When you establish your company in Delaware, especially as a C Corporation, you have a lot of flexibility, but depending on the state in which you do business, you can still be required to follow state regulations.
If you operate a business in Georgia, you must register with the state. We'll break down the process and simplify it. But first, how can you determine if your company is doing business in Georgia?
When to register as doing business in Georgia
The State refers to Delaware C corps and all other corporations created outside of Georgia as "foreign" corporations. Unlike a sole proprietorship, you must register your corporation as a foreign entity in Georgia once you begin doing business in the state.
Georgia law does not provide a clear definition of what constitutes conducting business within the state. The following activities, however, are exempt from Georgia legislation' requirement that you register with the state:
Defending or settling a legal action
Having a state-issued bank account
Using independent contractors to sell
When To Register To Collect Sales Tax In Georgia
Every state has rules concerning when a business must pay sales tax. These are known as sales tax nexus regulations.
The nexus may be likened to a special version of the state's border; if you do specific commercial operations there, you are considered to have a sales tax nexus with the state and must register for and collect state sales tax.
These activities typically take the form of purchasing and offering products and services.
Only businesses that offer tangible products or services to Georgia citizens are subject to Georgia's sales tax nexus regulations.
Up until 2018, you were traditionally not considered to have sales tax nexus if you sold or bought non-physical things, such as memberships to SaaS services, streaming service subscriptions, etc. After a significant court decision in 2018, that altered. Now, you could have a sales tax nexus with a state if you acquire or sell non-physical products or services there.
Georgia Sales Tax Nexus (physical goods and property)
If you have a physical presence in Georgia, you will almost certainly be required to collect and return sales tax. If you have warehouses, retail locations, or workers and/or representatives of your company in the state, you may be physically present.
You must pay sales tax regardless of any minimal requirements as long as you have a physical presence. More information on physical presence for sales tax purposes may be found on the State's website.
Georgia Sales Tax Nexus (non-physical goods and property)
The new state sales tax legislation that apply to non-physical (i.e. online) purchases allow you to qualify for sales tax nexus even if you do not have a physical presence or items. To qualify in Georgia, you must meet specific criteria. The criteria exists so that small businesses are not held to the same tax liabilities as larger businesses.
You will need to collect and remit sales tax if you do the following in the current or previous year:
- Collect $250,000 or more in retail sales from Georgia; or
- Have 200 or more separate transactions into Georgia
If you would like to take a deep dive, you can check out the State’s website.
As always, this is only a guide and not legal advice. It is important to consult with your legal counsel and/or an accountant who is knowledgeable about Georgia's legal code and tax rules if you are not completely sure if you fall within Georgia's sales tax nexus.
How To Register To Do Business In Georgia
- Select a name under which to do business. The business name doesn’t have to be the same name on your Articles of Incorporation, but it can be. If you select a different business name than the one you used when incorporating in Delaware, you are using a doing business as (DBA) name or trade name. You may also submit a name reservation prior to registration so you do not need to selection a DBA name.
- Fill out an application. You’ll need to file a Certificate of Authority to the Georgia Secretary of State. You will include information such as your business structure and Employer Identification Number (EIN).
- Pay the fee. Now you pay the Georgia Secretary of State a filing fee of $225.
- Submit your Application for Certificate of Authority to the Corporations Division, based in Atlanta.
- Wait. Processing typically takes two to four weeks.
The Georgia Secretary of State provides the following business guide to assist you in registering your business entity in the state.
After receiving approval to operate as a qualified foreign firm in Georgia, you will be required to adhere to specific regulations.
Compliance as a Qualified Foreign Business in Georgia
Different types of businesses are subject to different regulations and compliance standards. After becoming a registered foreign corporation in Georgia, you will have to fulfil certain compliance requirements like many other Georgia corporations. Maintaining a registered agent and submitting your yearly report are prerequisites for continuing to conduct business legally in Georgia. You will also be responsible for paying business income tax and net worth tax on top of that.
Registered Agent in Georgia
As the business owner of a foreign corporation in Georgia, your point of contact with regional authorities is your registered agent in Georgia. Finding a registered agent to receive official correspondence on your behalf may be useful if your firm doesn't have a physical location in Georgia.
Foreign businesses must maintain a Georgia registered office. The office must have a physical address of your registered agent or a recognized registered agent service; it cannot be a P.O. box.
You will receive any relevant correspondence, including business mail, from your registered agent. There are several Georgia businesses and filing services that hire independent registered agents. Normally, they run between $50 and $100 annually
Annual Reporting In Georgia
Unlike limited liability companies (LLC), where the Georgia LLC needs to submit an annual registration as their annual report, Georgia corporations only need to submit a biennial report. Every two years, you must file a statement with the State, updating any changes to the company address or the composition of the Board and officers. You’ll include info like:
- The legal name of your business
- The name and address of your registered agent
- The names and addresses of board members, managers, and officers
Your annual report filing fee is $50.
Paying Corporate Income And Net Worth Tax
On top of paying your federal taxes to the IRS, you are responsible for paying your Georgia state taxes as well. Georgia levies state tax on corporate net worth and income taxes. The business tax is made up of both a franchise tax and a standard corporate income tax. A corporation's income is subject to a direct tax known as a corporate income tax. A franchise tax is assessed against a corporation's net value as payment for the right to conduct business inside a state. Please refer to the following instructions from Georgia's Department of Revenue for further information on making payments for your corporate income tax.
Registering To Pay Sales Tax In Georgia
If you meet the requirements to collect sales and use tax in Georgia, you will need to register with the Georgia Department of Revenue. You can register to collect sales tax through the Georgia Tax Center provided by the Georgia Department of Revenue.
After you register to pay sales tax in Georgia, you will likely be assigned a state tax identification number for your future filings and payments. The state tax ID and IRS tax ID will not necessarily be the same number. Please note that after registering to pay sales tax in Georgia, you may also be responsible for acquiring any business licenses you may need to legally conduct business in the state.
Hiring And Paying Employees In Georgia
When you hire a new employee in Georgia, federal and state laws require that you report new hires to the state within 10 days of their hire. You can report your new hires online.
Your payroll provider should be able to take care of any withholding taxes, but it’s up to you to register as an employer with the State and set up an online employer account.
For a comprehensive guide of your responsibilities, Georgia provides the following information.
The Easiest Way To Register Your Business In Georgia
There are many moving parts that you, the entrepreneur, need to keep track of in order to register and maintain your new business in Georgia. Serious headaches might result from incorrectly submitting the proper paperwork, giving the proper information, or failing to follow compliance regulations.
It's simple using Capbase. We will create the necessary data for you to register to conduct business in Georgia when you incorporate your Delaware corporation on Capbase, and we'll keep you informed of any filings that are necessary.
You can maintain your legal entity in good standing with Georgia state regulators by keeping track of future fees, reporting deadlines, and other regulations using the compliance calendar in your Capbase account.
Written by Beth Zhao
Beth is a second year law student at The George Washington Law School. She is a member of the Public Contract Law Journal.
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