What You Need To Know About The Georgia Corporate Tax Rate in 2024: A Step-by-Step Guide

Summary

If you’re ready to take the leap and become a small business owner, keeping the right business location in mind is crucial. Georgia has diverse opportunities, including major hubs like Atlanta, important ports like Savannah, and emerging, more cost-effective cities like Augusta. 

Although navigating state’s fees and taxes may be challenging, Georgia  boasts a vibrant community of supportive clientele and fellow business owners to help you thrive. Discover the ins and outs of the Georgia corporate tax rate in this comprehensive guide.

Georgia Corporate Tax Rate: Key Takeaways

• Georgia’s diverse geography and industries enable businesses of all sizes to thrive.
• Georgia’s labor market is highly competitive because of its relatively low unemployment rate of 3.1%.
• Although Georgia is home to many large corporations, such as Delta Air Lines, Home Depot, UPS, and Coca-Cola, small businesses remain the state’s economic backbone.
• Georgia’s entrepreneurial community is growing, with a vibrant startup scene, a thriving tech industry, and more.

Is Georgia a business-friendly state?

Georgia is best known for its business-friendly regulations and taxes, thriving business ecosystem, and efficient government bureaucracy, which cuts red tape and ensures quick registration for new businesses. Georgia’s diverse talent pool strengthens its appeal as a top location for companies seeking to thrive in a dynamic and supportive environment. Several factors contribute to Georgia’s reputation as an attractive business location: 

• Georgia offers supportive communities and networking. Communities in Georgia support small business startups on a local and regional scale, which helps to grow local businesses.  Strong networking groups are another asset that aids in the search for mentors, accelerators, business incubators, and possible funding sources for entrepreneurs.
• Georgia’s diverse geography supports a wide range of industries. Georgia’s diverse geography creates an ideal environment for its major industries. 

• Agriculture industry: Agriculture is widespread in rural areas of Georgia and remains one of the state’s largest industries.
• Aerospace industry: The aerospace sector is primarily concentrated in large cities like Savannah and Atlanta.
• Technology industry: Atlanta is becoming a major hub for the tech industry, housing offices of big companies like Microsoft and Google. Startups and small tech companies have spread further across the state, sometimes to lower-cost cities. Augusta is an affordable city in which to start a business.
• Logistic: Georgia is well-known for having the busiest airport in the world, Hartsfield-Jackson International Airport in Atlanta; it also boasts a vast interstate highway network and the largest and fastest-growing container terminal in the nation, the Port of Savannah. 

• Georgia’s labor market is competitive. Georgia has a relatively low unemployment rate of 3.1%, which is favorable for consumer spending and a positive indicator of economic activity. 

One common challenge for businesses in Georgia is obtaining capital. Some companies can obtain funding with strong financials and a workable business plan for their first small business loan or line of credit. Finding a bank, however, might be difficult because of previous declines in the state’s bank population.

Georgia’s angel investors are an excellent resource for startups needing seed money.  Some have close collaborations with theClubhou.se and other development hubs. More substantial investment deals will require companies to travel to Atlanta to find venture capitalists. To obtain capital in Georgia, doing your homework, being prepared, and connecting with the right resources are essential.

How do I establish a business in Georgia?

1. Decide on the business structure or legal entity. Choose the most suitable type of entity for your business. 
2. Decide on a business name. Once you have decided on a name, call the Secretary of State at 404-656-2817 to see if anyone else uses it. If not, you may reserve the name by completing a “Name Reservation Request” form. To reserve a name, a $25 nonrefundable fee is required.
3. Prepare your business formation documents. After deciding on your business structure and name, you must prepare or have someone prepare your company formation documents.
4. File formation documents with the Secretary of State. Once the business formation documents are completed, you must submit the necessary registration form and documents to the Secretary of State. 

• You can file your domestic corporation online at the Georgia Corporations Division. 
• You cannot register a partnership or limited liability partnership (LLP) online. 

5. Register your business with your local government. Sole proprietorships are not required to register with the state, but all other business types are. Partnerships, LLPs, LLCs, and all types of corporations may be required to register with the local government where their operations are located. Contact the local government office, such as a county office or city hall, where your business will be located, to see if you need to register it. 
6. Get a Federal Tax Employer Identification Number (EIN) from the Internal Revenue Service (IRS).  You must obtain an EIN from the IRS to pay federal income and employee taxes at no cost. If your business is a sole proprietorship, you can use your SSN instead of an EIN, so you do not need to apply for one. 
7. Register for Georgia Sales Tax Number. To register your business and pay state taxes on income and employees and all sales tax collected from goods and services, you must submit a “State Tax Registration” application (Form CRF-002) to the State of Georgia. This will also automatically register you for a Georgia sales tax number, a withholding tax number, and any other tax registration numbers that may be required for the type of business you will operate.
8. Obtain Sales and Use Tax Certificate of Registration. Any business entity that sells, offers for sale or solicits sales of tangible personal property, certain taxable services, or contracts to provide services in Georgia must obtain a Sales and Use Tax Certificate of Registration. 
9. Withholding Tax. Any business with employees as defined by the IRS and subject to tax withholding must register and obtain a withholding number to transmit Georgia payroll taxes.

Does Georgia have an income tax?

Effective  January 1, 2024, Georgia undergoes a transition in its individual income tax system. The graduated tax system, which had a maximum rate of 5.75%, is being replaced by a single-rate tax structure with a rate of 5.49%. It imposes a 5.75% corporate income tax on a corporation’s federal taxable net income.

Does Georgia have a franchise tax?

Instead of a franchise tax, Georgia levies a net worth tax on corporations for the privilege of conducting business in the state. Net worth tax is a graduated tax levied on the entity’s net worth as reported on the prior year-end balance sheet. Only corporations with a net worth over $100,000 are subject to a net worth tax up to a maximum of $5,000 for a net worth exceeding $22 million. Partnerships and LLCs treated as partnerships for federal income tax purposes are not subject to net worth tax. Net worth tax is due on the 15th day of the fourth month (for C-corporations) or  the 15th month of the third month (for S-corporations)  following the beginning of the corporation’s tax year. 

Does having a mailing address in Georgia trigger corporate income tax and/or registration requirements?

Having a mailing address in Georgia does not, by itself, establish a physical nexus that would connect the company to the state in some way and require the company to register to collect or pay state taxes. A company is considered to have a physical nexus in Georgia if it:

• Has a retail store in Georgia 
• Has an employee, salesperson, or representative with a regular presence in the state
• Has inventory in a warehouse located in the state
• Owns real or personal property located in the state
• Has delivery of goods in Georgia
• Has independent contractors or other representatives in Georgia
• Has ties to Georgia businesses, including affiliates. When an out-of-state vendor participates in any of the following actions with a related member or affiliate in Georgia, it is assumed to have a Nexus:

1. Offering the same or comparable goods under the same or similar name as the out-of-state vendor
2. Uses trade names, trademarks, or service marks identical to or similar to those of the out-of-state vendor
3. Has an office, distribution center, salesroom, warehouse, or other business location owned by the vendor or someone other than a common carrier.
4. Provides the out-of-state vendor’s Georgia clients with deliveries, installations, assembly, and maintenance services.
5. Facilitates the delivery of property from out-of-state vendors to Georgia customers (products can be picked up at their place of business).
6. Performs any other activities in Georgia that are significantly associated with the out-of-state vendor’s establishment or maintenance of a Georgia market

Will I have to pay taxes if I own a business in Georgia but live in another state?

Nonresidents who live in other states but receive income from Georgia sources, such as a Georgia-based business, and are required to file a federal income tax return must also file a state tax return on Georgia Form 500, Individual Income Tax Return.  

You are exempt from filing a Georgia income tax return if you are a lawful resident of another state if:

• Your sole source of income in Georgia comes from working as an employee and providing services to an employer. 
• The remuneration for rendered services does not exceed the lower of five percent of the total wages in all locations, or $5,000.00.

If all my activities are outside the US, and I live in another country but have a company in Georgia, do I have to pay taxes there?

Even if you are a nonresident and conduct all of your activities outside of the United States, you are required to pay taxes on certain types of income from Georgia, such as income from flow-through entities such as S-corporations, partnerships, LLCs, and estates. However, you are not subject to income tax if you received no income from Georgia sources. 

Does having an employee in Georgia trigger corporate income tax?

Having an employee in Georgia typically establishes a Nexus and triggers corporate income tax. However, Public Law 86-272 offers a tax exemption if the employee’s role is limited to soliciting orders for out-of-state sales of tangible personal property, which are then approved, filled, and shipped from a location outside Georgia via a common carrier. However, it’s crucial to note that if the employee’s activities exceed mere solicitation, the exemption does not apply.

Does having an independent contractor in Georgia trigger corporate income tax?

Having an independent contractor and other representatives act on behalf of the company or solicit business for the company establishes a nexus, a connection that may subject your business to Georgia tax laws.

Does having a founder living in Georgia trigger corporate income tax?

Several factors, including a corporation’s business activities and state nexus, determine whether it is subject to Georgia corporate income tax and registration requirements. A founder who lives in Georgia but does not act as an employee or representative of the corporation and does not engage in any business activity does not subject the company to corporate income tax.  

If you hold board meetings in Georgia, will it trigger corporate income tax?

Holding a board meeting in Georgia alone will unlikely trigger a corporate income tax. Whether or not a corporation is subject to corporate income tax and registration requirements in Georgia depends on several factors, including its business activities, nexus with the state, and income earned from Georgia sources.

Does Georgia have a sales tax?

Georgia has a sales tax of 4%. Companies also have to consider local sales taxes, which vary across the 159 counties in the state. When both state and local sales taxes are considered, the rate can be as high as 9%. The average combined state and local tax rate is 7.4%.

Does Georgia tax Software-as-a-Service (SaaS) income?

In general, SaaS purchases in Georgia are exempt from sales tax.  Georgia has ruled that computer software delivered electronically does not qualify as a sale of tangible personal property and is, therefore, exempt from sales tax. Additionally, it has been determined by two rulings (LR SUT 2014-05 and LR SUT 2014-01) that cloud-based subscription services that allow end users to access and use software through the Internet are exempt from sales tax. This is so because the Georgia Code does not classify cloud subscription services as taxable, and the transaction does not involve the exchange of tangible personal property. Unless the service is expressly noted as taxable in Georgia, it is considered not taxable.

Does Georgia tax online marketplaces?

If a seller’s gross revenue surpasses $100,000 or if they had 200 or more sales transactions of tangible personal property delivered electronically or physically in Georgia in the previous or current calendar year, they are required to obtain a Georgia sales tax permit, collect sales tax on shipments into Georgia, and remit sales tax to the state. 

Does Georgia tax remote software sales?

Yes, Georgia collects taxes from remote software sales. Remote sellers that have met the economic thresholds in the previous or current calendar year are required to collect and submit Georgia sales tax on any tangible personal property they deliver to a location in Georgia. To have an economic nexus, one must meet a state’s economic threshold, measured by the total revenue or the number of transactions in that state. 

1. Generated over $100,000 gross revenue in the previous or current calendar year through retail sales of tangible personal property for delivery electronically or physically to a location within the state for use, consumption, distribution, or storage.
2. You have made 200 or more retail sales of tangible personal property in the previous or current calendar year to be delivered electronically or physically to a location within this state to be used, consumed, distributed, or stored for use or consumption.

How do I dissolve my Georgia company?

To dissolve a company in Georgia, the first step is to hold a meeting of its members (for LLCs) or directors/shareholders (for corporations) and draft a resolution authorizing the dissolution. Once the resolution is ratified, the dissolution process involves the following steps:

1. Dissolution Documents: Articles of Dissolution are filed with the Georgia Secretary of State, and the process takes approximately 7-12 business days, with an expedited option available in 24 hours.
2. Newspaper Publication: Georgia corporations are required to publish a notice of intent to dissolve. The corporation must file a request for publication notice with the county where its registered Georgia office is. Mail or deliver the publication notice to the newspaper by the next business day after filing the Notice of Intent to Dissolve with the Secretary of State..
3. File final tax returns: File final federal tax return with the IRS and state tax returns with the Georgia Department of Revenue.
4. Cancel permits, licenses, and business name with the Department of Revenue.
5. Close the sales & use business account. Submit a written request to SalesTax.Business@dor.ga.gov to close your sales and use business account
6. Close the withholding account. Submit a request to close a withholding business account via phone, the Georgia Tax Center (GTC), or by written request, which can be sent to  Withholding.Issues@dor.ga.gov.
7. Update other agencies. Do not forget to notify the IRS and other state agencies regarding the dissolution. 
8. File with the IRS. Form 966 should be filed 30 days after the resolution to dissolve. The final return is due four months and 15 days after dissolution, and the EIN cancellation letter should be mailed simultaneously, as you are liable for filing taxes as long as the EIN is active.

When is the Georgia state tax return due?

The deadline for Georgia state tax returns is typically April 15. Individual tax returns are due on April 15, whereas the deadline for corporate income tax returns is the 15th of the fourth month after the end of the taxable year. If the due date falls on a Saturday, Sunday, or holiday, the return is due on the following business day.

You will be given an extra six months to file your return if you file a federal extension (Form 7004, Application for Automatic Extension to File Certain Business Income Tax, Information, and Other Returns) by the original return due date. 

What happens if I file my Georgia tax return late?

The state will charge the taxpayer (individual or corporation) a late payment penalty of 5% of the tax not paid by the original due date and an additional 5% for each additional month the return is late. The maximum penalty is 25% of the tax amount owed.

Can Cleer help me with my Georgia state income tax filing?

YES! CLEER provides consultations to discuss the best structure for your startup business, regardless of which state you register in. Every Cleer Income Tax Package includes BOTH federal and state income tax filings.  If you do business in more than one state, each additional state costs $175.  

If you have further questions or need assistance, feel free to contact us.