A question on the mind of most starting a new business is what type of entity should I form? Georgia law imposes certain filing requirements which vary depending on the type of business entity a person chooses to create. Starting a corporation, for example, involves taking different steps than would be required in establishing a Limited Liability Company (LLC). Complying with all the state’s requirements can be especially difficult for those who choose to incorporate; so if you are considering starting your own business, do not hesitate to reach out to an experienced business formation attorney to assist you.
Advantages vs. Disadvantages
Many new business owners choose to use a corporate model when forming their company. Although both corporations and LLCs provide their respective owners with certain protections from personal liability, corporations are often the entity of choice for those hoping to attract outside capital and investors. This stems partly from the comfort that many private equity and venture capital firms have with the corporate structure and the well-established case law defining the rights and preferences of different classes of investors. Many corporations require an established management structure which includes officers, directors, and shareholders, who perform specific roles within the company. Additionally, while all entities must adhere to specific state rules and regulations to ensure separation of the entities from their owners, corporations are subject to additional statutory requirements. Furthermore, as the entity type of choice for outside investment, corporations allow businesses to expand at a rate that may not be possible for a different kind of business entity, particularly when raising funds from private equity or angel investors.
Although there are a variety of advantages to incorporating a business in Georgia, the process does have some drawbacks. It involves compiling and submitting a significant amount of paperwork and paying a variety of fees. This process is notorious for being time-consuming and frustrating, especially for those not being advised by an attorney.
Incorporating Your Business
The first step a person must take after deciding to incorporate a business is to choose a company name, which must include the word corporation, company, incorporated, or an abbreviated form of those terms. Furthermore, the name must be entirely original and cannot be similar to an already-existing business name in the state of Georgia. The next step is to file corporate bylaws and Articles of Incorporation, which will include:
- Business’ name and street address;
- Number of shares the corporation will issue;
- Name of the registered agent who is authorized to receive communications on the company’s behalf; and
- Name and address of each incorporator.
Once completed, this information must be sent to the state’s Corporations Division with a $100 fee. If the state informs the incorporator of any mistakes, he or she must address them within 60 days or risk having to submit new articles and pay another fee. Finally, business owners must announce their newly formed entity in a newspaper published in the county where the company’s primary registered office is located. The paper must have a certain size readership and a subscription rate to qualify.
Call Today to Speak with a Business Law Attorney
If you are considering starting your own business, please contact MendenFreiman LLP at 770-379-1450 to consult a dedicated business law attorney to walk you through the process of business formation. Our Atlanta legal team is prepared to help you today.