Sole Proprietorship in Georgia

By Elizabeth Rayne

A sole proprietorship is a common business entity because it is relatively simple to set up and allows for a great deal of flexibility in how the business is managed. As a sole proprietor, you have complete control over the management of the business, take all the profits and avoid corporate income taxation. Although there are no registration requirements to initially form a sole proprietorship in Georgia, depending on the type of business, the Georgia Secretary of State recommends professional, local and tax registration.

A sole proprietorship is a common business entity because it is relatively simple to set up and allows for a great deal of flexibility in how the business is managed. As a sole proprietor, you have complete control over the management of the business, take all the profits and avoid corporate income taxation. Although there are no registration requirements to initially form a sole proprietorship in Georgia, depending on the type of business, the Georgia Secretary of State recommends professional, local and tax registration.

Formation

Georgia does not require a sole proprietor to register with the state to operate the business. A sole proprietorship is essentially the alter ego of the owner, who is personally liable for the debts and obligations of the business. Unlike incorporated businesses, the income and assets of a sole proprietorship belong to the owner. An individual forms a sole proprietorship as soon as she starts doing business in the state. However, depending on the type of business, a sole proprietor may need to acquire a number of other licenses or permits.

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State Licensing

The State of Georgia regulates a number of professions and requires many types of businesses, regardless of business entity type, to register with the appropriate licensing board. Accountants, pharmacists, chiropractors, nurses, foresters and many other professionals must apply for state licensing before offering their services to the public. Contact the professional licensing board division of the Georgia Secretary of State to determine your licensing requirements.

City Licenses and Permits

The town or city where your business is located may require businesses to obtain a local business license. Although your sole proprietorship is formed without registration, a local license may allow you to open doors to customers in a particular city or town. Contact your city or county clerk to learn more about local permit requirements in your area.

Tax Registration

Depending on the type of business, you may pursue tax registration with the State of Georgia. The state recommends that businesses that collect sales tax, as well as businesses involved in tobacco and fuel, register with the Georgia Department of Revenue. As a sole proprietor, you may use your Social Security number for your business and do not need a separate tax ID. However, if you plan to have employees, you must register for an Employer Identification Number with the IRS. As an employer, you may consider withholding income tax and carrying workers' compensation insurance.

Fictitious Business Name

Georgia allows businesses to register a "fictitious" or "assumed" name. Unlike a corporation, you do not need to register your name with the state if you plan to do business under your own name. However, if you are interested in doing business under a different name than your own, you must register the business name. The state recommends that businesses register assumed names with the Clerk of Superior Court of the county where the business is located.

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How to Get a Sole Proprietorship

References

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