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Georgia Business Licenses

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					          GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                 1
Bill Thomas               Craig Scroggs
Center for Agribusiness   Rural Development
& Economic Development    USDA




  SELECTING THE RIGHT
  FORM OF BUSINESS FOR
  YOUR BUSINESS

                           GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                  2
          GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                 3
Alternate Forms of
Business
     Sole Proprietorship
     Partnerships
          – General
          – Limited
     Corporations
          – Chapter S
     Limited Liability Companies
     Cooperatives
                             GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                    4
Table 1: General Comparison of Georgia's Most Commonly Used Types of Business
Organizations
                  Proprietorship     General              Limited        Corporations           LLC           Cooperatives
                                    Partnership         Partnership

Method of        Owner             Created by          Created by        Charter           Charter            Charter issued
Creation         commences         agreement of        registration      issued by the     issued by the      by the state
                 business          the parties         with the state    state under       state under        under
                 acti vity                             under             statutory         statutory          statutory
                                                       statutory         authority         authority          authority
                                                       authority

Entity           Not separate      In some             Separate          Legal entity,     Legal entity       Legal entity
Status           from owner.       cases , can         from limited      separate and      separate and       separate and
                                   be separate         partners, not     distinct from     distinct from      distinct from
                                   from owners.        usually           owners.           the                the
                                                       separate                            member/own         member/owne
                                                       from the                            ers.               rs
                                                       general
                                                       partners

Liability of     Owner is 100%     Unlimited           Limited           Shareholders      Members            Member is
Owners           liable for all    liability for all   liability for     l iable only to   enjoy              liable only to
                 debts.            partners.           limited           extent of         complete           extent of
                                                       partners only.    paid-in           limited            paid-in capital.
                                                                         capital.          liabil ity
                                                                                           simil ar to that
                                                                                           of limited
                                                                                           partners.

Duration         Same as           Terminated          May be            May be            May be             May be
                 owner             by agreement        perpetual         perpetual         required to        perpetual
                                   of partners,                                            specify term
                                   or by a                                                 of years;
                                   partner’s                                               must be 99
                                   death,                                                  years or less
                                   withdrawal or
                                   bankruptcy

Transfer of      May be sold at    Generally, sale     Limited partner   Shareholders      Operating          Mem bership
Interest         any time          of                  may sell          m ay sell or      agreement          limited to
                                   partnership         interests;        transfer shares   defines            agricultural
                                   interest            general           of stock          restrictions, if   producers and
                                   terminates the      partners may                        any, to            may be further
                                   partnership;        not sell                            trans ferability   limited by
                                   may create          interests                           of a mem ber’s     charter
                                   new                 without                             interests
                                   partnership.        consent of the
                                                       others ,
                                                       depending on
                                                       the by-laws or
                                                       charter

                                                                                GEORGIA COOPERATIVE DEVLOPMENT CENTER
               July 10                                                                                                5
Proprietorship

     Procures all capital
     Personally liable for all claims
     Profits taxed on individual return
     Need business licenses
     Should register trade name



                              GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                     6
General Partnership

     Oral or written agreement
     Procures all capital
     Partners liable for all claims
     Profits taxed on individual returns
     Need business licenses
     Should register trade name

                              GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                     7
Limited Partnership

     More regulated – register with Sec of State
     General Partners share full liability
     Limited Partners have limited liability
     Limited partners no part in running business
     Profits taxed on individual returns




                                 GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                        8
Corporations

     File papers with Sec of State
     Report annually
     Has limited liability
     Business continues after death of
      owners
     Pays taxes on profits
     Taxes on dividends paid by
      shareholders           GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                    9
S Corporations

     Part corporation, part partnership
     Limited to 35 shareholders
     Does not pay taxes
     One class of stock
     Limit on shareholders
     Limit on type of business

                              GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                    10
Limited Liability Company

     Combines benefits of corporations &
      partnerships
     Files Articles of Organization
     Members active managers
     Limited liability of members
     Taxed as either corporation or partnership
     Refile when membership changes


                                 GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                       11
Cooperative

     Limited to agricultural producers
     Limited liability of members
     Requires extensive record keeping
     Limited tax exempt status
     Patronage based on use



                             GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                   12
WHAT IS A
COOPERATIVE?
                    BUSINESS
                  USER-OWNED
               USER-CONTROLLED
          DISTRIBUTES BENEFITS ON THE
                   BASIS OF USE



                           GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                 13
Why Start a Co-op

     Improve bargaining power
     Reduce Cost
     Obtain Products or services
     Broaden market opportunities
     Improve quality
     Increase Income

                          GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                14
Steps To Organize
     Exploratory Member Meeting
     Steering Committee Formation
     Member Survey
     Market or Supply and Cost Analysis
     Financial Analysis
     Incorporation
     Legal Papers
     Charter Member Meeting
     Implement the Business Plan
                              GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                    15
General Rules for Success

     Use Advisors & Committee Effectively
     Keep Members Informed and Involved
     Maintain Proper Board-Manager
      Relations
     Conduct Businesslike meetings
     Follow Sound Business Practices
     Forage Links with Other Cooperatives


                              GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                    16
How are Co-ops Different?

 Service at cost
 Benefits proportional to use

 Limited return on capital

 Democratic control




                     GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                           17
Sources of Capital

     Debt – borrowed money that must be
      repaid at interest
     Equity – money value of a property
      used in business, include a risk factor
      and ownership right to property




                              GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                    18
Sources of Loans

     Commercial Banks
     Venture Capital Funds
     Revolving Loan Funds
     Federal Government
     State of Georgia
     Public offering of Securities

                               GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                     19
Commercial Banks

     Loan request
     History & nature of business
     Management
     General information
     Personal & business financial data



                              GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                    20
5 C’s of Credit

     Character
     Capacity
     Capital
     Collateral
     Condistions



                    GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                          21
Venture Capital

     Limited niche
     High growth business
     Minimum investment of $1 million




                            GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                  22
Revolving Funds

     Designed to help local communities
     Used for bricks & mortar
     Favorable interest




                             GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                   23
Federal Government

     USDA Rural Development

     Small Business Administration
          – Direct loans
          – Guaranteed loans
          – Technical assistance


                                   GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                         24
State Government

     Dept of Community Affairs
          –   Community Development Block Grants
          –   Employment Incentive Program
          –   Downtown Development
          –   Appalachian Regional Com Development Funds
          –   Tax-Exempt Bonds
          –   And many more
     OneGeorgia Fund

                                       GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                             25
Georgia Department Of
Economic Development
     A global agency and one-stop-shop for
      accessing Georgia’s assets and finding the
      right components for success.
     Specialists assist in:
          –   Business expansion and relocation
          –   International trade
          –   Small business development
          –   Cutting-edge technological advances
          –   Entertainment industry
          –   Travel

                                         GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                                               26
          GEORGIA COOPERATIVE DEVLOPMENT CENTER
July 10                                27

				
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