Sole Proprietorship in Georgia

A sole proprietorship in Georgia is an unincorporated business owned by a single person. A husband and wife may operate a sole proprietorship in Georgia. As the company begins to grow, a sole proprietor in Georgia can convert his business into a limited liability company or a corporation. Business owners in Georgia have a number of legal and financial matters to consider when operating as a sole proprietor.

Formation of a Sole Proprietorship

A Georgia sole proprietor does not have to file documents with the state to begin the legal existence of the business. The owner can form a sole proprietorship in Georgia without formality or expense, as explained by the LawForChange website. A Georgia sole proprietorship may assume the legal name of the business owner, but the owner has the option of filing a trade name with the clerk of superior court in the county where the company operates. The cost to register a trade name varies from county to county.

Business and Personal Liability

Sole proprietors in Georgia are personally liable for everything that occurs in the business. The law treats the owner of the business and the company as having the same legal identity. This means that if a sole proprietorship loses a lawsuit and lacks sufficient assets, the judgment may extend to the owner’s home, automobile and other personal assets. In addition, the business owner's creditors may pursue assets from the sole proprietorship as compensation for the owner’s personal debts and obligations.

Control of a Sole Proprietorship

Sole proprietors in Georgia have complete control over every aspect of the business. The owner can allocate money from the business in any way and Georgia has no legal requirement for a sole proprietor to separate his personal money from his business funds. The business owner does not have to consult with any others to make business decisions, which makes it easier to react to changes in the marketplace. In addition, sole proprietors in Georgia do not have other owners or partners with which they split the company’s profits.

Considerations

Georgia sole proprietors may have trouble raising funds to operate the business because lenders may be wary of extending a loan to the business owner. The reason is that the lender may have difficulty recovering the loan if the sole proprietor dies or becomes disabled. This means that a sole proprietor may have to rely on his personal assets to fund the company. In addition, a sole proprietorship ends automatically when the business owner dies or decides to sell the business.

References

• Citizen Media Law Project: Becoming a Sole Proprietor in Georgia
• LawForChange: Georgia Sole Proprietorships
• SBA.gov: Register Your Fictitious or "Doing Business As" (DBA) Name
• Henderson Law Firm, LLC: Sole Proprietorships
• Georgia Secretary of State, Corporations Division; Which Legal Entity is Right for Your Business: Sole Proprietorship, General Partnership, Limited Partnership, Corporation or Limited Liability Company?; 2000