How to Set Up an S Corporation in Georgia

Setting up an S Corporation in Georgia can be a rewarding venture for small business owners looking to take advantage of tax benefits and limited liability protection. Below is a step-by-step guide to help you navigate the process smoothly.

Step 1: Choose a Name for Your S Corporation

The first step in forming an S Corporation is to select a unique name that adheres to Georgia's naming requirements. Your corporation's name must include "Corporation," "Incorporated," or abbreviations like "Corp." or "Inc." Additionally, ensure that the name is not already in use by checking the Georgia Secretary of State's business registry.

Step 2: Appoint Directors and Prepare Bylaws

Once you have your corporate name, appoint a board of directors. There are no specific requirements for the number of directors, but at least one is necessary. Next, prepare corporate bylaws that outline the governance structure and operational procedures of your S Corporation. Although bylaws are not required to be filed with the state, they are critical for internal purposes.

Step 3: File Articles of Incorporation

To officially create your S Corporation, you must file Articles of Incorporation with the Georgia Secretary of State. You can complete this online or by mail. The filing fee is typically around $100. The Articles must include the corporation’s name, registered agent information, and the number of shares authorized for issuance.

Step 4: Obtain an Employer Identification Number (EIN)

After your Articles of Incorporation are approved, you will need an Employer Identification Number (EIN) from the IRS. This unique tax ID number is essential for tax purposes and is required whether you will have employees or not. You can apply for an EIN online through the IRS website, and the process is free.

Step 5: Elect S Corporation Status

To be taxed as an S Corporation, you must file IRS Form 2553, “Election by a Small Business Corporation.” All shareholders must sign this form, and it should be submitted to the IRS within 75 days of formation or by the 15th day of the third month of the current tax year to qualify for S Corporation status. Ensure that your corporation meets the eligibility requirements, such as having 100 or fewer shareholders.

Step 6: Comply with State and Local Requirements

Once your S Corporation is established, you must comply with Georgia’s state and local requirements. This includes registering for state taxes, obtaining any necessary business licenses and permits, and possibly filing for local business tax registrations depending on your jurisdiction. Consult with a local attorney or accountant to ensure you meet all regulatory obligations.

Step 7: Hold Initial Organizational Meeting

After completing the necessary filings, hold your initial organizational meeting with the board of directors. During this meeting, formally adopt the bylaws, issue shares of stock, and set up a corporate record book to store important documents.

Step 8: Maintain Compliance

S Corporations must adhere to ongoing compliance requirements such as filing annual reports and maintaining proper corporate records. It is essential to keep accurate financial records and conduct regular meetings to fulfill legal obligations and protect the corporation’s limited liability status.

Conclusion

Setting up an S Corporation in Georgia involves several important steps, from choosing a name to maintaining compliance. By following this comprehensive guide, you can ensure a smooth setup process and enjoy the benefits that come with operating as an S Corporation.