How Your Georgia LLC Will Be Taxed
In this guide, we’ll cover all the main business taxes required in Georgia, including self-employment, payroll, federal and Georgia sales tax. The profits of a Georgia LLC are not taxed at the business level like those of C Corporations. Instead, tax for a Georgia LLC works as follows:
Items 1, 2 and 3 are taxed as “pass-through” income for any LLC owners, managers or members who receive profits from the business. Any profits are reported on federal and Georgia personal tax returns, and that’s where you will pay those taxes.
Georgia State Business Taxes
There are two main types of tax that you will pay to the Georgia Department of Revenue: Georgia state income tax and Georgia state sales tax.
As an Georgia business owner, you will need to pay GA state tax on any money you pay to yourself. These earnings flow through to your personal tax return, which is where you will pay Georgia income tax. You will be taxed at the standard rates for Georgia state taxes, and you will also get to apply regular allowances and deductions.
Any salaried employees will also need to pay personal Georgia state taxes. There are multiple GA tax rate bands based on personal and LLC income
Georgia Sales Taxes on LLC Sales
If you sell physical products or certain types of services, you may need to collect sales tax (also known as sales and use tax) and then pay it to the GA Department of Revenue (through the Georgia Tax Center). Georgia sales tax is collected at the point of purchase. Georgia sales tax rates do vary depending on the region, county or city where you are located.
You will typically need to collect Georgia sales tax on:
- Tangible, personal property and goods that you sell like furniture, cars, electronics, appliances, books, raw materials, etc.
- Certain services that your Georgia business might provide
Most states do not levy sales tax on goods that are considered necessities, like food, medications, clothing or gas.
Georgia Sales Tax Rates
Sales tax rates do vary between states, counties and cities. Typically, the state will set a base sales tax rate, then specific counties and cities may levy small additional sales tax amounts on top of that. Here are the sales tax rates for the major cities in Georgia:
The Georgia Tax ID — State Taxpayer Identification Number
You use the State Taxpayer Identification Number (STIN) as a reference for your business tax licenses, liabilities and credits. You can get a number by submitting a State Tax Registration Application (form CRF-002) online at the Georgia Tax Center.
Federal Taxes for Georgia LLCs
There are a couple different federal taxes that every LLC will need to pay, including Georgia LLCs. These are self-employment tax and federal income tax, which are taxed as “pass-through” income via your tax return forms.
Federal Self-Employment Tax
All Georgia LLC business members or managers who take profits out of the LLC will need to pay self-employment tax. This tax is also known as FICA, Social Security or Medicare tax. It applies to all the earnings you withdraw from your Georgia business. The current self-employment tax rate is 15.3 percent.
You will be able to deduct your business expenses from your income when working out how much self-employment tax you owe. Here are some examples of how much self-employment tax you may need to pay, depending on your earnings:
Pay Less Self-Employment Tax by Treating Your Georgia LLC As an S Corporation
The Internal Revenue Service allows LLCs to ask to be treated as an S Corporation for tax purposes. This can help you reduce the amount of self-employment tax that you pay by declaring some of your income as salary and other income as distributions or withdrawals. Speak to your accountant for more information on reducing your Georgia LLC self-employment tax through an S Corporation tax election.
You can do this by making an “S Corporation Tax Election” with the IRS using a form known as Form 2553. We can file your Form 2553 with the IRS on your behalf.
Federal Income Tax
You must also pay regular federal income tax on any earnings you take out of your Georgia LLC. The amount of income tax you pay depends on your earnings, current income tax brackets, deductions and how you file.
You only pay federal income tax on your Georgia LLC profits that you take out of the business, less certain deductions and allowances. This includes your tax-free amount, plus LLC business expenses and other deductions for areas such as healthcare and some retirement plans. Speak to your accountant for more information.
Employee and Employer Taxes for Your Georgia LLC
If you pay employees, there are some slightly different tax implications. Speak to your accountant to get clear guidance for your own unique situation.
All employers must collect and withhold payroll tax from their employees when they receive their salaries. You would normally withhold 7.65 percent of the taxable salary that you pay to your employees.
You may also choose to withhold federal income tax on the wages you pay to employees. Speak to your accountant for more information.
Regardless of whether you withhold federal and Georgia state income tax, your employees may need to file their own tax returns.
You may also need to pay insurance for any employees, like employee compensation insurance or unemployment tax. There will also be other requirements you have for employees.
Depending on the industry you are in, your Georgia LLC may be liable for certain other taxes and duties. For example, if you sell gasoline you may need to pay a tax on any fuel you sell. Likewise, if you import or export goods you may need to pay certain duties. Speak to your accountant about any other taxes you may need to withhold or pay.
Most Georgia LLCs will need to pay estimated taxes throughout the year, depending on the amount of income and profit you expect to make. The most common types of estimated tax are:
- Federal income tax
- Federal self-employment tax
- Georgia state tax
Most Georgia LLCs will pay estimated taxes four times a year. Speak to your accountant for more information.
FAQs on Georgia LLC Business Taxes
Yes. Georgia does have a sales tax, which may vary among cities and counties. You can find more information above.
Yes. Georgia does have a general state income tax. You can find more information above.
We have listed common sales tax rates in Georgia cities above.
Yes. In most cases you must pay estimated taxes on your Georgia tax, federal income tax and self-employment tax. Speak to your accountant for more information.