LLC Taxes In Georgia: Essential Information
LLC taxes in Georgia are required after a limited liability corporation is formed in the state of Georgia. Certain fees and taxes must be paid. However, LLCs do not always treat taxable income and taxes the same way that other types of businesses do, like a sole proprietorship, a partnership, an S corporation, or a regular corporation.
There are a couple of different kinds of taxes in the state of Georgia, like many other states. The use tax in Georgia is 9 percent and the state sales tax is 6 percent. Based on the kind of business, there might be other taxes owed as well.
Tax Benefits For Limited Liability Corporations
In Georgia, limited liability corporations have a few benefits available to them, particularly in terms of paying their federal and state taxes:
Income taxes are not required to be paid by LLCs
All business expenses can be deducted or written off
Since Limited liability corporations are pass-through entities, LLCs are not required to pay the same state or federal taxes that corporations do. Instead of the company paying the taxes, basically, the taxes are passed to the business owners who are then responsible to pay them.
For example, a limited liability corporation has two business partners who equally own the company as well as its profits. For the year, the LLC earns $1 million in federal taxable income. This income will then be split equally between the two partners and each will have $500,000 in company earnings. Then the two partners will each be required to pay taxes on their personal Georgia tax returns on the $500,000. The individual will be taxed on this amount along with any other taxable income the owner has earned that year.
Since the LLC’s income is taxed on the owner’s personal taxes, the owner also will be required to pay self-employment taxes on the income. Included in self-employment taxes are Medicare tax, Social Security tax, and FICA. Those taxes are required to be paid on the owner’s earnings and normally are paid at a 15.3 percent rate of their taxable income.
However, because the owner files as self-employed, the person will be able to write-off or deduct certain business expenses that are incurred. Those deductions can help to lower some of the person’s taxable income.
Corporate Income Taxes
Sole proprietorships and partnerships in the state of Georgia are subject to comply with some of the same tax filing rules that LLCs must adhere t0o. Net income for these kinds of businesses should be claimed by the owners as well and reported on their personal tax returns. However, in the state of Georgia, corporations must pay corporate income tax, at a 6 percent rate. All corporations in Georgia are required to pay a net worth tax as well as an income tax.
For example, say a corporation has a $1 million taxable income and a net worth of $2 million. Not including adjustments and all else being equal, the corporation would owe George $60,000 in state income taxes, and taxes based on the IT 611 tax table of the state of Georgia.
Paying Business Taxes in the State of Georgia
To pay Georgia state taxes, a company must apply for a State Tax Identification Number (STIN). This number is a way to reference the business’s liabilities, credits, and tax license. A STIN can be applied for online at Georgia’s state website or at a Georgia Tax Center in person.
Federal Income Taxes
Businesses must pay their taxes quarterly. The IRS expects the payments to be made on the 15th day of months 4, 6, 9, and 12 of the year. Quarterly estimated tax payments are required to be paid by businesses in the state of Georgia using Form Form 602ES.
An S corporation will typically fill out Form 1120S and then file it no later than the third month on the 15th day after the end of the tax year. For those corporations that follow the calendar year, the IRS due date is March 15th. The annual taxes for S Corporations are due on the third month on the 15th day, including Form 600S for net worth taxes, and are required to be submitted to Georgia.