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Editorial 6 MIN READ

Georgia in August 2017: what the formation actually costs

A $100 filing fee online, a $50 annual registration due April 1, and a state that has been ranked number one for business for five years running

The Editors
Staff, Incorporator.org
6 min read Updated
Contents 5 sections
  1. The mechanics
  2. Maintenance
  3. Taxes, honestly
  4. Who this state actually makes sense for
  5. Sources

Georgia LLC costs $100 to form online and $50 a year to keep. The deadline on the annual filing is April 1, not the anniversary date, and missing it is the single most common way Georgia LLCs get administratively dissolved.

This is a guide for someone forming in Georgia in August 2017, written to survive one reading rather than thirty. Georgia is not Delaware and does not pretend to be. What it offers is a cheap, fast filing system, a Secretary of State office that has done the online-submission work, and a state whose business climate has been ranked first in the country by Site Selection magazine five years running.

The mechanics

You file Articles of Organization with the Corporations Division of the Secretary of State, under the Georgia Limited Liability Company Act at O.C.G.A. Title 14, Chapter 11. The statute authorizing the entity is § 14-11-100 ("Georgia Limited Liability Company Act"), enacted as Georgia Law 1993, p. 123, § 1 and effective March 1, 1994. The formation document itself is short: the name of the LLC (which must contain "limited liability company," "LLC," or a permitted variant), the name and address of each organizer, the mailing address of the principal office, and the name and Georgia street address of the registered agent.

The fee is $100 if you file online through the Corporations Division's eCorp portal, or $110 if you file the paper Form CD 030 by mail. Online standard processing runs seven business days; paper mail runs fifteen. If you need it faster, Georgia sells expedited service: $100 for two-business-day turnaround, $250 for same-day if you file before noon, and $1,000 for one-hour. The one-hour tier is rarely used outside of transactional closings.

Every Georgia LLC must continuously maintain a registered office and a registered agent in the state. O.C.G.A. § 14-11-209 specifies the requirement: the agent must be a Georgia-resident individual, a Georgia corporation or LLC, or a foreign entity with a certificate of authority to do business in Georgia, and the agent's business address must match the registered office. You can name yourself if you live in Georgia and are willing to have your home address on the public record. Most founders do not.

You will then need an EIN from the IRS (Form SS-4, issued online in minutes), and an operating agreement, which Georgia does not require you to file but which the statute repeatedly defers to. The LLC Act follows the modern contractarian model: § 14-11-1107 gives "maximum effect to the principle of freedom of contract and to the enforceability of operating agreements." In plain English, the operating agreement is the document that actually governs the LLC; the statute is the backstop.

Maintenance

Georgia does require an annual report. It is called the annual registration, and it is due between January 1 and April 1 each year. The fee is $50 filed online. You file it through the same eCorp portal you used for formation, confirm the officers and registered agent, and pay. It takes about five minutes once the reminder arrives.

The first annual registration is due by April 1 of the calendar year following formation. If you form an LLC in August 2017, your first annual registration is due by April 1, 2018, along with every subsequent April 1. There is no proration and no anniversary date billing. Miss the deadline and the Secretary of State will administratively dissolve the LLC, which is reversible by filing for reinstatement and paying a penalty, but which also leaves a gap in your good-standing record that some banks and counterparties will notice.

Georgia's corporate net worth tax — the state's franchise-tax analog, administered by the Department of Revenue — does not apply to single-member LLCs or to LLCs treated as partnerships for federal tax purposes. It applies to entities taxed as C-corps or S-corps. For a default-classification LLC, the net worth tax is not a line item. That is a real simplification relative to Delaware's franchise tax, which makes C-corp founders sweat every February.

Taxes, honestly

Georgia's individual income tax in 2017 is a graduated schedule from 1% to 6%, with the top 6% bracket kicking in at $7,000 of Georgia taxable income for a single filer and $10,000 for married-filing-jointly. That means, for any realistic owner distribution, the income from a Georgia LLC is taxed at the state's top marginal rate. The corporate income tax is a flat 6% on Georgia taxable net income.

The practical consequence: for a default-classification LLC (passthrough) with a Georgia-resident sole member, state tax on LLC profit is 6% once you clear the small bottom brackets. For an LLC that has elected corporate treatment, the LLC itself pays 6% and distributions to an owner come out of after-tax dollars. The math comes out close for a founder who pays herself everything as wages; it diverges once the entity retains earnings.

Who this state actually makes sense for

Georgia is the right state for anyone whose business actually runs in Georgia. That sentence sounds tautological, but it is the rule that most first-time founders get wrong. If your customers are in Atlanta, your employees are in Atlanta, and the lease on your office is in Atlanta, form in Georgia. Do not form in Delaware and foreign-qualify back. The foreign-qualification fee is the same $225 as a Georgia formation for an out-of-state LLC, the compliance is doubled (you maintain both states), and you get none of the Delaware court-system benefit because your cases, if any, will be heard in Georgia anyway.

Atlanta is the meaningful part of the pitch. The metro is the southeast's corporate headquarters cluster (Coca-Cola, Delta, Home Depot, UPS, Southern Company), has an airport that connects to almost anywhere in one hop, and has a venture ecosystem that — while not Silicon Valley — is well past the critical mass where founders can raise local capital, hire senior talent, and sell to enterprise customers within a one-hour drive. If you are starting a business that will live in Georgia, the state's rules will not be the binding constraint; the labor market, the customer market, and the airport will be.

The state that should not form in Georgia is an entity that has no Georgia operations and is forming there to shop for a cheap filing fee. At $100 online and $50 a year, Georgia is competitive on price, but Wyoming ($100 formation, $60 annual) and New Mexico ($50 formation, no annual report) will generally be cheaper over a decade once you account for the foreign-qualification cost in your actual operating state. Georgia does not sell itself on the holding-company or privacy-shell theory, and trying to use it that way loses the state's real advantage, which is that it is where your business already is.

If you are forming this quarter and the business is Atlanta-based, file Georgia online this week, set an April 1 calendar reminder for every future year, and do not overthink the registered agent — pick a commercial provider at a reasonable rate and move on. The $100 and the April 1 deadline are the two facts that matter; the rest is texture.

Sources

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