Individual Entrepreneur vs LLC in Georgia: Which to Choose
Should you register as an Individual Entrepreneur or form an LLC in Georgia? How each is taxed, who can use the 1% rate, liability, banking and work permit rules.
Overview
- An Individual Entrepreneur (IE) is you, registered as a business. An LLC is a separate company that you own.
- Only an IE can get Small Business Status and the 1% tax on turnover up to 500,000 GEL a year. An LLC pays tax on profits when it pays them out.
- Consultants, lawyers, architects, auditors and some others can't use the 1% rate, so for them the IE loses its main advantage.
- An IE has unlimited personal liability. An LLC protects your personal assets, and it suits partners, investors and staff.
Most foreigners who start a business in Georgia pick between two forms: the Individual Entrepreneur and the limited liability company. Online, the choice gets reduced to "IE for the 1% tax." That's right for a lot of freelancers. It's wrong for a lot of others. Here's how to decide.
Rules current as of October 28, 2026. This is general information. Your home-country tax position matters as much as the Georgian one.
The short comparison
| Individual Entrepreneur | LLC | |
|---|---|---|
| What it is | You, registered for business | A separate legal company |
| Owners | You alone | One or more, people or companies |
| Liability | Unlimited, your personal assets are at risk | Limited to what you put in |
| Standard tax | 20% on net profit | 15% on profit when distributed, plus 5% tax on dividends |
| 1% option | Yes, with Small Business Status, if your activity qualifies | No |
| Best for | Solo freelancers and small service businesses | Partners, investors, staff, bigger contracts, higher risk work |
The IE and the 1% rate
An IE on its own pays 20% income tax on net profit. The draw is Small Business Status. With it, you pay 1% on turnover, as long as turnover stays within 500,000 GEL a year. Above that, the rate rises to 3%. If you go over the limit two years in a row, you lose the status.
Since March 7, 2026, Small Business Status starts on the day you apply, not the first of the next month. You can register an IE and get the 1% rate within a working day.
There's also a 0% option for very small businesses. Micro Business Status covers income up to 30,000 GEL with no staff. If you go over, you have 15 days to apply for Small Business Status, or the year's income falls back to the 20% rate.
Who can't use it
Small Business Status is closed to some activities. The list includes:
- consulting, including tax consulting.
- legal, notarial, audit, medical and architectural services.
- activities that need a license or permit.
- currency exchange, gambling and staffing services.
The consulting exclusion catches a lot of Westerners. If your work is advice, strategy or management consulting, you probably can't get the 1% rate. Then you'd pay 20% on profit as an IE, and an LLC may be the better choice.
The monthly filing
An IE with Small Business Status files a declaration and pays by the 15th of each month. Since March 2026, a missed return no longer counts as a zero return. It's a tax offense with a fine, even if you earned nothing that month. If you stop working, file zero returns or deregister.
The LLC
An LLC is a separate company. You can own it alone or with partners, and the owners don't answer for its debts beyond what they put in.
Georgia taxes LLCs on profit only when it leaves the company. Profit you keep in the business isn't taxed. When the company pays a dividend, it pays 15% profit tax, and the dividend itself is taxed at 5%.
An LLC makes sense when:
- you have a partner or an investor.
- your activity can't get Small Business Status.
- you'll hire staff or sign large contracts.
- the work carries real risk of a claim or a debt.
- you want to keep profit in the business and grow it.
It costs more to run. An LLC needs a Georgian legal address, keeps proper accounts and files more than an IE.
Work permits and the 2026 rules
Since March 1, 2026, most foreigners need a work permit to work or run a business in Georgia. Both forms are affected, but differently.
- An IE is a self-employed person under the law, so you need a self-employed work permit. That permit has a turnover test of 50,000 GEL over the last 12 months, unless your business is less than 3 months old.
- An LLC owner who doesn't work in the company no longer needs a permit. An April 2026 amendment took owners out of the rule. A director who runs a small LLC usually does need one.
See our guide to the January 1, 2027 work permit deadline for the details.
Your home country still matters
The 1% rate is a Georgian rate. It doesn't decide what you owe at home.
- If you're a US citizen, the US taxes you wherever you live. A Georgian IE is usually treated as a sole proprietorship for US purposes, and the 1% rate doesn't remove US self-employment tax.
- If you're from the UK, Canada or Australia, you may still be tax resident at home if you keep a home, family or income there.
Before you register, talk to a tax adviser in your home country. Then choose the Georgian form that fits.
How to choose
- Solo freelancer, eligible activity, under 500,000 GEL a year: IE with Small Business Status.
- Solo consultant: probably an LLC, or an IE at 20%. Compare both.
- Two or more owners, or outside investors: LLC.
- Staff, large contracts, or work with real liability risk: LLC.
- Testing an idea with small income: IE with Micro Business Status, then Small Business Status when you pass 30,000 GEL.
How we can help
We look at your work, your clients and your home-country position, then recommend the right form. We register the IE or LLC, apply for Small Business Status, help you open a business bank account and handle the monthly filings if you want. Ask about setup or see what we do.