Whether you’re starting a new business or exploring the process of taking an existing sole proprietorship or LLC to an S Corp in Georgia, it’s important to have guidance from professionals as soon as you decide to research the steps. Forming an S Corp in Georgia is about more than getting your company classified properly; it’s also about recognizing the steps you now need to take in order to comply with S Corp mandates in the future.
Filing all the paperwork properly and meeting the requirements means that you need to start off on the right foot. Having all the details organized and broken down by step will enable you to tackle each aspect of forming a Georgia S Corp with the help of an experienced Atlanta business attorney. In this article, you’ll learn more about how to do this and what to expect when you retain a business lawyer in GA to assist you.
What is an S Corp in Georgia?
If you want more formal structure in your business and the protection afforded by an LLC, S Corps also offer the added benefit of pass-through taxation of business profits. This is a business that is a standard corporation with one deviation: the shareholders of an S corp choose a special tax status with the IRS by submitting Form 2553.
Shareholders get numerous benefits for being a part of an S Corp in Georgia: they get limited liability for obligations, debts, and liabilities that are taken on by the business. Furthermore, the individuals are shielded from liability associated with possible legal action. Of course, the exception to this is when a shareholder has been involved in fraudulent or illegal activities that have caused the harm or legal action in question.
How Are Taxes Handled for Georgia S Corps?
Given that one of the biggest benefits of creating an S corp in Atlanta is the pass-through taxation, it’s a good plan to start the process of forming your S Corp with an attorney who has experience in this area. At our Atlanta tax strategy law office, we have worked with many businesses who want to start off as an S Corp or adapt their strategy to get the tax advantages as the company has grown.
Any S Corp with more than one shareholder will file tax returns for the company, but a Georgia S corp itself does not pay any income taxes directly. The owners or individuals have to include their portion of a corporation’s loss or income on their individual tax returns much like the way it occurs with LLCs, partnerships, and sole props. If you need help filling out the paperwork and deciding if this is the right tax strategy for your business, now is the perfect time to schedule a consultation with a trusted business and tax strategy attorney to prepare you and your shareholders for what this means as far as changes in process.
What’s Required if My Company Becomes a Georgia S Corp?
As is mentioned above, filing to become an S Corp doesn’t mean your work stops there. You need to continue with a structure that complies with the mandates of being an S Corporation. To get everything set up the right way from the time your S Corp is filed, it’s strongly recommended that you work with an attorney. It’s much easier to kick things off properly than it is to discover that you missed an important detail that could render your benefits of S Corp structure meaninguless.
In order to be legally recognized as a corporation in Georgia with an S classification, you’ll need to:
- File the company’s official documents with the state and pay filing fees
- Submit Form 2253 with the IRS
- Ensure that the S Corp is treated as an entity distinct from its individual shareholder members.
- Your corporation cannot exceed a total of 100 shareholders
- Minutes must be kept from meetings that include shareholders and the board of directors for the corporation
If you have specific questions about your company and whether there are any issues with the kind of business you conduct and compliance with S Corp mandates, you’ll want to use this opportunity to meet with a GA business lawyer to learn more.
Typically, S Corps that meet all the requirements are audited much less frequently than partnerships and sole proprietorships. Income and losses have to be allocated within the company based on ownership percentages of people. Finally, self employment taxes are not calculated in terms of salaries that are paid by the corporation.
How to Form a Georgia S Corp
Do you know how to get started with a Georgia S Corp filing? Our office can help. You’ll start by choosing a corporate name and filing your Articles of Incorporation. After that point, you will appoint a registered agent for the corporation.
Once you’ve taken these initial steps with the help of a GA business lawyer, you will:
- Need to open a corporate records book
- Create corporate bylaws
- Appoint your directors and hold the first meeting
- Send/issue stock to shareholders
- Set a cadence for annual reporting requirements and regulatory requirements
If you think you’re ready to form your S Corp and just need guidance on how to get things in order before you do file, consider working with an experienced Georgia business attorney. To form an S Corp in Georgia, you want to decrease your risk for any problems or filing issues. Hand over the responsibility of setting up the corporation and complying with requirements to an attorney who can advise you about the business and tax implications.