LLC vs S-Corp in Georgia

Georgia has a flat state personal income tax: 5.19% for the 2025 tax year, scheduled to drop 0.10 percentage points per year until it reaches 4.99%. That matters for the LLC vs S-corp decision because pass-through profits from either entity flow to the owner's Georgia personal return. The Georgia Secretary of State handles the entity filing. The IRS handles the tax classification via Form 8832 and Form 2553. A Georgia LLC can elect to be taxed as an S corporation. Georgia LLC basics. - Articles of Organization filed with the Georgia Secretary of State Corporations Division. - Filing fee is $100.00 plus a $10.00 service charge when filed online, for a total of $110.00. Paper filing is also $110.00. - Annual registration required each year between January 1 and April 1, with a fee of $50.00 plus a $10.00 service charge, totaling $60.00. The initial annual registration is due between January 1 and April 1 of the year following formation. - Single-member LLCs default to disregarded entity for federal tax. Multi-member LLCs default to partnership tax. Either can elect S corp treatment with Form 2553. Georgia tax treatment. - Corporate income tax. Georgia's corporate income tax rate is 5.19% of Georgia taxable net income. An S corporation that has validly elected federal S status is generally not subject to Georgia corporate income tax at the entity level. The income passes through to shareholders, who report it on their Georgia personal returns. A C corporation pays the 5.19% entity-level tax, and shareholders pay again on dividends. - Net worth tax. Georgia imposes a separate net worth tax on corporations and on LLCs that elect to be taxed as corporations. The tax is graduated, starting at $125 and capping at $5,000 for net worth over $22 million. Corporations with net worth of $100,000 or less owe no net worth tax but must still file a return. A disregarded single-member LLC (one that has not elected corporate or S-corp tax treatment) is not subject to the Georgia net worth tax. An LLC that elects S corp treatment can become subject to the net worth tax. - Personal income tax. Pass-through profits and S-corp owner wages hit the owner's Georgia return at the 5.19% flat rate for 2025. - Payroll. An S corp must pay its owner-employee a reasonable W-2 salary. Georgia employers pay state unemployment insurance tax through the Department of Labor once the wage threshold is met. Why a Georgia trades shop might elect S corp. The main reason is federal self-employment tax savings. A disregarded-entity LLC owner pays self-employment tax on the full net profit. An S corp owner-employee pays payroll tax on wages only; the distribution portion avoids self-employment tax. The Georgia personal income tax rate applies either way, but the S corp election can also pull the LLC into the Georgia net worth tax. That is a cost a disregarded single-member LLC would not pay. Rule of thumb. Start as a Georgia LLC. When annual profit after a reasonable owner wage is high enough that payroll tax savings clear the payroll, retirement plan, accounting, and Georgia net worth tax costs, elect S corp. A CPA with Georgia construction clients can run the breakeven for your numbers and confirm the Georgia annual filings.