Business Strategies

Limited liability companies are popular with small businesses. Here are answers to common questions about how they work.

What is an LLC?

A limited liability company is a business entity created under state law. It gives its owners, called members, protection from personal liability for most business debts, while offering flexible tax treatment and simpler administration than a corporation.

How is an LLC taxed?

A single-member LLC is by default taxed like a sole proprietorship, and a multi-member LLC like a partnership. Profits pass through to the members' personal returns. An LLC can elect to be taxed as a corporation, including as an S corporation, if that suits the owners. Members who work in the business are generally subject to self-employment tax unless an S corporation election changes the picture.

How do I form an LLC in Georgia?

You file articles of organization with the Georgia Secretary of State, designate a registered agent and pay the filing fee. You should also write an operating agreement, get an employer identification number, and obtain any needed licenses. Our formation team can assist.

Do I need an operating agreement?

It may not be required by the state, but you should have one. It sets out ownership percentages, who manages the company, how profits are shared, what happens when a member leaves or dies, and how disputes are handled. Even single-member LLCs benefit, since a written agreement supports the separation between you and the company.

Does an LLC fully protect my personal assets?

It protects you from many business debts and lawsuits, but not from everything. Personal guarantees, your own negligence, and unpaid payroll taxes can still reach you. Keep a separate bank account and records so that the protection holds up.

What ongoing requirements apply?

Expect an annual registration with the state, a tax return that matches your tax treatment, bookkeeping, and any payroll filings if you have employees. See our bookkeeping services for help.

Can I convert to a corporation later?

Yes, an LLC can change tax status by election or convert to a corporation, but the tax consequences should be reviewed first.

To decide whether an LLC fits your plans, talk with us.