How to Establish a Sole Proprietorship in Georgia
To establish a sole proprietorship in Georgia, here's everything you need to know.
In Georgia, you can establish a sole proprietorship without filing any legal documents with the Georgia Secretary of State. There are four simple steps you should take:
- Choose a business name.
- File a trade name with the Superior Court.
- Obtain licenses, permits, and zoning clearance.
- Obtain an Employer Identification Number.
To find out how to establish a sole proprietorship in any other state, see Nolo’s 50-State Guide to Establishing a Sole Proprietorship.
1. Choose a Business Name
In Georgia, a sole proprietor may use his or her own given name or may use an assumed name or trade name. It is always a good idea to choose a name that is not too similar to another registered business because of common and federal law trademark protections. To make sure your business name is available, run a search in the following government databases:
2. File a Trade Name
If you use a business name that is different from your legal name, Georgia requires you to register the trade name. After you have chosen a name, you will need to publish it in a local newspaper in the county where your business is located for at least two weeks. To file your trade name, you need to contact the Clerk of Superior Court in the county where your business is located. The filing fee varies depending on the county but expect to pay around $160.
3. Obtain Licenses, Permits, and Zoning Clearance
Your business may need to obtain business licenses or professional licenses depending on its business activities. Georgia Secretary of State Licensing Board is the agency in charge of licensing and regulating most professions. However, other professions such as health care and law are licensed by other departments. If your particular profession is not listed with the Licensing Board, check with the appropriate Georgia State Agency. In addition, local regulations, including licenses, building permits, and zoning clearances, may apply to your business. You will need to check with your city and county governments for more information.
4. Obtain an Employer Identification Number
Sole proprietors who wish to have employees need to obtain an Employer Identification Number, or EIN. This is a nine digit number issued by the IRS to keep track of businesses. All businesses with employees are required to report wages to the IRS using their EIN. Registering for an EIN can be done online at the IRS website.
Even though sole proprietors without employees are not required to have an EIN, you may want to obtain one anyway. Some banks require one to open a bank account and it can reduce the risk of identity theft.
In Georgia, businesses are required to file new-hire reports. You will need to use your EIN when registering your business through the Georgia New Hire Reporting Center. If you have employees, you must report and pay employment taxes on a periodic basis. You will need to register and obtain a taxpayer withholding number. To register as a new business and employer in Georgia, visit the Georgia Tax Center.
It is important to consider doing the following once you have established your sole proprietorship:
- Open a business bank account. Using your fictitious business name and EIN, you should set up a bank account to keep your business and personal finances separate.
- Obtain general liability insurance. Because sole proprietors are personally liable for all debts and obligations of the business, a business liability insurance policy may be the only form of financial protection against unforeseen events.
- Report and pay taxes. Depending on your specific business activities, you may be required to report such items as sales tax and use tax. You will need to register with Georgia’s Department of Revenue Online Tax Center. Instructions are available in the Georgia Tax Center Manual for Taxpayers.