn more about the differences between business entities.
Advantages of Setting up a Georgia S Corporation
In addition to the general benefits above, GA S Corporations provide several other advantages:
Running an S Corporation in Georgia is simpler than running a C Corporation.
It is easy to transfer ownership in an S Corporation by selling your stock.
In some cases, part of the income from an S Corporation can be paid as a “distribution” rather than “salary,” so it would not be subject to self-employment tax. Find out how this can save you money using our S Corporation Tax Calculator.
LLCs can choose to be taxed as S Corporations to take advantage of this.
Learn more about the advantages of forming an S Corporation.
Advantages of Setting up a Georgia C Corporation
In addition to the general benefits above, Georgia C Corporations provide several other advantages.
Ownership in a Georgia C Corporation is very fluid and determined by who owns stock in the business.
Georgia C Corporations can list their shares on a public stock exchange. This stock can be bought and sold by anyone.
Georgia C Corporations can sell stock to investors inside and outside the U.S.
Georgia C Corporations can issue more than one type of stock.
Georgia C Corporations can raise more funds by issuing more stock.
Important Points About Forming a Corporation in the State of Georgia
Here are some areas to be aware of when you’re creating a corporation in Georgia.
First, GA corporations are formed on the state level by filing Articles of Incorporation with the GA Secretary of State. Incfile specializes in helping entrepreneurs form Georgia S Corporations and C Corporations and can collect the information and file this form on your behalf.
When you incorporate a business as a corporation, the Georgia Secretary of State will treat your business as a C Corporation by default. A C corporation will become an S Corporation when all shareholders wish to change the corporation’s status to an S Corporation with the IRS. You can make this choice when you first form your Georgia corporation or at any time after you incorporate.
There are some similarities and some differences between S Corps and C Corps:
Similarities: Georgia S Corporations and C Corporations have similar rules and regulations for liability, governance, management and ownership
Differences: Key differences are taxation and the ease of buying, selling and transferring stock
Learn what you need to do to create a Georgia S Corporation or C Corporation
Rules and Regulations for Georgia Corporations
All GA corporations must issue stock to shareholders
All GA corporations must hold Annual General Meetings (AGMs)
All GA corporations must have an elected Board of Directors
All GA corporations must appoint officers
All Georgia corporations must follow stringent compliance rules and regulations. These include financial reports, bylaws, corporate formalities, taxes, fees, business licenses and the like. You can find links to these below.
Learn about Georgia corporation requirements.
Learn about Georgia corporation taxes and fees.
Are you ready to start your Georgia corporation? If so, we can help. We provide comprehensive corporation formation services for both S Corporations and C Corporations in Georgia.
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Detailed Information for Your Georgia Corporation
You’ll find plenty more insight and guidance on the other pages of this guide, including:
The six steps you need to take to start a Georgia S Corporation or C Corporation.
How to search the Georgia business registry of the GA Secretary of State and find the right name. Includes information on naming rules, fictitious names, reserving a Georgia corporation name and more.
How to appoint a Georgia Registered Agent to your new corporation or change to a different Registered Agent. Includes information on Registered Agent rules and searching for Georgia Registered Agents.
How to understand the various fees you’ll need to pay and the requirements you’ll need to meet for both federal and Georgia rules. Includes details of Employee Identification Numbers (EINs), Georgia and federal business licenses, Georgia annual reports and more.
How to understand the various taxes you will need to pay to the federal and Georgia government. Includes details of federal taxes like income and self-employment, and Georgia taxes like sales tax and income tax.