Many people
mistakenly think that an LLC in Georgia is the same as a
corporation. While both the limited liability company and the
corporation are legal entities that can be formed in the state, they
are not the same.
While the
Georgia LLC does have many similar traits of a corporation, the
LLC was specifically created to offer the advantages of benefits of
other legal entities without the disadvantages of those same
alternatives. They both offer owners of a business limited liability
protection and this benefit is so important in today’s world where
lawsuits are out of control.
They also both offer
an ideal structure to raise capital and bring in investors. This is
because their ownership is based on a unit such as stock or LLC
membership units and these units can be issued for capital.
However, the LLC
does offer more advantages over the corporation for the small
business owner.
An LLC in Georgia Is
Easier to Maintain
The Georgia state
legislature wanted to create a simpler entity than the corporation
for small business owners. Corporations were initially designed to
house large complex businesses. But, as entrepreneurship grew, many
solo and small business owners did not want to undertake the
compliance and additional complexities of a corporation in order to
gain liability protection.
However, as
liability and asset protection became a bigger issue in our country,
lawmakers realized the need for an asset protection vehicle more
suitable for small business. This became the Georgia limited
liability company which does not have the same level of formalities
as a corporation.
An LLC in Georgia is
a More Flexible Business Vehicle
The Georgia
corporation statutes outline the management structure of a
corporation. This structure requires centralized management with a
Board of Directors and a standard ownership structure.
The limited
liability company laws in Georgia allow for the owners of an LLC to
decide upon management structure and does not impose a rigid
ownership structure. Business owners have major flexibility to
decide upon the rules, conditions and limitations of their
business. This allows for a business to be managed and operated
based on the business needs and not a one size fits all set of legal
rules.
An LLC Has More Tax
Choices
Another reason why
the LLC in Georgia is the more common choice is because it can
choose from three taxation structures. First, an LLC automatically
qualifies for pass through taxation which is significant because by
forming an LLC you can receive limited liability and avoid the
double taxation of C corporation taxation.
However, for some
businesses, being taxed under the corporation tax structures may be
preferred. The great thing about the Georgia limited liability
company is that the business can elect to be taxed as a corporation
if it chooses. This is done by filing a simple election form with
the Internal Revenue Service. It is always recommended that
business owner seek the professional advice of their accountants
before making any elections that will affect the taxation of
business profits.
SUMMARY
Since the LLC in
Georgia was made available back in 1993, it has become the entity of
choice for small business owners. The simplicity, flexibility and
affordability of this legal entity allows business owners to spend
more time and investment on growing their businesses and less time
trying to meet extraneous legal requirements and formalities.
