How to start a business in Georgia

Starting a small business in Georgia can be an exciting and profitable journey. Whether you are an existing business owner or a budding entrepreneur researching how to start a business in Georgia, there are plenty of options available to choose from in terms of what type of business to operate, who to serve, and where to set up shop.

Georgia's major cities like Atlanta and Savannah are popular among entrepreneurs looking to establish a strong business presence. That said, even if you plan to operate in a smaller town or focus on a niche market, there are limitless possibilities and loads of valuable business resources to help you out.

To get your Georgia business up and running, it’s a good idea to have some basic business knowledge and an understanding of the formalities involved in setting up a legal entity. Don’t worry, we've compiled a step-by-step business guide with all the essential information to help you start your small business in Georgia with confidence.

What are the steps to opening a business in the state of Georgia?

1. Develop your business idea

You probably have an idea burning away in your mind already, but if not, there are some steps you can take to find solid inspiration for your startup. Consider your interests and hobbies—what kind of business could you create to turn a profit? 

Take a look at other businesses both online and in your local community that are doing well in your chosen industry. It's easy to be tempted by completely unique business ideas, but it can be difficult to generate profit if the idea is untested. If nobody else is doing it, it could be due to the lack of a suitable audience.

• Discuss your business idea with your spouse, family, and friends, as it's helpful to gain different perspectives in order to project whether your business could be sustainable.

• Research your business idea to find examples of others running successful enterprises in the same niche or industry.

• Consider your ideal audience and think about how your small business will serve them. Your business location is also important, so take a look at some demographics to support your idea.

• Seek feedback from people you trust and be open to constructive criticism. Feedback is critical, so be sure to take it with a grain of salt.

2. Create your small business plan

A business plan is a crucial document for any entrepreneur starting an LLC or other form of Georgia corporation. It acts as a roadmap that guides your path toward sustainable profits and long-term success. A well-crafted business plan covers all the essential details about your enterprise and can be used to secure funding from banks, investors, or other third-party lenders.

Your business plan should tell the full story of your business, including your projected milestones and objectives and how you plan to achieve them. It should include extensive financial details, structural information (such as the hierarchy or management of your business), and key marketing strategies. These essential points will help ensure that your plan is comprehensive and sets you up for positive economic development as you grow.

Here are the key elements to include in a well-rounded business plan:

3. Secure necessary funding

Starting a business in Georgia requires dedicated capital for purchasing inventory, leasing commercial space, and outfitting a storefront if applicable. If your business needs extra funds to get off the ground, you'll want to consider funding options carefully to determine how to start a business in Georgia with the appropriate amount of initial capital.

Capital lending solutions such as those provided by Capital lending solutions are specifically designed to help new small businesses with their startup costs. Whether you need $5,000 or $5 million, there are business loans that will cater to your business needs. Third-party lenders enable you to access the cash required to set up your business and prepare for your first customers.

Crowdfunding options or personal investments may also be considered, but either way, your business is going to need cash to operate. Understanding how to execute your Georgia business idea with the right funding is crucial because it can remove the financial stress that typically comes with starting a new business.

4. Choose your business name

Naming your business is an essential step in starting a business in Georgia. Your business name should be easily searchable online, memorable to your ideal customers, and should represent your values or the solutions that you provide. It can also carry geographical or historical meaning to those from your town if you're only planning to operate locally.

Once you've decided, you can check the availability of your business name by performing a search on the Georgia Secretary of State's website. If your desired name is available, you can form an LLC or other business entity type using that name.

If you're not ready to form an LLC or other business entity type just yet, you can request a name reservation for 120 days by filling out an application and filing online. Business name reservation in Georgia comes with a cost of $25.

Pro tip! Reserve your website domain name

All Georgia business owners should have a website to help customers find them and interact with them online. To ensure that your website matches your business name, you'll need to purchase the domain name as soon as you have named your business. This would also be a good time to create new social media accounts with the same name to increase your digital presence and promote your brand.

5. Identify your business structure and business entity type

Choosing the right business structure for your new enterprise is imperative. The legal business entity you choose will determine how your business will operate, how you'll be taxed by the Internal Revenue Service (IRS), and the regulations your business must comply with to remain in good standing. Understanding the various business structures available in Georgia will help you determine which structure will work best to serve your business needs.

General partnership

If you want to start a business with another individual in Georgia, you can form a general partnership. These arrangements don't require state filings like LLCs and corporations do, but as such, they also don't offer any liability protection. This means that if your business was involved in a lawsuit or owed debt to creditors, the personal assets owned by the partners (your home, vehicles, etc.) aren't protected. Business insurance can help to protect you to a point, but it isn't necessarily a catch-all.

General partnerships typically use the names of the owners (for example, Bob & Doug's Custom Furniture), but they can also choose to register a trade name or DBA to be known by another business name. There aren't any required tax forms for general partnerships at the federal level, so all of the profits earned by the business are taxed as personal income.

Sole proprietorship

In Georgia, a sole proprietorship is an unincorporated business owned by a single individual—the sole proprietor. This type of business is a bit like self-employment, in that the owner can either use their legal name or register a DBA to operate in their local municipality.

Sole proprietorships don't offer liability protection, meaning that the business can't own any assets separate from the owner's personal assets. Any financial difficulties would be the responsibility of the owner and not the business, as it isn't a registered legal entity. This means that any profit earned by the sole proprietor is taxed as regular personal income. Sole proprietorships have attractively low startup costs, but they aren't typically a good long-term fit for businesses that plan to grow and expand.

Limited liability company (LLC)

A limited liability company (LLC) is a highly popular business entity type for small business owners in Georgia. LLCs offer limited liability protection to their owners, which means that the business can own assets separate from the owner's personal assets. If the business becomes involved in a legal suit, incurs debt, or simply fails, the owner's assets are protected.

All profits generated by an LLC are subject to pass-through taxation, meaning that once any income is divided among the owners, it's taxed as personal income. It's important to note that LLCs are not the same as registered corporations. If you own and operate your LLC by yourself, you'll need to file Form 1040 with the IRS. If you have other members in your LLC, you'll instead need to file Form 1065.

Subchapter "S" corporation (S Corp)

In Georgia, a Subchapter "S" Corporation (S Corp) is a registered corporation that offers limited liability protection to its owners. S Corps can issue stock, though only one type, and they are limited to 100 total shareholders. That said, there are perks.

Forming an S Corp is a great option for small businesses that want the protection of a corporation and the tax flexibility of an LLC. This is because S Corps can choose either pass-through taxation or double taxation, depending on how the business is set up. To elect S Corp status, the corporation must file with the IRS using Form 2553 "Election by a Small Business Corporation".

Subchapter "C" corporation (C Corp)

C Corps offer limited liability protection to their owners, and thanks to their ability to issue stock, can be owned by companies, investors, and regular everyday people. However, C Corps must comply with several requirements, such as electing a board of directors and holding annual meetings.

One disadvantage of a C Corp is double taxation. This means that the corporation is required to file annual corporate tax returns for any profits earned. After this profit is taxed at a corporate level, it is then distributed to the shareholders who must claim their dividends as personal income on their personal income tax returns.

Despite the potential drawbacks of double taxation, forming a C Corp is a good option for larger companies looking to go public and raise capital by selling shares of stock to the public. To remain compliant with the IRS, C Corps are required to file Form 1120.

Nonprofit organization

Nonprofit organizations in Georgia provide similar limited liability protection as other entity types. However, their main purpose is not to generate profits for owners or shareholders, unlike LLCs or C Corps. Nonprofits are focused on creating, building, or changing something for the public interest. Any profits earned by nonprofits must be invested back into the organization to be used to achieve their main goal.

Nonprofits are exempt from federal taxes on any profits earned from activities related to their goals, however, they must maintain accurate records in order to avoid IRS penalties. Nonprofits also have to file a lot of paperwork, including the mandatory Form 990 "Return of Organization Exempt from Income Tax".

6. Register your small business in Georgia

To register a small business in Georgia, you must select a registered agent, file articles of organization (sometimes referred to as articles of incorporation), and pay the state filing fee to register a legal business entity. The filing fee to register as a Georgia LLC or corporation is $100.

What is a registered agent?

A registered agent is an individual or an entity designated to receive legal notices and other official documents on behalf of a business. In Georgia, a registered agent must have a physical address within the state of Georgia (P.O. boxes are not permitted) and be available during regular business hours to receive any legal correspondence. Business owners can decide to act as their own registered agents or they can hire a third-party service to represent them.

What are articles of organization?

The state of Georgia requires new business owners to file specific documents in order to form a legal business entity, known as articles of organization or articles of incorporation. These documents make your business official with the state and provide important information about your business as well as the obligations of the owner(s).

When filing articles of organization in Georgia, the document must contain certain information that will be reviewed and approved by the Georgia Secretary of State's office. This information includes:

Georgia business owners can file their articles of organization on the Georgia Secretary of State's website.

7. Apply for an employer identification number (EIN)

If you plan to operate your business as a corporation, hire employees, or open business bank accounts and credit cards, you'll need to apply for a Federal Employer Identification Number (EIN). An EIN is a unique tax identification number assigned by the IRS to identify your business for tax purposes. Having an EIN will help you protect your personal identity, as you won't have to use your personal social security number.

Getting an EIN for your business in Georgia can also help you establish business credit, apply for business loans faster, and avoid tax penalties if you were required to have one but didn't get one at the right time. It doesn't cost anything to obtain an EIN, and you can apply for it online on the IRS website. Online EIN applications yield immediate results, so you'll be able to use your EIN right away.

8. Open your small business bank account

After obtaining your EIN, visit a local bank in Georgia to set up a business bank account and business credit card. This will keep your personal finances separate from your business transactions so that you can avoid any issues as you grow. If you plan to hire employees for your Georgia business, you'll need a separate business bank account for payroll transactions.

9. Obtain your business licenses and permits

In Georgia, businesses are expected to comply with various municipal regulations. While a general business license isn’t required by the state, it's very likely that a business license is required in your municipality. Depending on what activities your business engages in, you may need multiple permits or licenses.

The licensing criteria and fees may also differ based on your business type and location. It's always best to consult your local government website for information on how to obtain the appropriate licenses and permits.

10. Understand your Georgia business taxes

In the state of Georgia, business owners are required to pay federal personal income tax on their profits, as well as state personal income tax. Registered corporations will also need to pay both state and federal corporate taxes. In addition, there are other Georgia taxes governed by the Georgia Department of Revenue that business owners should be aware of.

Sales and use tax

Georgia business owners are required to pay a sales tax on any physical products that they sell, which can range from 4% to 8% depending on the county. Some services may also be subject to sales tax, such as hotel stays, car rentals, and admission fees to local events and attractions. 

Use tax may also apply to businesses that purchase products sold outside of the state of Georgia from retailers or distributors that don't charge Georgia state tax on sales.

Corporate income tax

Georgia imposes a corporate income tax on businesses that file as corporations with the IRS. At the time of this publication, the tax rate is a flat 5.75% of net income, with no exemptions or deductions for any type of corporation. This is in addition to the 21% federal corporate income tax rate.

Other taxes and fees that businesses may be subject to in Georgia include the unemployment tax, the alcohol tax, and the tobacco tax. As the business owner, you should always consult with a licensed tax professional to ensure that your business is compliant with all applicable tax laws and regulations.

What is a DBA?

In Georgia, a DBA (doing business as) is an alternate name that a business can use in place of the legal name. It’s a useful option for businesses that want to rebrand or use a name that better represents the services they offer. You might choose to register as "Peachtree Digital Marketing" but file a DBA to do business as "Peachtree Media" if you want to represent your business more broadly as you grow and add additional services.

Frequently asked questions (FAQs)

Start a small business and work toward big results with free course

When you’re building a small business or startup in Georgia, all the to-dos to check off might feel overwhelming. But this is an exciting time, and now you have all the tools you need to take your business from concept to reality.

As you start your journey toward becoming a successful business owner in Georgia, we encourage you to check out the Start-Up Path for Entrepreneurs. It’s a jam-packed resource – did we mention it’s available at no cost? – designed to show you how to start and grow a business, even if you’re unsure what to do first.

From interactive worksheets and planning tools to advice from real entrepreneurs who have been in your shoes, The Start-Up Path is chock-full of invaluable content you can move through at your own pace. We know you’re a busy go-getter, so if on-the-go know-how works better for your schedule, tune in to our Entrepreneur’s Studio podcast. Hear empowering and inspiring stories and advice from folks like Shake Shack founder Danny Myer, fashion design visionary Rebecca Minkoff and the duo behind the up-and-coming Sugar + Spoon cookie dough food truck. 

Need custom technology solutions for your burgeoning business? See how Heartland can help you get there.

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