Are you planning to register a business in Georgia but struggling to decide on the legal structure? The choice between a Limited Liability Company (LLC) and an Individual Entrepreneur (IE) determines not only your legal liability but also whether you will pay 1% or 15% in taxes. In this article, we cover everything you need to know before visiting the Public Service Hall.

What is the Difference Between an LLC and an IE?

Before proceeding with registration, it is crucial to understand the primary distinction: Liability.

• Limited Liability Company (LLC): This is the most common legal entity in Georgia. The main advantage is that your personal assets (house, car, savings) are protected. If the business accumulates debt or faces bankruptcy, you are liable only to the extent of the company’s assets.

• Individual Entrepreneur (IE): In this case, there is no legal distinction between you and the business. If the business fails, creditors can claim your personal assets to satisfy debts.

Comparison Table: Taxes and Obligations

Who Qualifies for "Small Business Status" (1% Tax)?

Many are attracted to the Individual Entrepreneur status due to the low tax rate, but it does not apply to everyone. Under the Tax Code of Georgia, certain activities are prohibited from the 1% tax regime and are subject to the standard 20% income tax.

Prohibited activities include:

• Consulting services (e.g., legal, business consulting);

• Medical and architectural activities;

• Currency exchange operations, etc.

If your business activity falls onto this list, it is advisable to incorporate an LLC to benefit from the "Estonian Model" (Corporate Income Tax is paid only when profits are distributed).

How to Register a Business: Key Steps

Opening an LLC in one day is entirely possible if you are well-prepared.

1. Legal Address: You will need the consent of the owner of the real estate where the company is being registered. If the owner cannot attend the Public Service Hall, a notarized consent letter is mandatory.

2. The Charter (Articles of Association): The Public Service Hall offers a standard template. Legal Advice: If you have business partners, do not use the standard template. It does not adequately regulate disputes between shareholders. It is highly recommended to have a lawyer draft a customized Charter.

3. Email Address: Provide a valid and active email address. The Revenue Service (RS) will send official tax notifications and potential fines to this address. Failure to check your email does not exempt you from liability.

Frequently Asked Questions (FAQ)

Here are the most common questions asked by our foreign clients:

What is the cost of registering an LLC? The Public Service Hall fee is 200 GEL (Same-day expedited service) or 100 GEL (Next business day). This excludes legal fees for document drafting and consultation.

Can I register a business remotely? Yes. If you cannot be physically present in Georgia, registration can be completed via a Power of Attorney (PoA). Our firm provides full remote registration services.

Does an LLC require a corporate seal? No, under Georgian law, a company seal is not mandatory. However, it is still widely used in practice for banking transactions and contracts with conservative partners.

Need Assistance with Business Registration?

Errors during the registration process can lead to significant fines or legal complications in the future. Consult with professionals to ensure compliance.