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From technology companies in Atlanta to peach growers in central Georgia, all Georgia business owners should form an LLC to protect their personal assets from any business liabilities. An Georgia LLC is simple to set up and the maintenance costs are low compared to other states.
FORM A GEORGIA LLC IN 4 EASY STEPS
- 1) Creating a Name
Georgia LLCs must contain one of a number of designators in their name: “limited liability company” or “limited company,” which can be abbreviated, or “L.L.C.,” “LLC,” “L.C.,” or “LC.”
The name must also be unique; that is, it must be distinguishable from the names of every other business entity that is formed in Georgia or has been authorized to do business in Georgia. Finally, the name cannot be longer than 80 characters, including spelling and punctuation.
- 2) Submitting Articles of Organization
Any organizer can form a Georgia LLC by filing articles of organization with the Secretary of State. These articles of organization only need to include the LLC name, the name and address of the organizer and registered agent, and the address of the LLC’s principal place of business. Once these are sent to the Secretary of State with a $100 filing fee, the LLC officially exists.
- 3) Drafting an Operating Agreement
An operating agreement is a written or oral agreement that will govern the affairs of your LLC. This agreement will bind the LLC, whether or not it is actually executed. This agreement can also provide rights to people who are not members of the LLC.
- 4) Ongoing Maintenance
EIN: Georgia LLCs will need to obtain an EIN from the I.R.S. if they will have employees or multiple members. An alternative is having an incorporation service obtain the EIN for you.
Annual Registration: Every Georgia LLC has to submit an annual registration to the Secretary of State, which contains the information that was in the articles of organization, with any updates. The filing fee for this annual registration is $50.
WHY FORM A GEORGIA LLC?
The Benefits and Advantages of Creating a Georgia LLC
- Advantages of Forming a Georgia LLC
The Georgia LLC Act states that it should be interpreted “to give maximum effect to the principle of freedom of contract and to the enforceability of operating agreements.” The Act gives LLC members contractual freedom to customize their capital contributions and their shares of profits and losses. An LLC’s members can specify a method for allocating profits and losses in an LLC agreement that is greater or lesser than their portion of capital contributions. This gives members contractual flexibility to tailor their income and risks of loss to further their big-picture asset management plans.
The Georgia LLC Act does not require LLC members to be listed with the Georgia Secretary of State. A “person” may organize an LLC, and the person does not need to be a member of the LLC. An LLC’s members may therefore have an entity or person who is not a member file the LLC’s Articles of Organization with the Secretary of State.
The LLC Act provides for an LLC’s unlimited life. For example, § 14-11-506 provides that even if the last member of an LLC “dies or a court of competent jurisdiction adjudges him or her to be incompetent to manage his or her person or his or her property,” the member’s legal representative may become a member of the LLC. An LLC’s existence can therefore outlive its members’ lifetimes.
Dealing with Business Partners
The Georgia LLC Act gives members contractual freedom to customize the duties each party to an LLC’s operating agreement owes to the other parties. The Act provides a threshold set of fiduciary duties for a member or manager to act “in a manner he or she believes in good faith to be in the best interests of the limited liability company and with the care an ordinarily prudent person in a like position would exercise under similar circumstances.” If a member’s or manager’s conduct satisfies this standard, he or she is not otherwise liable to the LLC or its members.
Moreover, the Act allows an LLC agreement to provide “dissenter’s rights” to a class or group of members in connection with major transactions or events. These transactions or events include amendments to an LLC agreement, merger with another entity, conversion of an LLC to another kind of entity, and sale of all or substantially all of the LLC’s assets.
But the Act then provides that the threshold fiduciary duties, and any other duties a member or manager may have relating to an LLC, its members, or its managers may be “expanded, restricted, or eliminated by provisions in the articles of organization or a written operating agreement.” The only exceptions are that no provision may eliminate liability for “intentional misconduct or a knowing violation of law” or “any transaction for which the person received a personal benefit in violation or breach of any provision of a written operating agreement.”
The Act even allows members to determine whether, and under what conditions, to allow contracts and transactions between an LLC and one or more of its managers or members or an entity in which they own an interest. These provisions give members certainty in business planning and the ability to take advantage of mutually beneficial opportunities.
Preventing Unwanted Business Partners
The Georgia LLC Act protects membership interests from members’ creditors. An LLC agreement may provide that a membership interest cannot be assigned. Even if a membership interest is assigned, the assignee cannot participate in the management of the LLC, become a member, or exercise any non-economic interests of the assignor. The assignee may become a member only by a majority vote of the non-assigning members. In addition, the Act provides that unless an LLC agreement specifies otherwise, a member becomes dissociated if he or she makes an assignment for the benefit of creditors, becomes a debtor in bankruptcy, or fails to contest the appointment of a receiver or trustee over all or a substantial part of the member’s property.
Creditors Only Get Passive Rights, Not Control Rights
If a creditor obtains a charging order against a member’s membership interest, “the judgment creditor has only the rights of an assignee of the limited liability company interest.” That means the “judgment creditor shall have no right under this chapter or any other state law to interfere with the management or force dissolution of a limited liability company or to seek an order of the court requiring a foreclosure sale of the limited liability company interest.” This enables members to protect their control of an LLC.
- Georgia Registered Agent Services
A Georgia LLC must list a Georgia registered agent for service of process. A commercial registered agent service may act as a Georgia registered agent.
- How to Keep a Georgia LLC in Good Standing
Georgia requires both domestic (Georgia) LLCs and foreign (non-Georgia) LLCs that have obtained a certificate of authority to do business in Georgia to file an annual registration. The fee for filing the registration is only $50, which is much lower than the fees in many states.
Because of the advantages of forming an LLC in Georgia, over 56,000 new LLCs are formed in the state each year. Should you wish to have more flexibility and protection, you may instead form a Delaware LLC even if you operate in Georgia. What are the advantages of a Delaware LLC? (Delaware LLC Advantages). We can then help you file an application for registration to do business in Georgia with your Delaware LLC (Form Delaware LLC).
- Georgia LLC Act References
§ 14-11-101 “Definitions” § 14-11-203 “Formation” § 14-11-204 “Articles of Organization” § 14-11-205 “Execution of Documents” § 14-11-209 “Registered Office and Registered Agent” § 14-11-305 “Duties” § 14-11-307 “Conflicting Interest Transactions” § 14-11-308 “Approval Rights of Members and Managers” § 14-11-403 “Allocation of Profits and Losses” § 14-11-502 “Assignment of Limited Liability Company Interest” § 14-11-503 “Rights of Assignee to Become Member” § 14-11-504 “Rights of Judgment Creditor” § 14-11-505 “Admission of Members” § 14-11-506 “Powers of Estate of a Deceased or Incompetent Member” § 14-11-601 “Events of Dissociation” § 14-11-601.1 “Events Resulting in Cessation of Membership” § 14-11-1002 “Right to Dissent” § 14-11-1101 “Filing Fees and Penalties” § 14-11-1103 “Annual Registration” § 14-11-1107 “Laws Governing Chapter; Limited Liability Companies”
Georgia vs. Delaware LLC's: Which State Is Better?
|States||LLC Filing Fee||Required to Name Members or Managers||Report Frequency||Annual Fee?||Reduce Fiduciary Duties?||Series?||Charging Order as Exclusive Remedy||Maximum Freedom of Contract||Separate Equity Court?|