Georgia at a glance
Partnership law
UPA (original)
LLC default split
Proportional to capital
Operating agreement
Not required
Community property
No
Formation cost
$100
Annual cost
$50 annual registration fee
Georgia is one of the few states that still follows the original Uniform Partnership Act (UPA) rather than the revised version. Under UPA's aggregate theory, a partner's departure can automatically dissolve the partnership, which creates significantly more risk for multi-partner businesses. Georgia is a large state with a thriving startup scene in Atlanta.
Default partnership rules in Georgia
Georgia still follows the original Uniform Partnership Act (UPA), not the revised version (RUPA). Under UPA, the partnership is treated as an aggregate of its partners, not a separate entity. This has a critical consequence: when any partner leaves, dies, or goes bankrupt, the partnership is automatically dissolved. Profits and losses are shared equally by default. Partners are jointly and severally liable for partnership debts. These rules make written partnership agreements even more important in Georgia than in RUPA states.
The most important takeaway: profits are split equally by default in Georgia, regardless of capital contributions. If you and a partner start a business and one of you invests $100,000 while the other invests $5,000, you still split profits 50/50 without a written agreement. This is true in every US state, including Georgia.
LLC defaults in Georgia
Georgia allocates LLC profits and losses in proportion to capital contributions by default. Members have equal management rights in a member-managed LLC. Georgia does not require an operating agreement. The state imposes a state income tax on business income. Georgia's LLC Act provides standard limited liability protections and allows for significant customization through operating agreements.
Georgia defaults to proportional distributions based on capital contributions, which aligns better with many founders' expectations than equal-split states. However, capital contributions alone rarely tell the full story. A founder contributing time and expertise may receive nothing if they didn't invest cash. An operating agreement can account for all types of contributions. Our equity calculator can help you determine a fair arrangement.
What happens when a partner leaves in Georgia
Under Georgia's UPA, any partner's departure automatically dissolves the partnership. This is the key difference from RUPA states, where the partnership continues despite a partner leaving. In Georgia, the remaining partners must wind up the partnership's affairs and settle accounts, then reform a new partnership if they wish to continue. This automatic dissolution can disrupt the business, scare creditors and clients, and create tax complications. A well-drafted partnership agreement can mitigate this by including continuation clauses, but the legal default is dissolution.
Important: Because Georgia follows the original UPA, a partner's departure automatically dissolves the partnership. This is a significant risk that can disrupt the business, alarm creditors and clients, and create tax complications. A written partnership agreement with a continuation clause is essential for any Georgia partnership with more than one partner.
Marriage and business equity in Georgia
Georgia is an equitable distribution state. Business interests acquired during marriage are considered marital property and are divided equitably in a divorce. The court considers the length of the marriage, each spouse's contributions, and the future needs of each party. A business owned before marriage may be partially marital if it grew in value during the marriage. Georgia courts have broad discretion in property division.
Even though Georgia is not a community property state, marriage can still affect your business equity. In equitable distribution states, courts divide marital property based on what is fair, which may include business interests acquired or grown during the marriage. A clear equity agreement and proper documentation of ownership can help protect your business in the event of a divorce.
Formation and cost considerations in Georgia
| Formation cost | $100 |
| Annual/recurring cost | $50 annual registration fee |
| State income tax | Yes |
| Partnership law | UPA (original) — partner departure dissolves the partnership |
| LLC default distributions | Proportional to capital contribution |
| Operating agreement | Not required (strongly recommended) |
Frequently asked questions
Does Georgia use UPA or RUPA for partnerships?
Georgia follows the original Uniform Partnership Act (UPA), not the revised version. This means partnerships are treated as an aggregate of partners, not a separate entity. The most significant consequence is that a partner's departure automatically dissolves the partnership. Georgia is one of only a handful of states still using the original UPA.
What happens if a partner leaves a Georgia partnership?
Under Georgia's UPA, a partner's departure automatically dissolves the partnership. The partnership's affairs must be wound up, debts paid, and assets distributed. If the remaining partners want to continue, they must form a new partnership. This is very different from RUPA states, where the partnership simply continues. A written partnership agreement with continuation clauses can help avoid this disruption.
How much does it cost to form an LLC in Georgia?
The filing fee for Georgia Articles of Organization is $100. LLCs must also file an annual registration for $50 per year. Georgia imposes a state income tax on LLC income that flows through to members. The total first-year cost is at least $150 before legal fees.
What is the default profit split for a Georgia LLC?
Georgia defaults to allocating LLC profits in proportion to capital contributions. A member who contributed more capital receives a larger share of profits. An operating agreement can establish any profit-sharing arrangement the members prefer.
Related resources
- Equity calculator: find a fair split for your business
- Does your small business need an equity agreement?
- Equity for small businesses: the complete guide
- Dead equity calculator: how much is yours costing you?
- Slicing Pie calculator
- What is an operating agreement?
- All 50 states: partnership and LLC default rules
Partnership laws in neighboring states
Disclaimer: This page provides general information about Georgia partnership and LLC default rules and is not legal advice. Laws change, and the information here may not reflect the most recent amendments. The formation costs and annual fees listed are approximate and may vary. Consult a qualified attorney licensed in Georgia for advice specific to your situation. Equity Matrix is a software tool for tracking contributions and calculating equity; it does not provide legal services.
Replace Georgia's defaults with a fair agreement.
Equity Matrix tracks contributions and calculates ownership automatically, so your agreement reflects what your team actually built together.