You have picked Georgia. Now you hit the first real fork: register a limited liability company, or register as an individual entrepreneur. Choose badly and you either hand over a fifth of your profit where a much lighter regime was available, or you run a business with your personal savings sitting inside the blast radius. The LLC vs individual entrepreneur decision in Georgia turns on four things, and prestige is not one of them.
The short answer
Solo, service-based, no partners, no outside money, turnover comfortably under the small business ceiling: individual entrepreneur. Partners, employees, investors, physical risk, inventory, or clients whose procurement team refuses to contract with a human being: LLC.
That rule of thumb is right most of the time. The rest of this piece is where it breaks.
What each one actually is
Individual entrepreneur
An individual entrepreneur (IE) is not a separate legal person. It is you, with an entry in the entrepreneurs registry and a tax number attached to your own identity. Business debts are your debts. There is no charter, no share capital and no way to bring in a partner.
Registration is deliberately thin. The National Agency of Public Registry's business registration FAQ sets out that an individual entrepreneur registers with an identity document and a declared physical address in Georgia, and that a residential or temporary address is acceptable without extra documentation from the property owner.
Limited liability company
An LLC (შპს, written Ltd or LLC in English) is a separate legal person. Partners are exposed only to what they put in. You file a founding agreement that contains the charter, and the same registry FAQ confirms you can adopt the standard charter approved by the Minister of Justice instead of paying a lawyer to draft one.
Capital is not the obstacle people expect. Stating a capital figure is optional at registration, so the "how much do I need to put in" question mostly answers itself. Signatures need notarisation unless they are executed electronically or certified by an authorised body, and the company has to register on the electronic portal with the manager's phone number and email.
Side by side
| Individual entrepreneur | IE with small business status | LLC | |
|---|---|---|---|
| Separate legal person | No | No | Yes |
| Liability for business debts | Personal, unlimited | Personal, unlimited | Limited to contributions |
| Headline tax on business income | Standard personal income tax | Turnover tax at the small business rate | Tax on distributed profit only |
| Can add partners or sell equity | No | No | Yes |
| Eligible for the 1% regime | Yes, on application | Already has it | No |
| Registry fee, 1 working day | 26 GEL | 26 GEL | 200 GEL |
| Monthly filing burden | Light | Light, but turnover reported monthly | Heavier |
| Survives your death or exit | No | No | Yes |
Tax is what decides it for most people
Georgia's tax system does two unusual things, and they pull in opposite directions.
For individuals, there is a special regime for small businesses that taxes gross turnover at 1% rather than taxing profit. It is only available to a natural person registered as an individual entrepreneur. An LLC cannot hold it. That single sentence settles the choice for a large share of freelancers, consultants and remote workers. We cover the eligibility rules and the excluded activities in our guide to Georgia's 1% small business status.
For companies, Georgia taxes distributed profit rather than earned profit. An LLC that reinvests everything pays no profit tax on retained earnings. The charge lands when money leaves the company as a dividend, and a separate withholding applies to dividends paid to individuals. So an LLC that is accumulating capital can be extremely efficient, while an LLC that pays everything out to one owner every month usually is not.
Registering as an individual entrepreneur does not give you the 1% rate. It is a separate application to the Revenue Service, and until it is granted you are taxed under the ordinary rules. Apply in the same week you register, not after your first invoice clears.
About the numbers
Rates and thresholds in Georgia live in the Tax Code of Georgia, which was last amended in late 2025 and is amended most years. The widely used figures are a 1% rate on turnover under an annual ceiling in the region of half a million lari, a higher rate on turnover above it, a flat personal income tax in the region of 20%, profit tax around 15% on distributed profit, and a dividend withholding around 5%. Treat those as orientation, not as advice: check the current text through the Revenue Service legislation portal or with an accountant before you build a plan on them.
VAT registration is not triggered automatically by the tax office. Once your taxable turnover crosses the mandatory threshold you have to register yourself, and assessments run from the moment you crossed it, not from the day you noticed. This catches IEs on the 1% regime hardest, because 1% turnover tax and VAT are separate obligations that can apply at the same time. See VAT registration thresholds in Georgia before you invoice your way past the line.
Liability, and what it actually buys you
Limited liability is the LLC's real product. If a client sues, a supplier goes unpaid, or a delivery driver you hired causes damage, an LLC absorbs it up to the company's assets. An individual entrepreneur absorbs it with their apartment.
For a copywriter invoicing 4,000 USD a month to three clients, that risk is close to theoretical. For anyone holding stock, running a physical location, employing drivers, taking client deposits, or signing contracts with liability clauses they did not negotiate, it is not. The question is not how much you earn. It is how much someone could plausibly claim from you.
There is a second, quieter benefit. An LLC is transferable. Shares can be sold, partners can be added, a stake can be given to a co-founder who joins in year two. An IE ends when you end. Nothing about it can be sold, inherited as a going concern, or split.
What each one costs to set up and run
Registry fees are published by the National Agency of Public Registry and are the same whether you file in Tbilisi or Batumi. These are the figures on the agency's fees and terms schedule.
| Registry service | 1 working day | Same day as filing |
|---|---|---|
| Register an entrepreneurial entity other than an IE (LLC, JSC) | 200 GEL | 400 GEL |
| Register an individual entrepreneur | 26 GEL | 75 GEL |
| Extract from the entrepreneurs registry | 20 GEL | 75 GEL |
| Change a registered legal address | Free | n/a |
| Terminate an individual enterprise | Free | n/a |
Fees are set by government resolution and get revised, so confirm on the day you file. The registry fee is also the smallest line in your budget. Notarisation, translation, a legal address if you do not have one, and the first year of bookkeeping cost far more, which we break down in the full company registration cost breakdown.
Running cost is where the two genuinely diverge. An IE on the small business regime files a monthly turnover declaration and keeps a simplified record of income and expenses. An LLC keeps real double-entry books, files monthly, and produces annual financial statements. Most solo IEs can manage with a bookkeeper checking in monthly. Most LLCs need a proper accountant in Tbilisi from month one.
Who should pick which
Pick an individual entrepreneur if you sell your own time or skill, you have no partners, your clients are happy to pay a named person, and your annual turnover is safely inside the small business ceiling. The tax outcome is hard to beat and the admin is genuinely light. If you would rather not file anything yourself, the company registration firms in Tbilisi we rank will do either form for a flat fee.
Pick an LLC if any of the following is true: you have a co-founder, you will hire more than a couple of people, you want to retain profit inside the business rather than draw it, you handle client money or physical goods, your customers are enterprises with vendor onboarding, or you plan to sell the business one day.
Pick an LLC with a specialised status if you write software. IT companies exporting services should compare a plain LLC against Georgia's virtual zone regime before defaulting to the 1% route, because the arithmetic flips once you have staff and retained profit.
We research the company registration services working in Tbilisi and rank the ones worth paying. Independently researched, re-checked quarterly, free to read.
See the ranked list
Switching later
You cannot convert an individual entrepreneur into an LLC. Georgian law treats them as different things, so the move is: register the LLC, move contracts and banking across, then terminate the IE registration. The good news is that the registry charges nothing to terminate an individual enterprise, and nothing to change a legal address.
The cost of switching is not the fee. It is re-papering client contracts, opening a new bank account, re-doing know-your-customer checks, and explaining to a client's finance department why the payee changed. Budget a month.
Deregistering also does not erase history. Any tax liability the IE accrued stays with you personally, because it always was you. If there is an open question about past filings, resolve it before you close, ideally with a tax advisor in Tbilisi rather than after a Revenue Service letter arrives.
You cannot hold two individual entrepreneur registrations, because the registration is your identity. You can, however, be an IE and simultaneously own shares in an LLC. Plenty of people here run a 1% IE for consulting income and a separate LLC for a venture with partners.
Mistakes we see repeatedly
Choosing an LLC for credibility. Georgian LLCs impress nobody abroad on their own, and the extra accounting is a real monthly cost.
Choosing an IE and then hiring. The moment you take on staff you have payroll obligations, employment risk and someone else's conduct attached to your personal name.
Assuming the 1% rate covers everything. It is a turnover tax on eligible business income. Employment income, rental income, capital gains and VAT sit outside it.
Ignoring where you are tax resident. Your entity is Georgian; you might not be. If you still have ties to another country, read our explainer on Georgian tax residency rules before you assume the Georgian rate is the only one that applies.
Registering before reading the process. The document list is short but unforgiving, and our step-by-step guide to registering a company in Georgia covers what to bring.
Key takeaways
- An individual entrepreneur is you with a tax number. An LLC is a separate legal person with limited liability.
- Only an individual entrepreneur can hold small business status and its 1% turnover regime. An LLC cannot.
- An LLC is taxed when profit is distributed, which favours businesses that retain earnings.
- Registry fees are trivial next to notarisation, translation and bookkeeping.
- Liability, partners and the ability to sell the business are the reasons to pay for an LLC.
- Switching means registering a new entity and closing the old one. The registry fee is nothing; the contract and banking work is not.
- Confirm every rate and threshold against the current Tax Code or with an accountant before you commit.
FAQ
Is an individual entrepreneur the same as a sole trader?
Yes, in substance. A Georgian individual entrepreneur is the local equivalent of a sole trader or sole proprietor: an unincorporated business that is legally identical to the person running it. It gets a registry entry and a tax number, but not separate legal personality. Liability, assets and obligations all stay personal.
Can an LLC get Georgia's 1% small business status?
No. Small business status is a regime for natural persons registered as individual entrepreneurs, so a company cannot apply for it. This is the single most common misunderstanding we correct. If the 1% rate is the reason you are incorporating, you want an IE, not an LLC.
Which is cheaper to register?
The individual entrepreneur, by a wide margin. The registry charges 26 GEL for one-working-day IE registration against 200 GEL for an LLC, and 75 GEL against 400 GEL for same-day service. Beyond the registry, an LLC usually adds notarisation and sometimes translation costs that an IE avoids entirely.
Can a foreigner register as an individual entrepreneur in Georgia?
Yes. Foreign nationals can register as individual entrepreneurs and as LLC founders without a residence permit, which is one reason Georgia attracts remote workers. You need an identity document and a declared physical address in Georgia. Requirements can change, so confirm current practice before you book flights.
Do I need a Georgian address?
Yes, both forms need a physical address in Georgia on the register. An individual entrepreneur can generally declare a residential or temporary address without additional owner documentation. An LLC needs a legal address, which many people rent as a service. Changing a registered address later is free at the registry.
Can I register without flying to Tbilisi?
Increasingly, yes. The National Agency of Public Registry has launched a digital service it describes as registering as an individual entrepreneur from anywhere in the world, and LLC registration can be handled by a representative acting under a properly certified power of attorney. Notarisation or a qualified electronic signature is the sticking point, so arrange the paperwork in your home country first.
What happens if I go over the small business turnover ceiling?
Turnover above the ceiling is taxed at a higher rate for that year, and breaching it repeatedly costs you the status altogether. The precise ceiling, the higher rate and the number of years that trigger revocation are all set in the Tax Code and have been amended before. If you are within twenty percent of the line, model it with an accountant rather than guessing.
Does an individual entrepreneur need an accountant?
Not always, but usually worth it. An IE on the small business regime files monthly and keeps a simplified income and expense record, which a numerate person can handle alone. The value of an accountant is catching the VAT threshold, the excluded activity list and the residency questions before they become assessments. An LLC is a different matter and effectively requires one.
Can I switch from an individual entrepreneur to an LLC?
Yes, but it is a migration rather than a conversion. You register the LLC as a new entity, move contracts, invoicing and banking across, then terminate the IE registration, which the registry does free of charge. Past tax obligations of the IE remain yours personally, so clear anything outstanding before you close it.
Which one helps more with a residence permit?
Neither is a permit, and owning an entity is not by itself a route to residency. An LLC is more often useful in work-based applications because it can employ you, whereas an IE cannot employ its own owner. The rules are applied strictly and change, so check the current position with an immigration lawyer in Tbilisi before building a plan around it.
Do I have to register for VAT either way?
Yes, VAT rules apply to both forms once you cross the mandatory threshold, and being an individual entrepreneur on the 1% regime does not exempt you. Registration is your responsibility, not the tax office's. Some clients also prefer a VAT-registered supplier, so voluntary registration is occasionally worth considering even below the threshold.