Georgia Corporation Advantages Disadvantages

Georgia Corporation Advantages Disadvantages

Georgia Corporation Advantages Disadvantages - Articles of Incorporation must be drafted and submitted to the Georgia Secretary of State, Corporations Division. Once articles of incorporation have been successfully filed, your Georgia Corporation has been formed and this begins its existence as a Georgia corporate entity.

Should I form a Georgia Corporation?

A corporation, chartered by the state in which it is headquartered, is considered by law to be a unique entity, separate and apart from those who own it. A corporation can be taxed; it can be sued; it can enter into contractual agreements. The owners of a corporation are its shareholders. The shareholders elect a board of directors to oversee the major policies and decisions. The corporation has a life of its own and does not dissolve when ownership changes.

Georgia Corporation Advantages Disadvantages

  • Shareholders have limited liability for the corporation's debts or judgments against the corporations.
  • Generally, shareholders can only be held accountable for their investment in stock of the company. (Note however, that officers can be held personally liable for their actions, such as the failure to withhold and pay employment taxes.)
  • Corporations can raise additional funds through the sale of stock.
  • A corporation may deduct the cost of benefits it provides to officers and employees.
  • Can elect S Corporation status if certain requirements are met. This election enables company to be taxed similar to a partnership.
  • A corporation pays 15% federal income tax on taxable income up to $50,000; 25% tax on income from $50,001 - $75,000; 34% tax on income from $75,001 - $100,000; 39% tax on income from $100,001 - $335,000; and 34% tax on income over $335,000.
  • A sole proprietor who filed a federal income tax return under the status of married, filing jointly, would pay 15% federal income tax on taxable income up to $35,800; 28% tax on income from $35,801 to 86,500; and 31% tax on income over $86,501.

Georgia Corporation Advantages Disadvantages

Disadvantages of a Corporation

  • The process of incorporation requires more time and money than other forms of organization.
  • Corporations are monitored by federal, state and some local agencies, and as a result may have more paperwork to comply with regulations.
  • Incorporating may result in higher overall taxes. Dividends paid to shareholders are not deductible form business income, thus this income can be taxed twice.

Federal Tax Forms for Regular or "C" Corporations

  • Form 1120 or 1120-A: Corporation Income Tax Return
  • Form 1120-W Estimated Tax for Corporation
  • Form 8109-B Deposit Coupon
  • Form 4625 Depreciation

Georgia Corporation Advantages Disadvantages

Georgia's 2012 Business Tax Climate Ranks 34th

Georgia ranks 34th in the Tax State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states rank as follows: Tennessee (14th), Alabama (20th), Florida (5th), South Carolina (36th) and North Carolina (44th).

Tax Freedom Day Arrives on April 3 in Georgia

Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2011, Georgia taxpayers work until April 3 to pay their total tax bill, ranking them 37th nationally. That's nine before national Tax Freedom Day (April 12). The Tax Freedom Days of neighboring states are: Tennessee, March 27 (ranked 49th nationally); Alabama, April 2 (ranked 43rd nationally); Florida, April 11 (ranked 16th nationally); South Carolina, March 29 (ranked 48th nationally); and North Carolina, April 6 (ranked 27th nationally).

Georgia's State and Local Tax Burden Below National Average

Georgia's 2009 state and local tax burden of 9.1% of income is below the national average of 9.8%. Georgia's tax burden has decreased overall from 9.3% (33rd nationally) in 1977 to 9.1% (31st nationally) in 2009. Georgia taxpayers pay $3,350 per capita in state and local taxes.

Georgia's Individual Income Tax System

Georgia's personal income tax system consists of six separate brackets with a top rate of 6% kicking in at an income level of $7,000. That top rate ranks 23rd highest among states levying an individual income tax. In 2008, state-level individual income tax collections were $920 per person, which ranked 23rd highest nationally.

Georgia's Corporate Income Tax System

Georgia's corporate tax structure consists of a flat rate of 6% on all corporate income. Among states levying corporate income taxes, Georgia's top rate ranks 35th highest. In 2008, state-level corporate tax collections (excluding local taxes) were $98 per capita, ranked 41st highest nationally.


Tax Foundation

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