Paying taxes is a crucial part of making sure that your small business is properly authorized to operate in Georgia. But knowing what taxes you might be subject to and when to pay them can cause quite a bit of anxiety. Don’t worry, we are here to help. That’s why we’ve compiled this guide on what kinds of state taxes might apply to your business and how to file them to keep your business legally compliant.
If you’re looking for a more comprehensive service to help you stay on top of state compliance tasks such as annual registration and filing required amendments to formation documents, check out our Worry-Free Compliance Service.
If you’re looking for information about federal taxes, head over to our page on federal taxes for small businesses to learn more.
Step 1: Establish your Georgia business’s corporate income tax obligations
The first step for your Georgia small business is to determine your corporate income tax obligations. Such obligations will depend on your business structure.
For example, in a pass-through entity, such as a sole proprietorship, partnership, or limited liability company (LLC), the business itself is generally not subject to a corporate income tax. Rather, its profits will flow through to the owners or members who will be taxed on their individual income taxes.
Corporations, on the other hand, are subject to a corporate income tax and generally do not benefit from pass-through taxation. This includes any corporation that owns property, does business in Georgia, or receives income from Georgia sources.
As a general rule, if an entity is set up as an S corporation (S-Corp) for Georgia purposes, the shareholders of the entity will pay the tax as opposed to the corporation. However, as of May 4, 2021, S-Corps may also elect to pay their Georgia income taxes at the entity level for the same taxable period.
The corporate Georgia business tax rate is a non-graduated percentage, currently 5.75%, of a corporation’s Georgia taxable net income. This amount is determined based on the amount of the entity’s federal taxable net income, although may be modified by certain Georgia statutory adjustments.
Georgia corporations must file their taxes on or before the 15th day of the third month after incorporation.
Step 2: Determine your Georgia business’s employment taxes
Next, it’s time to determine your business’s applicable employment tax obligations.
If your business has employees, it must pay state employment taxes. In Georgia, these are referred to as a withholding tax. Withholding tax is the amount held from an employee’s wages and paid by the employer directly to the state.
Due dates for payment of Georgia withholding taxes will depend on the frequency of paychecks to employees. These dates are:
- Semi-weekly payers where payday falls on a Wednesday, Thursday, or Friday, withholding taxes are due on or before the following Wednesday
- Semi-weekly payers where payday falls on a Saturday, Thursday, or Friday, withholding taxes are due on or before the following Friday
- Monthly payers, withholding taxes are due on or before the 15th day of the following month
- Quarterly payers, withholding taxes are due on or before the last day of the month following the end of the quarter
- Annual payers, withholding taxes are due by January 31st following the end of the fourth quarter
If any due date falls on a Saturday or Sunday, a Federal Reserve bank holiday, or a Georgia state holiday, the due date will extend to the next banking day.
The precise amount of wages subject to withholding will vary depending on the marital status of the employee and payroll period.
Step 3: Establish your Georgia business’s additional state tax obligations
There are a number of other types of state taxes to be aware of as well.
One example is sales taxes. The state of Georgia imposes a sales tax on sales of tangible personal property and certain services, including:
- In-state transportation of individuals
- Sales of admissions
- Charges for participation in games and amusement activities
The sales tax rate in Georgia is 4% statewide. Remember, however, that local jurisdictions will also impose a sales tax in addition to the 4% state sales tax.
The Department of Revenue provides a sales tax general rate chart every two months, which can be found on their website, as well as the due dates for sales and use taxes.
Net Worth Tax
Another type of tax to be aware of is a franchise or privilege tax. In Georgia, this is referred to as a net worth tax and is levied in exchange for the privilege of exercising a corporate franchise or doing business in Georgia.
This net worth tax applies only to corporations with a net worth of more than $100,000, though all corporations must complete a net worth tax return. The rate will depend on the total net worth of the corporation. However, the maximum amount is $5,000 for a corporation with a net worth greater than $22 million. All Georgia corporations must file an initial net worth return by the 15th day of the third month after incorporation or qualification in the state.
Most Georgia businesses will also have to pay a Georgia unemployment insurance tax. This tax helps to fund unemployment compensation programs for eligible employees in the state. The rate for new or newly covered employers is currently 2.7%.
Lastly, depending on the activities your business conducts, you may also have to pay an excise tax. Excise taxes are those imposed on certain types of goods, services, or activities.
In Georgia, excise taxes apply to the sale of:
- Malt beverages
- Distilled spirits
- Little cigars
- Loose or smokeless tobacco
Excise tax returns are due by the 10th of each month for tobacco products and by the 15th of each month for alcohol.
Not sure how to stay compliant? Learn more about legal compliance for small business owners.
Step 4: Prepare to file and pay your Georgia small business taxes
The Georgia Department of Revenue allows business owners to file and pay their taxes online through the Georgia Tax Center. If you have a Georgia business, you can register with the Georgia Tax Center to make filing your taxes an easier process.
When you’re getting ready to file your taxes, make sure to first get your business records in order. Filing taxes for your businesses can feel complicated and overwhelming. However, you can make the process easier by having everything available that you may need for the filing.
Examples of records to compile might include receipts, accounting records for your business, and legal documents. If you need help staying on top of your business records, we can help you keep track of your documents and make filing your Georgia taxes easier with our ZenBusiness Money App.
Do I need an accountant?
Many people wonder whether they need an accountant for their new or growing business. And in short, most small businesses will benefit greatly from professional accounting help.
In fact, many businesses really do need a professional accountant to properly handle their taxes and ensure that they’re done correctly. Failing to file your Georgia small business taxes or doing so incorrectly can result in serious consequences for you and your business. Thus, hiring a professional, credentialed, and qualified accountant is always recommended. The IRS has an online guide called Understanding Tax Return Preparer Credentials and Qualifications
to help you get a handle on the terminology.
How we can help
Running a business is rewarding, but there’s no question that it also requires a lot of hard work. At ZenBusiness, we’re here to make things easier for you. With our Worry-Free Compliance Service and ZenBusiness Money App, we can help you track expenses and keep relevant documents and other financial information in one place.
Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
- How much can a Georgia small business make before paying taxes?
No matter how small your Georgia business is, if it generates income, it will also have to pay taxes. However, the total amount you will owe, and whether the taxes must be paid by the entity or its owners, will depend on factors such as the type of entity and the amount of income generated by the business.
- What percentage does a Georgia small business pay in taxes?
The amount of business taxes in Georgia you’ll have to pay will depend on what taxes it owes. These taxes might include corporate income tax, sales tax, net worth tax, and excise tax. The rates for all these types of taxes will vary.
- How does a Georgia small business pay taxes?
Your Georgia small business can pay its taxes online through the Georgia Tax Center.
- Do I have to file taxes for my small business in Georgia?
In short, yes. You do have to file taxes for your small business in Georgia. However, the precise amount and types of taxes you have to pay will ultimately depend on a variety of factors.
Small Business Tax Information by State
Learn about your business taxes and how we can help you stay compliant.
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