Creating an LLC in Georgia comes with many perks such as legal protection and variation in taxation.
Additionally, self-employment taxes will be owed to the Internal Revenue Service (IRS) which comes as a responsibility of these benefits.
In this article, we will discuss the process of IRS tax return filing for Georgia LLC, focusing on classifying the taxes, reporting the taxes, deadlines, and other relevant details.
How Are Georgia LLCs Taxed?
Due to the structure of the business and the choices the owners make, LLCs in Georgia may be taxed differently.
Most of the LLCs are considered “pass-through” entities meaning that the business’ earnings get allocated to the owners which fulfills the necessity to report income tax with the owners’ tax returns.
Nonetheless, LLCs have an option for corporate taxation which has different requirements for submission of documents.
Single-member LLCs (SMLLC): Typically treated as a disregarded entity wherein the LLC’s earnings are reported on the owner’s tax return using Schedule C (1040).
Multi-member LLCs: Automatically treated as partnerships requiring filing Form 1065 and providing everybody with a Schedule K-1, providing information on their share of profits and losses.
S-Corp Taxed LLC: An S-corp election can be made with the IRS by filing Form 2553 which may lead to tax savings such as lower self-employment taxes.
C-Corp Taxed LLC: An LLC can elect to be taxed as a C-corporation through Form 8832 and the LLC will subsequently file Form 1120 for corporate income tax.
Important Tax Documents Needed For LLC Owners In Georgia
For Georgia’s LLC owners, knowing what to file and of what size is important to the IRS. Here is a summary of popular forms used for LLC tax returns:
Form 1065 (U.S. Return of Partnership Income): This is used to claim income or loss of an LLC. All multi-member limited liability companies have to file the U.S. Return of Partnership Income. Each member is issued a K-1 for a creditable proportionate share, which members utilize while submitting individual returns.
Schedule C (Form 1040) (Profit or Loss from Business): This is the form single-member Limited Liability Companies that are taxed as disregarded entities use in conjunction with their personal income tax form.
Form 1120 (U.S. Corporation Income Tax Return): LLCs treated as C Corporations must complete this form to report the LLC’s income, expenses, and tax due. Unlike partnerships, C Corporations are taxed independently of their owners.
Form 2553 (Election by a Small Business Corporation): This form should be submitted to the IRS if your LLC opts for S Corporation taxation.
Form 8832 (Entity Classification Election): This form designates the LLC for corporate taxation, whether it be S or C.
Georgia State Tax Filing Requirements for LLCs
Alongside federal tax returns, Georgia LLC owners are responsible for state taxes as well. Georgia practices multiple state taxation on LLCs which includes income, sales, and unemployment taxes.
Georgia State Income Tax: If your LLC is a pass-through entity (SMLLC or multi-member LLC taxed as a partnership), the net profit will be taxed to the owners. Individuals’ earnings tax in Georgia ranges from 1 to 5.75 percent based on how much income you earn.
Georgia State Sales Tax: An LLC owner participating in a venture involving selling services and goods that fall under the sales tax category is liable for tax collection from clients as well as paying sales tax to the Georgia Department of Revenue.
Georgia State Employment Tax: Any unit that has workers on contracts must complete employee payroll reports and Georgia state income tax returns for employees. Georgia state employers are also liable for the payment of state unemployment insurance tax.
Tax Deductions for Georgia LLCs
Georgia LLCs are eligible for loads of tax deductions and other benefits that help to lower tax payments. Most LLCs claim these common deductions:
Business Expenses: All essential and normal costs incurred while operating the LLC and paid over would typically include rent and utilities, office and other types of supplies, equipment, and machinery, and workers’ wages to list a few.
Depreciation: For Georgia LLCs that own and use properties or equipment, there is a depreciation claim available that helps write down this value until it constitutes a minimal portion. This is advantageous in lowering taxable revenue.
Health Insurance Premiums: Business owners who personally work within the business can deduct healthcare premium costs incurred for their spouse and other dependents.
Travel and Meals: Travel expenses incurred while carrying out business promotional trips for the company, along with 50 percent of the meals consumed during the trips qualify as deductible business expenses.
Retirement Contributions: Putting money into various retirement accounts will lessen revenue. These accounts include SEP IRA and 401K plans.
Filing Deadlines
To avoid excessive penalties and interest, deadlines are very important. Georgia LLC owners should consider these dates important:
Federal Tax Filing Deadlines:
- Form 1065 (The partnership return): Due by the 15th of March (or the three months after the LLC’s fiscal year ends).
- Form 1120 (C-corporation return): Due the 15th of April (or the 14th day of 4 months after the LLC’s fiscal year ends).
- Schedule C (Form 1040): Along with the owner’s personal tax, which is due normally by the 15th day of April.
Georgia State Filing Deadlines:
- State Income Tax: Due the 15th of April for individual returns.
- Sales Tax: These are due every month or quarterly depending on if you have a higher sales volume.
- Payroll Taxes: These are due every quarter for Georgia state withholding taxes.
Penalties for Late Filing or Non-Compliance
When filing taxes offensively late or not at all, there is a whole host of penalties that could be incurred. Here are some common penalties Georgia LLC owners tend to deal with.
Failing to file penalty: The LLC is late in filing its tax return by da efinite deadline. Defaults normally tend to be a problematic 5% of the unpaid tax for every month the return is overdue capped at also 25%.
Failure-to-Pay Penalty: If you don’t pay your taxes on time, the IRS imposes a fine of 0.5% every month, which can build up to a total of 25%.
Late Payment Interest: The IRS imposes a fee that increases over time for not paying taxes, starting from the time the payment is due until it is paid in full.
State Penalties: Georgia, in addition to the Federal penalties, also has penalties for not filing or paying state taxes such as sales tax and state income tax.
To avoid these, it is best to file and pay your taxes on time. If you are unfamiliar with these obligations, consider hiring someone who can help you comply with them.
Step-by-Step Process to File Taxes for Your Georgia LLC
Your Georgia LLC tax remittance requires you to follow some important procedures, which include the below:
Determine Your LLC Tax Classification: At this stage consider if your LLC will be treated as a separate entity, partnership, S- corporation, or a C- corporation. Based on that information, relevant distribution forms need to be filled.
Prepare the Required Tax Forms: Based on your LLC’s tax classification, gather the appropriate IRS forms:
- Form 1065 for multi-member LLCs taxed as partnerships.
- Schedule C (Form 1040) for single-member LLCs.
- Form 1120 for LLCs taxed as C-corporations.
- Form 2553 or Form 8832 if you’re electing S-corp or corporate taxation.
File Your Taxes with the IRS: Complete and file the required forms with the IRS by the applicable deadlines.
File State Taxes in Georgia: In addition to federal tax filings, ensure compliance with Georgia’s state tax requirements, including income tax, sales tax, and payroll tax filings.
Pay Any Taxes Due: If your LLC owes taxes, make sure to remit payment to avoid penalties and interest.
Maintain Accurate Records: Keep copies of your tax filings and supporting documentation for at least three years in case of an audit.
Get Professional Tax Assistance with EasyBooks by EasyFiling
Filing taxes for your Georgia LLC is an easy task to do, especially considering the state and federal criteria. This is precisely where EasyBooks by EasyFiling comes in handy.
Ensure compliance with the tax regulations for your LLC through our professional bookkeeping services while obtaining the maximum possible deduction and paying the least amount of tax possible.
To make it easier for you, we help you pay your taxes correctly and timely, so you can focus on scaling your business without the fear of tax errors.
With EasyBooks, you get:
- Tax preparation and filing for Georgia LLCs that is accurate.
- Specialized and general advice regarding deductions and their implementation.
- Filing on time helps you avoid penalties and interest.
- Call us EasyBooks for helpful advice on tax compliance and support throughout the year.
Get in touch with EasyBooks today and get the professional services required for your Georgia LLC tax returns.
Frequently Asked Questions (FAQs)
1. What is the deadline for filing the taxes for Georgia LLC?
The deadline for federal taxes for an LLC varies as per its set classification:
- Form 1065 (partnership): The deadline is on March 15th
- Form 1120 (C corporation): Deadline is on April 15th
- Schedule C (Form 1040): The deadline is on April 15th when paying the tax return along with personal return taxes.
Georgia state income tax cap is around April 15th.
2. Can my Georgia LLC elect S-corp tax treatment?
Yes. In Georgia, an LLC can elect to be taxed as an S-corporation by filing Form 2553 with the IRS. This could decrease the amount of self-employment taxes, but it comes with additional requirements and limitations.
3. How do I avoid the IRS penalties for doing business with my Georgia LLC?
To avoid IRS penalties, you must file your taxes and pay any taxes owed on time as well as complete all required forms properly. If you are unsure, seeking professional aid can save you from making mistakes.
4. Can my Georgia LLC write off business travel expenses?
Yes, business travel expenses, such as airfare, hotel stays, and 50% of meal expenses while traveling, are considered deductible business expenses. Just make sure the expense was incurred while pursuing business activities.
5. Do I need to pay state taxes for Georgia LLCs like my other Georgia LLCs?
Yes. Georgia LLCs have to pay state taxes which are income tax, sales tax, and if you have employees, payroll taxes too. Georgia LLCs need to pay state taxes in addition to federal taxes.
Nabin Adhikari
