How to Form a Georgia Professional LLC

Should You Just Form an LLC?

PLLCs and LLCs are very similar entity types. The main difference is that only licensed professionals may form PLLCs.

In states that offer both entity types, the formation process is largely the same. Forming a PLLC simply requires a few additional steps, such as providing evidence of professional licensure or obtaining approval by the applicable state licensing board.

The LLC is a popular business type for licensed professionals because it offers the following benefits:

Flexibility

It’s relatively easy to form and maintain. It’s also suitable for a variety of ownership structures, from one-person businesses to multiple classes of owners.

How the business is managed is flexible as well — your LLC can be managed by the owners (which are called the “members” of the your LLC), or the members can appoint managers (much like the board of directors of a corporation). The members can agree to govern the LLC however they’d like by preparing and signing an operating agreement.

Liability Protection

Limited liability companies are designed to protect the personal assets of their owners. This means if your business is sued, creditors can only go after the assets of the company. Your personal assets as a member — such as your personal bank accounts, home, and other property — can’t be seized to pay liabilities or debts of the company.

One important exception is that each member is personally liable for their own malpractice, and no member is liable for the malpractice of any other member. For this reason, it’s wise for each member to maintain their own professional liability insurance.

Taxes

Many business owners like the LLC structure because these types of companies are generally classified as “pass through” entities for tax purposes. This means that the income and losses of the LLC are “passed through” to the members, and the members report the income and losses on their personal tax returns. In other words, any income tax is paid by the members, and not the entity itself.

A corporation’s income, on the other hand, is generally subject to “double taxation”. The corporation pays taxes on its income on the entity level, and if the corporation distributes profits to shareholders by paying a dividend, the shareholders must pay taxes on the dividend as well.

If you decide the LLC is the right structure for your Georgia business, the formation process is relatively straightforward. To form an LLC, you can complete the six-step process outlined in our step-by-step guide yourself, enlist the help of an attorney, or use an LLC formation service.

Your Other Options

If you’d like to explore other business structures in Georgia, forming a professional corporation is another option. Note that corporations are not as flexible as LLCs, including with respect to management arrangements. Corporations are also subject to more formal governance, bookkeeping, and reporting requirements.

To learn more about Georgia professional corporations, you should review our How to Form a Professional Corporation in Georgia guide.

If you have a one-person business, you may also choose to just operate as a sole proprietorship. A sole proprietorship is not a legal business entity formed with the state, and there’s no distinction between the business and the sole owner for legal or tax purposes. This is the simplest form of operating a one-person business and gives the owner complete control. However, a major disadvantage is that the owner of a sole proprietorship is subject to unlimited liability for all of the liabilities and debts of the business.

If your business has more than one owner, you can also form a partnership. Four partnership variations are available in Georgia:

General Partnership: A general partnership, or GP, consists of at least two owners, which can be either individuals or entities. Like a sole proprietorship, a GP is not a legal business entity that is formed with the state. Who controls the GP and how it’s managed can be outlined in a partnership agreement, but if there’s no partnership agreement, the partners generally share equal control and management rights. As with a sole proprietorship, the owners are subject to unlimited personal liability, meaning that their personal property can be seized to pay the liabilities and debts of the GP.

Limited Liability Partnership: In Georgia, a GP can elect to be treated by the state as a limited liability partnership, or LLP, by filing a certificate with the clerk of the superior court of any county in which the partnership has an office. After such election, the LLP will continue to operate like a GP, but the liability of each partner can be limited to his or her respective financial contribution.

Limited Partnership: A limited partnership, or LP, is a legal business entity that consists of at least one general partner and at least one limited partner. The limited partners of an LP have limited personal liability for the obligations of the LP, while the general partners are generally subject to unlimited personal liability. Unlike in other states, limited partners of Georgia LPs can participate in the management of the business without becoming personally liable.

Limited Liability Limited Partnership: In Georgia, an LP can also choose to limit the liability of general partners by filing an election to be treated as a limited liability limited partnership, or LLLP, with the state. A Georgia LLLP otherwise operates like an LP.

Many professional businesses with two or more owners choose to form an LP, LLP, or LLLP because like an LLC, they offer limited liability, “pass through taxation,” and flexibility. Each type of entity has legal and tax implications, so if possible, you should consult with an attorney and accountant to discuss your specific situation.

Resources for Georgia Professional Business Owners

We also recommend contacting your profession’s state licensing board to discuss their requirements before forming an entity for the purpose of rendering professional services.

The Georgia Professional Licensing Boards Division supports many professional licensing boards in the state. The Georgia Secretary of State’s website includes a list of these boards. You can contact the Division at:

237 Coliseum Drive

Macon, Georgia 31217

Phone: 478-207-2440

Email: plb@sos.ga.gov

You can also contact some of the common professional regulatory boards in Georgia using the information below.