The limited liability company has become more popular than its corporation counterpart due to its features combining the advantages of all business entities and at the same time doing away with the shortcomings inherent to the other forms of business.

The GA LLC is such a simple entity to understand and maintain but at the same time has flexibility when it comes to tax structures, ownership and functioning of the business.

OWNERS ARE NOT PERSONALLY LIABLE

The GA LLc offers the owners a much needed legal shield when it comes to sharing liability for business debts. The owners are not personally liable as the business is considered as a separate entity

In this regard it is interesting to note that section 14-11-303 of the Georgia LLC Act states that members (who are owners) are not liable for the business obligations, lawsuits and other liabilities of the business merely because they are owners. It does except out tax liabilities from operations and there are some conditions and exceptions. However, this protection is a tremendous advantage that only gets more significant as your business grows in size and scale.

WAYS OF RAISING CAPITAL

On forming an LLC in Georgia, you gain more options for accessing capital to fund your business. Banks are often unwilling to lend money to a startup. Another option is to issue ownership interests in a business in exchange for equity capital.

Issuing ownership interests is close to impossible in a sole proprietorship business. However, with a Georgia limited liability company, there is a concept of ownership interests and membership units can be issued in exchange for a percentage ownership in the business.

Having a separate structure as the business entity greatly facilitates the raising of capital and provides a well known structure to do so which in turn reduces the costs to raise money for your business needs.

FLEXIBILITY IN BUSINESS STRUCTURE

The laws allow a limited liability company to be extremely simple when it comes to ownership and operational structures. Minimum formalities are imposed. In effect the Georgia company LLC can be set up and structured fairly quickly and cheaply.

As a business evolves and grows over time, its ownership and operational structure may need to change to account for the growth and possible complexity. For example, the business may admit new owners or bring on a passive investor. Also, there may be a need for more official approval processes when it comes to major business decisions.

Forming an LLC in Georgia allows each business and their owners to set the structure of the organization and daily operations according to the requirements. In business, there is no one size fits all solution to these matters and the Georgia company LLC thus provides ways to customize such fundamental matters for your particular business situation.

OPTIONS IN FEDERAL INCOME TAX

A main reason the Georgia Limited Liability Company has become the entity of choice for small business is because in 1997, the IRS passed regulations that allows for the business entity to choose the way the business will be taxed. There are no longer any additional requirements to qualify for a single layer of pass through taxation.

When you form a GA LLC, your business will be taxed via a single layer of pass through taxation by default. This type of taxation avoids the potentially significant double taxation effect of corporate taxation.

However, in some circumstances, your accountant may advise that a corporation tax structure is more advantageous. In these cases, a Georgia company LLC may file an election with the IRS to be taxed as a C corporation or an S corporation. The S corporation qualification does require that the entity and its owners meet a set of requirements. You get more choices when it comes to how your business income will be taxed.