SMALL TOWN VALUES, BIG IDEAS

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121 E. Pine Street

 Fitzgerald, Ga. 31750
229-423-9357

Saturday November 01, 2014
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Deciding what form of legal entity your business will take is an important decision. This will have an impact on the future of your business including your protection under the law, and the rules and regulations (for example: federal and state taxes) that will apply to you. It is recommended that before you enter into any of these four forms of business, that you contact an attorney, CPA or other qualified individuals. Speaking with someone informed about the legal entities of business will reduce the risk of mistakes in the business setup.  You can probably do the necessary paperwork and procedures yourself, but it makes sense to leave it up to the professionals. Also, contact the Small Business Development Center (SBDC) at (229) 386-7056 for more information. THERE ARE FOUR BASIC FORMS THAT A NEW BUSINESS CAN TAKE:

  • Sole proprietorship
  • Partnership (General or Limited)
  • Corporation (C or S)
  • Limited Liability Company

A sole proprietorshipis usually owned and operated by one person. Under the law, it is not actually considered a legal entity.  It is instead considered an extension of the person who owns the business. This individual has sole ownership of assets, but is also solely liable for the debts of the business. 

A partnership can be formed in two ways. A general partnership is comprised of two or more individuals who join to start a business. Each person has proportional ownership of the business assets and proportional liability for business debts.  Each person also has authority in running this business. A partnership agreement can be drawn up to alter each person’s particular liability. However, despite this document, creditors may collect form each and every member of the partnership (this may include personal assets).

A limited partnership is made up of one or more general partners as well as one or more limited partners Limited partners contribute capital and share in profits/losses. These limited partners, however, take no part in the running of the business and are not held liable for the organization’s debts.

Whether taking part in a general or limited partnership, it is advisable that you draw up a partnership agreement. This document will detail each partner’s rights and responsibilities. Partnerships are required to file both federal and state income tax. Wile the partnership is not typically taxed, each partner reflects charges for the partnership on his/her personal tax returns.

A corporation is an entity, which must be approved by the state of Georgia through the Office of the Secretary of State. A corporation must file federal, state and local taxes on its operations. One advantage to a corporation is the protection from liability afforded to shareholders. However, when an organization is small, creditors may require personal guarantees of predominate owners.  Another advantage to the corporation is the ease of raising capital through the sale of common or preferred stock.  A disadvantage of the corporation is that the organization’s income will essentially be taxes twice (once for the business and again on the shareholders personal income tax after collecting dividends).

There are two types of corporations: C and S.

The C Corporation has their own tax identification numbers and pays their own taxes. The S corporation is the opposite.  It is not taxed as if it is a corporation at all.  Instead, it is taxed similarly to a partnership.  Its gains and losses are reflected on the personal income tax of the shareholder. The S corporation does not provide protection from liability to its shareholders.  (the distinctions between C and S corporations can be complicated.  It is very important that you consult with someone who is knowledgeable on the subject before making a decision.)

In order to incorporate your business, contact the Office of the Secretary of State. You will then reserve your corporation name. The incorporation process must be completed within 90 days.  The Office of the Secretary of State will instruct you in the completion of all documents needed.  You will be required to pay an incorporation fee each by April 1st.

Office of Secretary of State
Brian Kemp                                                            
315 West Tower                                                          
2 Martin Luther King Drive                                           
Atlanta, GA  30334                                                       
404-656-2881                                                            
Fax: 404-656-0513
http://www.sos.georgia.gov/
               

This incorporation process includes publishing your intent to incorporate in the local newspaper’s legal publication.  Newspapers do charge for this service.  The legal organ for Fitzgerald-Ben Hill County is
The Herald Leader. To publish your intent to incorporate contact:

The Herald Leader
P.O. Box 40
Fitzgerald, GA  31750
(229) 423-9331
Fax: (229) 423-6533
http://www.herald-leader.net/ 

An attorney can usually perform the necessary procedures for you for several hundred dollars. How much it will cost depends on the attorney and your business.

The limited liability company (LLC) is one owned by two or more persons known as members. It is a mixture of other forms of organizations.  This form combines some of the partnership, corporation and S Corporation’s best features. Similarly to a corporation, you must reserve a name and file the articles of incorporation.  You and your fellow members should write and operation agreement to control the conduct of the business.

An LLC shields the personal assets of members as if they were shareholders in a corporation.  It also eliminates double taxation. Because an LLC is a somewhat new organizational form, it is unclear how the partnership tax rules will apply. You may not be able to conduct interstate trade as an LLC. Many state and foreign governments have not yet approved this form.  In addition, an LLC may not have a perpetual life. While this form of organization is gaining popularity, you must take great care in the establishment of an LLC to insure pass-through tax treatment.

Licensing and Permit Information

Business License (also called an Occupational Tax)

If you plan to operate a business in the state of Georgia, you must obtain a city or county business license. In some cases, such as home-based businesses and some county areas outside the incorporated city limits, no license is needed.  You should discuss the details of your situation with the licensing department.  The fee for a license is contingent on the location, type and size of your business.

If your business will be located within the Fitzgerald city limits:

City of Fitzgerald

City Hall

302 E. Central Ave.

Fitzgerald, GA  31750

(229) 426-5060

Fax: (229) 426-5066

http://www.fitzgeraldga.org/   

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If your business will be located within the county of Ben Hill:
Ben Hill County
402 A. East Pine ST.
Fitzgerald, GA  31750
(229) 426-5100
http://www.benhillcounty.com/           
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Zoning
  

Once you have chosen a tentative location for your business, contact the zoning department to determine the permitted uses of that location. There might be special restrictions on that area.  DO NOT INVEST ANY MONEY IN A LOCATION UNTIL ZONING HAS BEEN THOROUGHLY RESEARCHED!!!

The Zoning office can help with determining if your location and type of business are in compliance with ordinances.  You will be required to submit your business plans to the zoning office to determine if the business complies/can be adapted to comply with the following:

  • Current zoning classification
  • Building setbacks
  • Off-street parking availability and service entrance requirements
  • Buffer yards or required screening
  • Lot area minimum
  • Sign regulations

Fitzgerald City Building Inspector                            

David Walker                                                             

115 N. Grant ST.                                                        

Fitzgerald, GA  31750                                                

(229) 426-5044                                                         

This e-mail address is being protected from spambots. You need JavaScript enabled to view it.    

Ben Hill County Building Inspector
Ken Anderson
402 A. East Pine St.
Fitzgerald, GA  31750
(229) 426-5149                                                  

If your plans do not/cannot meet these specifications, you can discuss options with the zoning office.  If you find the current zoning classification of your potential location does not allow for your business, you may file an appeal for rezoning. In order to file this appeal, contact the Zoning Administrator’s office. An answer on this appeal can usually be expected within 4-5 weeks after submission of your application packet.

Building Construction/Renovations/Occupancy

A building permit must be obtained for both new construction and renovations of and additions to existing buildings.  Before you may construct a new facility or renovate an existing one, you must have this permit.  Once you have obtained a building permit, complied with the regulations pertaining to the area you are in, and construction is complete, your facility will be inspected. You will then apply for a Certificate of Occupancy. Without this certificate, it is illegal for your business to reside in the facility.

 (see building inspector contacts above)

Health Permits

If your business is to involve food processing, handling, storage, or distribution, you must obtain permits from the Ben Hill County Health Department, which handles the permits for the entire county and city.  If you are unsure if your business needs a permit, contact the Health Department.

Ben Hill County Health Department
P.O. Box 188
251 Appomattox Rd
Fitzgerald, GA  31750
(229) 426-5288

Trade Name Registration

In the State of Georgia, every person, firm or partnership that conducts business has two options regarding trade name registration: 1) The business name must include the last name of the individual owner of the business. 2) If using a fictitious name (one not including the last name of the individual owner), the fictitious name must be registered in the office of the clerk of the Superior Court (229) 426-5135 of the county where the business is located. A corporation or limited liability company will not need to file this registration, as it will already be registered with the office of the Secretary of State. The fee for trade name registration is approximately $10.

The Clerk’s office will provide any paperwork that needs to be completed. Similar to publishing your intent to incorporate a business, you must publish a notice of your trade name registration in the newspaper. (The Herald Leader) You must also file the required affidavit.  Notice of the filing of the trade name registration must be published once a week for two weeks in the legal section of the publication. In order to run your legal advertisement, contact:

The Herald Leader
P.O. Box 40
Fitzgerald, GA  31750
(229) 423-9331
Fax: (229) 423-6533
http://www.herald-leader.net/ 

Failure to register a trade name will not nullify contracts signed by the unregistered entity.  The court, however, is authorized to assess court costs against the parties who have failed to register the trade name or partnership name at the time an action is filed.  Thus the trade name registration prevents a company from having a pay all court costs in an action by or against a company. If you have a question as to whether your business needs to register a trade name, contact the Clerk’s office>

To file your trade name registration, contact:

Clerk of Superior Court
Ben Hill County
(229) 426-5135

Federal Licensing

Most new small businesses most likely will not require any type of federal licensing to conduct business, unless you will be engaged in one of the following activities:

  • Rendering investment advice
  • Making alcohol products
  • Making tobacco products
  • Preparing meat products
  • Making or dealing in firearms

You would need a federal permit also to start large operations such as a television station, radio station, common carrier or producer of drugs or biological products. The aforementioned businesses are all heavily governmentally regulated. For information on federal licensing for these types of businesses, contact:


U.S. Dept. of Alcohol, Tobacco & Firearms
650 Massachusetts Ave. NW RM 8290
Washington, DC  20226
(202) 927-8610                                                             

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http://www.atf.gov/      

U.S. Federal Food / Drug Administration
60 Eighth St.
Atlanta, GA  30309
(404) 253-1169
1-888-463-6332
http://www.fda.gov/   

U.S. Federal Communications Commission
3575 Kroger Blvd.
Duluth, GA  30096
770-935-3370

State Licensing

Many licensing regulations should be considered when establishing a business or practicing certain regulated occupations in Georgia. Contact the Secretary of State’s office for a listing of all occupations that require state licensing.  You can find a complete list of occupations requiring state licenses in Appendix 1 (Section X). Before applying, you would be well advised to check the current licensing regulations through the office of the Secretary of State, the county and the city.

Georgia Secretary of State
Licensing Boards Division
166 Pryor Street SW
Atlanta, GA  30303
478-207-2440

**The Office of Secretary of State offers a timesaving booklet entitled Consolidated Registration Information for Businesses.  This book is more familiarly known as the BLUE BOOK. This packet includes request forms for governmental departments and agencies that will be instrumental in starting your business. In addition, this book contains important phone numbers, addresses and Internet addresses of offices and departments essential to your business.

Taxes
State of Georgia Sales & Use Taxes

Every business that sells tangible personal property, such as merchandise, to customers is required to obtain a seller’s permit. This is issued from the state sales tax agency. (There are some businesses, however, that are exempt from this requirement.) Typically, a separate permit must be obtained for every business in which property subject to sales tax is sold.  If selling to a retailer, wholesalers and manufactures usually do not have to collect sales tax on the goods they sell. This, however, is contingent on whether the retailer has a valid seller’s permit and can provide you with a “resale certificate”.

Similarly, retailers are not required to pay sales tax on items you purchase for resale. You may purchase blank resale certificates at office supply stores. If state law requires that your business collect sales and use tax, you must keep detailed records of your gross receipts from sales/rentals.  These records must include all sales/rentals whether or not you believe them to be taxable.  Your records must also include evidence of all deductions you claim on sales/use tax returns.  In addition you must record the total purchase price of all tangible personal property acquired for sale, lease or consumption.

Sales tax forms must be filed monthly. The taxes must also be paid on a monthly basis. You can contact the Georgia Department of Revenue to petition for special permission for pay/file quarterly.

State Excise Taxes

In addition to federal excise tax, you may be responsible for collecting state excise tax as well.  The categories are comparable to the federal categories.  Alcoholic beverages, tobacco products, motor carriers and trucks with more than two axles are included in the taxed categories. You should contact
the GA Department of Revenue for complete information.

Estimated State Income Taxes 

The State of Georgia also requires that you pay estimated state income taxes. The payment dates for estimated state tax are the same as those for federal payments (see Section K Federal Income Taxes above). The form 500ES should be completed for sole proprietorships or partnerships.  A 9% per year penalty can be imposed for failure to file an estimated return or failure to pay the correct amount of tax. 

Federal TaxesFederal Excise Taxes

There are some forms of business on which the U.S. Government requires additional taxation. This will be a tax that you are responsible for collecting. This tax does not come out of your pocket. Typically it is added to the sale price of your product or service. Form 720 Quarterly Federal Excise Tax Return is used to file most federal excise taxes.  Federal excise taxes can be broken into nine general categories of products and services.


They are:

  • Motor vehicle use tax (vehicles greater than 55,000 lbs. gross weight)
  • Retailers tax (certain types of fuels)
  • Retail excise tax on the sales of the following: heavy trucks/trailers, tires and tubes,
         recreation equipment (e.g. fishing/hunting supplies), firearms and ammunition.
  • Air transportation tax (if you are transporting people by air, you have to collect this tax.
  • Communications taxes (e.g. on telephone or teletype services)
  • Wagering taxesTaxes on U.S. mined coal
  • Environmental taxes (imposed on petroleum products, various chemicals and 
         hazardous wastes)
  • Alcohol, firearms, ammunition and tobacco taxes

Be sure to contact the IRS for complete information on federal excise taxes. 
Internal Revenue Service
401 W. Peachtree ST. NW                                                  235 Roosevelt Ave.
Atlanta, GA  30308                                                            Albany, GA  31701
404-338-7962                                                                  229-430-8401
Hours: Monday – Friday    8:30 a.m. – 4:30 p.m. 

Federal Income Tax

The amount and way you will pay federal income taxes will be dependent on the legal form in which your business is organized.

For a sole proprietor or a member of a partnership:

In either of these arrangements, you will be required to make estimated federal income tax payments and federal self-employment tax payments in advance.  These individual payments are due in four installments.  These payment deadlines are April 15, June 15, September 15 and January 15 for one whose tax year is the calendar year.  Any amount left unpaid will be due April 15 of the following year. The form 1040-ES is used to file these taxes.  90% of your estimated tax must be paid during the course of the year.

 For a corporation

The corporation is responsible for paying estimated corporate taxes if it has taxable income.  These taxes can be due as soon as the fourth month of the corporation’s first tax year.  The proper form for filing these taxes is the Form 1120W. You must deposit these payments in a bank licensed to accept federal tax payments.  The corporation will be issued a coupon book. These coupons will carry the corporation’s tax ID number and are to be used with all federal tax payment deposits.

All forms necessary to file any of the estimated taxes mentioned above are available at your local IRS office. A coupon book will be mailed to you upon receipt of your Form SS-4 (the form filed requesting a tax ID number).

Internal Revenue Service
401 W. Peachtree ST. NW                                                  235 Roosevelt Ave.
Atlanta, GA  30308                                                               Albany, GA  31701
404-338-7963                                                                       229-430-8401 Hours: Monday – Friday    8:30 a.m. – 4:30 p.m. 

Employer Taxes

There are taxes that as an employer you are responsible for both withholding from employee wages as well as paying yourself.  For more complete information on employer taxes, see Labor and Safety Regulation Information in Section IV.

Federal Tax Identification Numbers

Your federal tax identification number is the number used to file your taxes.  It acts in a similar capacity to your social security on your personal income taxes. In fact, if you are a sole proprietorship you will probably use your social security number. In partnerships and corporations you will need a Federal Tax ID number. To determine whether you need a Tax 10 number, contact the IRS. There is a form in the BLUE BOOK (see Section G-State Licensing above) that you may fill out and mail in for more information.