For proof of Georgia’s small-business prowess, look no further than the 2018 Small Business Profile from the U.S. Small Business Association (SBA). Businesses with fewer than 500 employees account for 99.6 percent of Georgia’s businesses and employ 43.2 percent of the state’s workers. That works out to a total of 1 million small business and 1.6 million employees.
Perhaps even more impressively, small businesses oversee a sizable chunk of the state’s exports. In 2015, over 88 percent of the companies exporting goods from Georgia were small firms. Together, they generated $35.6 billion in exports — nearly 29 percent of the state’s total.
Georgia’s small businesses are spread across a variety of industries. However, their presence is particularly pronounced in industries such as farming and agriculture, forestry, fishing, and hunting. Other industries where small businesses are prevalent include the following:
- Construction: 111,536 firms
- Real Estate and Rental and Leasing: 83,655 firms
- Arts, Entertainment, and Recreation: 42,668 firms
- Accommodation and Food Services: 29,387
- Professional, Scientific, and Technical Services: 131,598 firms
- Other Services: 184,514 firms
Georgia’s Small Business Accolades
Several respected third-party sources have also identified Georgia as one of the nation’s best states for entrepreneurs and small businesses. Consider these 2018 accolades, for example:
- Earned an A grade in Thumbtack’s 2018 Small Business Friendliness Survey, which polled over 7,500 small business owners across the U.S. with questions about the situations in their state. This grade put Georgia in the top 10. In the same survey, Atlanta was one of only 15 cities to score in the A range.
- Ranked 3rd overall on WalletHub’s list of 2018’s Best and Worst States to Start a Business. More specifically, Georgia ranked 7th in business environment, 15th in access to resources and 17th in business costs.
- Ranked 6th on Forbes’ annual list of the Best States for Business. Georgia ranked 7th for both the economic climate and regulatory environment, 10th for labor supply, 13th for growth prospects, and 18th for business costs.
- Ranked 7th on CNBC’s list of America’s Top States for Business 2018. Boosting its high score, Georgia took 2nd, 3rd, and 4th place respectively in the categories of economy, infrastructure, and workforce.
- Ranked 9th and 13th respectively for cost of living and startup activity on a list published in July 2018 by Fit Small Business.
What Makes Georgia a Good Choice?
Entrepreneurs can find several great reasons to start a Georgia small business — starting with generous tax incentives:
- Inventory Tax Exemption. Under this rule, businesses don’t have to pay state property tax on business inventory. About 93 percent of the state’s cities and counties have followed suit with exemptions set at 20, 40, 60, 80, or 100 percent of the inventory’s value.
- Sales Tax and Use Tax Exemption. Manufacturing companies can avoid paying sales and use taxes on certain kinds of machinery.
- Job Tax Credit. Businesses related to manufacturing, telecommunications, broadcasting, warehousing, research, processing, or tourism can claim a tax break. The exact amount depends on which tier a business falls into, with the areas of highest economic need offering the highest credit.
- Port Tax Credit Bonus. This credit can be claimed by businesses that increased their imports or exports through a Georgia port by at least 10 percent compared to the previous year.
- Work Opportunity Tax Credit. Business who participate in the state’s WOTC program can receive federal tax credits for hiring veterans, ex-felons, or summer youth workers.
- Film Television and Digital Entertainment Tax Credit. Companies that produce TV shows, movies, music videos, interactive games, animation, or music videos in the state can save up to 30 percent on their taxes. This includes 20 percent for spending at least $500,000 on production and post-production in Georgia, plus another 10 percent for including the state’s promotional logo in the finished product.
- Retraining Tax Credit. Businesses that invest in their own employees can claim an annual tax credit of up to $1,250 per employee to help defray costs related to employee training.
Starting a Small Business in Georgia
Of course, tax incentives aren’t all Georgia has to offer. The state makes starting a small business easy, with a Georgia.org website full of information and resources for entrepreneurs. Visitors to this site can use a convenient drop-down menu to indicate what they are looking to do: start a small business, grow a small business, finance a small business, learn more about small business, connect, or innovate a small business.
Establishing a sole proprietorship is a simple matter of choosing a business name, registering a trade name with your county (if the name of your business will be something other than your legal name), and appointing a registered agent. You should also register as a sole proprietorship at the Georgia Department of Revenue Online Tax Center so you can report and pay your taxes. If you plan to hire employees, you need to obtain an employer identification number (EIN) from the IRS.
A few other steps are optional but recommended. For instance, opening a business bank account will help you keep your personal and business finances separate. It’s also wise to purchase general liability insurance for your business since, as a sole proprietor, you can be held personally liable for all of your business’ debts and obligations. In some cases, you may also need to obtain special licenses, permits, or zoning clearances to operate your business legally.
Other business structures are more complicated to set up because they come with additional legal requirements. If you want to operate a limited partnership, LLC, or corporation, you will have to register with the Corporations Division of the Georgia Secretary of State. You will also run into modest fees for your initial filing ($100), annual registration ($50), and name reservation ($25).
For more information about the state of small businesses in Georgia, check out our infographic.