So you’ve decided to set up your business in Georgia. You know what you want to do with your company, and you’ve picked what type of business model you’ll be working with. Now, you need to look into the specifics of your model so you understand how it works from the ground up.
A Limited Liability Corporation, or LLC, comes with many advantages to you. However, there is one important thing to consider when deciding on an LLC. According to the U.S. Small Business Administration, an LLC is not considered a separate tax entity. What does that mean for you? It means that members of the LLC will shoulder the burden and pay the taxes themselves. LLCs are not recognized as business entities by the federal government when it comes to taxes, which means that you will need to file a tax return under one of the following:
- Sole proprietorship
Other tax forms that you may need to follow include Form 1065, Form 1040 Schedule C, or Form 1120. These correspond with the aforementioned classifications.
Be aware of the fact that income is not taxed on an LLC on the federal level. However, different states have different policies about LLC taxation. While most will not tax income, some will, which may change your mind regarding whether or not this is the option for you.
Regardless of what you pick, be sure to do your research ahead of time. Different business models suit different people, and this type of taxation may or may not fit your visions best.