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Avoid costly mistakes in business formation with Moton Legal Group
This 10 minute read can save you from Common mistakes millionaires make that cost them hundreds of thousands of dollars & time when forming their empire...Read this and save hours, headaches, and your money
Risks you should know of forming your business without a knowledgeable business lawyer
Financial Costs
Refiling and correction fees could cost your business thousands of dollars and time that you could be spending on running your business. If your business name, structure, or registration details are incorrect, you may need to refile with your state’s Secretary of State. This could mean paying additional filing fees, delays in approval or activation losing your original filing date (which can affect tax or legal status). You may be subject to additional tax penalties if you register under the wrong entity type (e.g., LLC vs. sole proprietorship vs. S corporation), you might owe unexpected self-employment taxes, miss deductions that can lower your tax liability available to other entity types, or file the wrong tax forms, triggering IRS penalties or audits, costing you peace of mind and time. Ensuring that you have the proper licensing and permit costs because Incorrectly formed businesses may have to reapply for state or city business licenses, which means more time and fees.
Legal Risks
If your LLC or corporation wasn’t properly filed or maintained, you could lose personal asset protection. That means: Creditors could go after your personal savings, home, or vehicle Courts might “pierce the corporate veil” and hold you personally liable b. Invalid contracts or agreements If your business is not legally recognized, contracts you sign might be unenforceable — leaving you with no legal recourse in disputes. c. Intellectual property exposure Using a name not properly registered could lead to: Trademark infringement lawsuits Forced rebranding (which can cost thousands in new logos, domains, and marketing)
Tax & Compliance Risks
he tax and compliance risks of improper business formation can create serious long-term problems for a company. Using the wrong Employer Identification Number (EIN) can lead to payroll complications, delayed tax refunds, and even the misclassification of employees. Failing to file required annual reports with the state may result in administrative dissolution, leaving the business unable to operate legally. Additionally, selecting an incorrect ownership structure can directly affect how profits, losses, and liabilities are allocated among owners, potentially creating tax burdens or disputes that could have been avoided with proper formation.
Operational Risks
Operational risks from improper business formation can significantly disrupt daily business activities and growth opportunities. Errors in formation can cause delays in opening business bank accounts, establishing business credit, or securing loans, slowing down essential financial operations. An invalid or unverified business entity may also result in the denial of grants or government contracts, limiting access to funding and strategic opportunities. Additionally, operating without proper legal status can damage credibility with customers, partners, and vendors, undermining trust and harming the business’s reputation in the marketplace.
Frequently Asked Questions about Business Formation
Protecting you and your business while making you more knowledgeable
In Georgia, you can choose from several entity types, including a Sole Proprietorship, Partnership, Limited Liability Company (LLC), Corporation (C-Corp or S-Corp), and Limited Partnership (LP). Each structure offers different levels of liability protection, tax treatment, and management flexibility, depending on your business needs.
You can check business name availability through the Georgia Secretary of State’s online name search database. If the name is available, you may reserve it for 30 days or proceed directly with forming your LLC or corporation, which automatically registers the name once approved.
To form an LLC in Georgia, you must: Choose a unique business name Appoint a registered agent File Articles of Organization with the Georgia Secretary of State Create an operating agreement Obtain an EIN from the IRS Complete any required local licensing or permits
Yes. Georgia requires all LLCs and corporations to have a registered agent with a physical address in the state. The agent receives legal documents, official notices, and service of process on behalf of your business to ensure compliance and timely communication.
Online filings are typically processed within 5–7 business days, while mailed filings may take longer. Georgia also offers expedited processing for an additional fee, shortening review times to as little as 2 business days.
While Georgia does not legally require an operating agreement, it is highly recommended. This document outlines ownership, management roles, profit distribution, and dispute resolution, helping protect your business’s legal and financial structure.
A registered agent receives legal notices and official state documents on behalf of your business. You can serve as your own agent if you have a physical street address in Georgia and are available during business hours.
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Sara Parker
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