Georgians have several types of legal entity from which to choose depending on their business goals and objectives.
As economic times slowly improve, some Georgians will decide to kick off new businesses of all kinds. One of the first and most important decisions when establishing a business is which kind of
business entity to choose, a decision that will impact future operational issues of taxes, management, control and liability.
When contemplating a new business, it is smart to engage legal counsel early in the process in order to get important legal advice about the kinds of business entities available in the state. An experienced business attorney can help an entrepreneur sort out his or her commercial goals and priorities and then analyze which type of business model makes sense for the business.
Choices of business entities under Georgia law include:
- Sole proprietorship: The sole proprietorship is the simplest kind of business structure and occurs when an individual hangs out a shingle alone, so to speak. The owner has complete control over management and business decisions; is personally liable for business debts and liabilities; and handles business income and loss on his or her own personal tax return.
- Partnership: A partnership is created when two or more people begin a business enterprise together for profit. Generally, each partner shares in management decisions, business profits and liability, and responsibility for taxes. However, these arrangement may be varied by a partnership agreement.
- Limited partnership: A partnership that has general partners who have management control and are personally liable for partnership debts and limited partners who make financial investments and earn proportional profits, but do not participate in business decisions and are generally not personally liable beyond their levels of investment.
- Corporation: A
corporation creates a fictional legal entity separate from the founders and shareholders, those who own the company by virtue of purchasing stock in the company. As such, the corporation in most situations absorbs liability and debt, protecting owners from personal liability. Corporations are taxed as separate entities. Executive management is the responsibility of directors and officers.
- Limited liability company: A modern fictional legal entity consisting of members and governed by an operating agreement. The LLC has some aspects of a corporation and some of a partnership and may be flexibly created by agreement.
- Nonprofit corporation
- Professional corporation
- Joint venture
- And more
Legal counsel retained to set up the business will prepare and file any necessary legal documents to establish the entity (such as articles of incorporation or an LLC operating agreement), as well as required applications for permits and licenses and proper registration of the business with federal, state and local tax authorities. A knowledgeable attorney can also instruct the business about internal recordkeeping requirements and any ongoing public filing requirements.
Based in Atlanta, the business lawyers of Kaufman & Forman, P.C., advise new business clients on matters of entity choice, contract formation, dispute resolution and commercial litigation.
Keywords: Georgia, legal entity, business entity, corporation, new business, limited liability company, LLC, partnership