Sole Proprietorship in Georgia

By Jeffry Olson, J.D.

Sole Proprietorship in Georgia

By Jeffry Olson, J.D.

In Georgia, a sole proprietorship is the simplest and most common form of business. To start, a business person only needs to open their door and begin doing business. Unlike other forms of business, the state requires no formal filing for a sole proprietorship. It's the default form of business used when an individual doesn't organize another type of business entity.

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Operating a Sole Proprietorship

As previously stated, operating a sole proprietorship in the state of Georgia requires no formal filing. However, some professions require licensing and permits in the state, and existing as a sole proprietorship does not allow an individual to avoid them. Contact the state of Georgia to determine whether your chosen profession requires licensing, permits, or both.

If the sole proprietorship operates under the name of the owner, no registration is required. However, if you do business under a different name, that name must be registered. Businesses can register “fictitious" or assumed names with the Clerk of Superior Court in the county where the sole proprietorship operates. Because a sole proprietorship is just one person, the owner, the business cannot continue upon the death of the owner.

Registration for Taxes

If appropriate, the sole proprietorship must collect Georgia sales tax and any other required taxes. A sole proprietorship may use the owner's Social Security number for business and does not need a separate tax ID. However, if the business has employees, it must use an employee identification number with the IRS. Further, as an employer, the sole proprietorship is responsible for withholding income tax, workers' compensation insurance, and any other governmental requirements.

The profits of a sole proprietorship are taxed as the owner's income. Unlike corporate profits, business income is not subject to a separate tax. Along with ease of creation, simple taxation is the primary advantage a sole proprietorship has over other forms of business.

Unlimited Liability

A sole proprietorship provides the owner no protection from liability. All of the owner's property and assets are subject to the liabilities of the business. Liability extends beyond the assets of the business because there is no legal distinction made between the assets of the owner and the assets of the business entity. This is one distinction between a sole proprietorship and a corporation or limited liability company.

Unlimited liability for the owner is the primary disadvantage a sole proprietorship has in comparison with other forms of business. If your business debt is exceeding your business-related assets, your personal assets can be taken to cover the debt.

Other than the licensing and permit requirements of certain professions, a sole proprietorship requires no registration with the state. Profits of a sole proprietorship flow through as taxable income for the owner and are not taxed separately. However, the sole proprietorship does have unlimited liability for the owner and provides no liability protection for the owner's property and assets. Carefully consider the advantages and disadvantages of a sole proprietorship when deciding your form of business in the state of Georgia.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.