How to File LLC Taxes in Georgia? (Simple Guide)
As a Georgia business owner, you must file your taxes, as it's an important part of running a company. However, you must understand the tax filing requirements to submit the correct tax forms.
To help you start your tax filing, we partnered with our qualified experts with over twelve years of experience in the LLC industry.
We took three weeks and reviewed the Georgia Secretary of State's website for the correct information regarding LLC taxes.
Keep reading for a detailed guide on filing taxes for your Georgia LLC.
Quick Summary
- The amount of taxes payable by your LLC is determined by factors such as how your LLC is taxed, local and state tax regulations, sales and use tax obligations, and whether or not you have employees.
- Georgia LLCs do not pay taxes by default; LLC Members must record their income (or losses) on the personal 1040 tax return.
- The members pay taxes on all LLC profits because of LLC pass-through taxation.
How Are LLCs Taxed in Georgia?
In Georgia, LLCs are taxed as "pass-through entities," meaning the firm on its own doesn't pay taxes. Instead, the LLC's revenues and losses are distributed to the owners/members, who pay income taxes on their personal profits.
By default, single-member LLCs (SMLLC) are taxed as sole proprietors (sometimes known as "disregarded entities"), whereas multi-member LLCs are taxed as partnerships.
LLCs having the default tax categorization must file one of the following forms:
- Form 1040 (typically Schedule C, but some SMLLCs file C-EZ, E, or F) for a single-member LLC [1].
- Form 1065 for a Multi-Member LLC [2].
A limited liability company can also be taxed similarly to a corporation.
There are two forms of corporate elections:
- S-Corporation
- C-Corporation
State Taxes for Georgia LLCs
In Georgia, the IRS has numerous options for how to treat your LLC.
Below is how different LLC structures are taxed in Georgia.
1. Single-Member LLCs
The IRS considers all single-member LLCs to be disregarded entities for tax purposes. This implies that the IRS does not anticipate the LLC filing its own federal taxable income tax return.
Instead, the single-member LLC's owner submits the form (and pays the federal taxable income).
The ownership of the LLC determines how the LLC pays federal income taxes:
- If one individual owns the LLC, it is taxed as a sole proprietorship.
- If another firm owns the LLC, it is taxed as a division or branch of the parent company.
2. Multi-Member LLCs
If an LLC has two or more owners, it is taxed similarly to a partnership.
The LLC must file a 1065 Partnership Return and provide the LLC owners with a Schedule K-1 form.
The K-1s show the distributive portion of profits for each owner. Furthermore, the K-1 income "flows through" to the owners.
Each owner then pays the income taxes on the personal income tax return (Form 1040).
3. LLCs Taxed as S-Corp
Some LLCs might save money on taxes by deciding to be taxed as S-corps. Businesses with S-corp tax status are taxed as pass-through LLCs, but they can make distributions to members or shareholders not subject to the self-employment tax of 15.3%.
S-corps are liable to the 5.75% Georgia corporate income tax. However, the tax is given by the shareholders, not the firm.
Before filing Form 2553 to apply for S-corp status, we recommend consulting an accountant to ensure that S-corp status will benefit your LLC.
If you want your LLC to be taxed as an S-corp, you must submit Form 1120-S to the IRS yearly [3].
4. LLCs Taxed as C-Corp
Alternatively, LLCs can apply to be taxed as C-corps.
C-corps are subject to "double taxation," which implies that the corporation has to pay income tax for the corporate while the shareholders are taxed on dividends received.
"C-corps are eligible for additional tax breaks and credits compared to default-status LLCs."
- Collin Ciepeila, Business Attorney
5. Georgia State Income Tax
Individual income taxes in Georgia range from 1% to 5.75%, depending on income level.
The corporate income tax in Georgia is 5.75%. Georgia LLCs are taxed as companies with a net worth of more than $100,000 and must pay a net worth tax yearly.
LLCs taxed as partnerships do not pay corporate income tax but must declare their earnings on Income Tax Return Form 700.
Georgia LLC S-corps report their revenue to the Georgia Department of Revenue yearly using Tax Form 600S [4].
Federal Taxes for Georgia LLCs
The IRS levies these federal taxes on Georgia LLCs:
1. Federal Self-Employment Tax
Georgia limited liability company members are subject to state income tax and the federal self-employment tax of 15.3% (2.9% for Medicare and 12.4% for social security).
2. Federal Income Tax
Business taxes have to be paid every three months. Payments to the IRS are due on the 15th of the fourth, sixth, ninth, and twelfth months of the year.
In Georgia, businesses must submit their quarterly estimated tax payments using Form 602ES.
An S-Corp will typically utilize Form 1120S and file it by the fifteenth day of the third month after the end of the fiscal year.
S Corporation yearly taxes, including a net worth tax (Form 600S), are due on the 15th day of the third month and must be filed to the State of Georgia.
Read our article for more information on how to file LLC quarterly taxes.
Other Taxes
Here are some additional Georgia taxes that may apply to your LLC.
1. Georgia State Employer Taxes
Most Georgia LLCs with employees must pay for unemployment and workers' compensation insurance.
- Unemployment Insurance (UI) Tax: Employers with a quarterly payroll of $1500 or more than one employee for at least 20 weeks of the year must pay UI tax. The rate of taxation for new employers is 2.7% till a rate determined by their claims history can be computed.
- Workers' Compensation: Most firms with three or more employees must acquire workers' compensation insurance. Georgia workers' compensation rates are approximately $1 for $100 of insured payroll, although the exact amount will depend on the claims history and the risk associated with your employees' work.
2. Sales and Use Tax
Georgia has a 4% state sales tax. Local governments have the authority to impose an additional tax, which can raise the overall sales tax to 8% in some counties.
Georgia has a helpful Sales and Use Tax Rate Chart to determine the sales tax rate in your county [5].
You must register your limited liability company with the Georgia Tax Center to collect sales and use tax from clients.
3. Industry Taxes
Georgia levies extra taxes and fees on specific industries, including:
- Transportation Services Tax
- Alcohol and Tobacco License Fees
- State Hotel-Motel Fee
- Fireworks Excise Tax
- Motor Fuel Tax
What Is Tax-Deductible for an LLC in Georgia?
The tax-deductible for an LLC in Georgia includes deductible expenses such as travel and infrastructure, retrofit credit, dependent care and child expense credit, and disaster assistance credit.
Other tax-deductibles for an LLC in Georgia include:
- Single-Family Residence Tax Credit Eligibility: Georgia provides a tax credit to people who purchase a single-family house there. The credit equals $1,800 or 1.2% of the purchase price, whichever is less.
- Credit for Qualified Caregiving Expenses: You can deduct 10% of the charges, up to $150, on your state tax return if you paid for caregiving expenses for an eligible family member (such as adult day care, medical supplies, etc.).
- Certified Education Expense Credit: Tuition and other qualified educational costs, such as student activity fees, may be deducted from your Georgia tax return. You must submit an electronic pre-approval request to achieve this.
Like most normal business owners, LLC members can deduct any valid business costs from their income. This can lead to much smaller earnings reported to the IRS.
Alternatively, LLC owners can choose a flat 20% tax deduction for their company's net income.
This is significantly easier and might be useful for organizations who, owing to their business approach or sector, do not spend as much on operating expenses.
Related articles:
FAQs
Do Foreign LLCs in Georgia Need To Pay Georgia Taxes?
Yes, foreign LLCs in Georgia need to pay Georgia taxes. This includes sales tax, state income tax, and applicable local taxes.
Do I Have To Pay an Annual Fee for My LLC in Georgia?
Yes, you must pay an annual fee for your LLCs in Georgia. Every year, all Georgia LLCs must pay an annual fee by completing a Georgia LLC Annual Registration. This is in addition to your state, federal, and local taxes.
How Do I Know My LLC Tax Classification?
You know your LLC tax classification by determining how many members there are. This is because the IRS assigns an LLC's tax categorization based on its number of members (owners).
Do You Need Help With Your Georgia LLC Taxes?
Determining which types of taxes you owe might be difficult, let alone how to correctly fill out all the forms. And filing your taxes incorrectly or missing deadlines can harm your business.
That’s why we strongly advise using QuickBooks to file your local, state, and federal taxes appropriately.
QuickBooks has an intuitive interface with hands-on sample files that'll streamline your tax preparation process. With its cloud-based storage, you'll also monitor, export, and download your tax reports for future reference efficiently.
References:
- https://www.irs.gov/forms-pubs/about-form-1040
- https://www.irs.gov/forms-pubs/about-form-1065
- https://www.irs.gov/forms-pubs/about-form-1120-s
- https://dor.georgia.gov/600s-corporation-tax-return
- https://dor.georgia.gov/taxes/business-taxes/sales-use-tax/tax-rates
