The limited liability company has surpassed the corporation as the most popular business vehicle for small business. Why? Because it was created to provide all the advantage of other business entities but without their disadvantages.
The Ga LLC is such a simple entity to understand and maintain but at the same time it gives the owners many options when it comes to tax structures, how the business will be owned and how it will be operated.
The main reason to form a Ga LLC is to protect yourself and other owners from being personally liable for business debts and obligations. Without a limited liability legal entity such as a Georgia company LLC, you will be placing everything you own entirely at risk for potential loss. Given the growing litigious environment of our society and the aggressive plaintiff lawyers out there looking for small businesses to attack, every Georgia business should operate with this legal shield.
Specifically, section 14-11-303 of the Georgia LLC Act states that members (who are owners) are not liable for the business obligations, lawsuits and other liabilities of the business merely because they are owners. It does except out tax liabilities from operations and there are some conditions and exceptions. However, this protection is a tremendous advantage that only gets more significant as your business grows because successful business are targeted more for lawsuits.
RAISING MONEY FOR BUSINESS
When you form a Georgia company LLC, you gain more options for accessing capital to fund your business. Banks are often unwilling to lend money to a brand new business in whatever form it is formed. Another option is to issue ownership interests in a business in exchange for equity capital.
Issuing ownership interests is close to impossible in a sole proprietorship business. However, with a Georgia limited liability company, there is a concept of ownership interests and membership units can be issued in exchange for a percentage ownership in the business.
Having a separate structure as the business entity greatly facilitates the raising of capital and provides a well known structure to do so which in turn reduces the costs to raise money for your business needs.
PROFESSIONAL IMAGE AND TRUSTWORTHY PERCEPTION
With the many fly by night business and business scams out there today, potential customers are suspicious. A new business has quite a challenge to overcome these concerns .
By going through the process to form a Ga LLC for your business and having an official entity as your business, you automatically separate yourselves from others. You see, it only takes coming up with a name to call yourself a business.
But creating a Georgia company LLC is a clear sign of intelligent business planning which in turn creates more professionalism and trust when it comes to your business identity. This can be a great advantage when trying to get customers and build your brand presence in the marketplace.
FLEXIBLE BUSINESS STRUCTURE
The laws allow a limited liability company to be extremely simple when it comes to ownership and operational structures. There are less formalities imposed upon it. Accordingly, for the single owner business or one with a few related owners, a Georgia company LLC can be set up and structured fairly quickly and cheaply.
As a business evolves and grows over time, its ownership and operational structure may need to change to account for the growth and possible complexity. For example, the business may admit new owners or bring on a passive investor. Also, there may be a need for more official approval processes when it comes to major business decisions.
The Ga LLC allows each business and their owners to define for themselves, how the ownership will be structure and how the business will operate and run on a day to day basis. In business, there is no one size fits all solution to these matters and the Georgia company LLC thus provides ways to customize such fundamental matters for your particular business situation.
Georgia Tax Assessors’ Offices usually mail the PT-50P or Georgia Business Personal Property Return during the first few weeks of the year. Many tax minimizing strategies for federal return purposes may actually increase business personal property tax exposure. Remember, there is no Section 179, bonus depreciation, or threshold for personal property assets. The following tips are not an exhaustive list, but rather a starting point for your business tax planning:
Tip #1: Know the business personal property valuation date and tax return due date for your Georgia county!
Property Valuation Date for ALL Georgia counties: January 1
Property Tax Due Date for ALL Georgia counties: April 1
Personal property taxes are assessed on January 1 of the current tax year for all applicable assets. The law provides that property tax returns must be filed with the county tax assessor or the county tax commissioner between January 1 and April 1 (O.C.G.A. 48-5-18).
Tip #2: File the Business Personal Property return by April 1 to avoid penalties on unreported assets!
A 10% penalty applies to the value of unreported property assets on late returns. For example, if a return is postmarked and received by the Assessors’ Office after April 1st, the penalty would apply to all assets that had not been previously reported-including current year assets. However, if a company has been in existence for years, but never filed a personal property return until April 1, 2013, all prior year assets (2011 and before) are subject to the 10% penalty despite the timely filing date. Only the 2012, or current year assets, would not be penalized in this example.
Tip #3: When mailing your return close to the April 1st deadline, do not use metered mail!
Avoid the 10% penalty on unreported assets by mailing your return at least one week before the due date through the U.S. Post Office, FedEx, or UPS. Ask for your envelope to be counter stamped by the U.S. Post Office as proof of a timely filed return. Most counties do not accept metered mail dates as official filing dates because it is relatively simple to back date the meter. There is also the option to hand-deliver the return to the Assessors’ Office. Make sure to receive a copy of the stamp dated return.
Tip #4: Again, timing is everything!
All property subject to taxation should be returned as provided by law (O.C.G.A. 48-5-10). File personal property returns for property held and owned as of January 1 (valuation date for all Georgia counties). If you are the property owner as of January 1, it does not matter if you sold the property on January 2. You are deemed the property owner for the entire year! There is no proration for business personal property taxes.
Tip #5: Time your fixed asset and inventory purchases wisely!
The property valuation date is January 1 for all Georgia counties. Consider purchasing assets on or after January 2 to defer reporting the property for one year. This may be contrary to standard federal tax advice about timing asset purchases before December 31.
Freebie: Perform due diligence before you purchase a business!
Taxes are assessed against the property owner if known OR against the property if the owner is unknown. The Assessors’ Office can treat as the owner any person that has possession of the assets when they are unable to attach ownership to anyone else. Possession is considered a mark of ownership.
While some of these tips may seem elementary, many businesses are penalized each year due to non-compliance. Take a proactive approach with business personal property tax planning and minimize your tax liability for 2013.
Angelica Moss, CPA is the principal of Equity Tax Consultants, a full-service business personal property tax consulting firm based in metro Atlanta, Georgia. Equity Tax Consultants specializes in Freeport Exemption Reviews, Tax Appeals, Compliance, Reverse Audits, and Property Tax Planning. Angelica was a former personal property appraiser and auditor for a large metro-Atlanta county for several years before founding her consulting practice.