Individual entrepreneur and small business status

What an individual entrepreneur is

An individual entrepreneur is a natural person registered as a business. No separate legal entity is created - you yourself are the business.

This form is simpler than an LLC: fewer documents, simpler reporting. But you are personally liable for obligations.

Our role

Tax advice is given by a licensed accountant. We coordinate registration, interpret and make sure you miss no deadlines.

The main task is that you get the status only when it truly fits your activity and your own country's rules.

Small business status

Small business status is a special tax regime for an individual entrepreneur. The tax is a small percentage of turnover, not of profit.

The status does not apply automatically - you obtain it by applying to the Revenue Service.

The conditions are set by law and change from time to time. So we check every case against the current rules.

Who it suits

The status often suits freelancers, designers, programmers, translators and other specialists who sell services.

It suits those with low expenses. The tax is paid on turnover, and expenses do not reduce it.

If you have large expenses - materials, staff - the status may no longer be advantageous.

Excluded activities

Not every activity can get this status. Excluded are, for example, licensed activities and some kinds of consulting.

The list is detailed, and the same work can be classified differently depending on how it is described.

So the accountant checks your activity before registration - that is the most important step.

The turnover threshold

The status applies only up to an annual turnover set by law.

The threshold is counted in lari. If you receive money in foreign currency, it is converted at the exchange rate.

The accountant tracks turnover month by month, so you know in advance when you are approaching the threshold.

Exceeding the threshold

If turnover exceeds the threshold, the status conditions change - the tax rises or the status ends, according to the rules.

This should not happen by surprise. As you approach it, we plan the next step - often moving to an LLC.

The accountant explains the exact rules and consequences for your turnover.

Registering as an individual entrepreneur

An individual entrepreneur is registered at the House of Justice. Registration is often quick and simple.

You need a passport, its Georgian translation and an address in Georgia.

The description of the activity at registration matters - it affects the status application too.

The status application

After registration, the application for small business status goes to the Revenue Service.

The application is often made online, through the portal. The portal is in Georgian, and the accountant helps you with it.

Once the status is confirmed, the new rules apply. Before confirmation the ordinary regime applies.

Address

An individual entrepreneur needs an address in Georgia. It can be your rented flat, with the owner's consent.

If you do not live in Georgia permanently, an address service or an acquaintance's address is used.

Official letters arrive at the address, and receiving them on time matters.

Registering remotely

Registration is sometimes possible without coming over - by notarised power of attorney, with an apostille.

But a bank account often needs a visit in person.

So we often plan one short visit: registration, the bank and a meeting with the accountant.

The bank account

An individual entrepreneur's income should come into an account, so turnover is recorded correctly.

The bank checks your activity and clients. Contracts and invoices make the check easier.

Keeping personal and business money separate is better, so the records stay simple.

Payments from abroad

Many freelancers receive money from foreign clients - by bank transfer or through international payment platforms.

Every income counts towards turnover, wherever it comes in. So every channel must be recorded.

The bank may check a large or unusual payment. A contract and invoice make this easier.

Currency and exchange rate

In Georgia turnover is recorded in lari. Money received in foreign currency is converted at the exchange rate.

The accountant applies the rate rule and date. A mistake here changes the declaration.

Converting the money into lari is not required - you can keep it in foreign currency in the account.

Invoices

You should send every client an invoice, in your name, with your identification number and bank details.

We prepare an invoice template in two languages, so both a foreign client and the Georgian system accept it.

Invoices are the basis of recording turnover, and keeping them is mandatory.

Declarations

An individual entrepreneur with the status declares turnover regularly, often monthly, even if there was no income.

The declaration is simple, but missing it leads to a fine.

The accountant prepares the declaration and sends you a short summary in your language.

Expenses

Under small business status the tax is paid on turnover. Expenses - equipment, an office, software - do not reduce it.

So the status is advantageous when expenses are small compared with turnover.

If expenses are large, the ordinary regime or an LLC may be more advantageous. The accountant runs the numbers.

Recording income

Every income - date, client, amount, currency - should be kept in one spreadsheet.

This spreadsheet is the basis for the declaration, for tracking the threshold and for any check.

We often set up a simple shared spreadsheet that both you and the accountant can see.

Tax residence

The status does not by itself mean Georgian tax residence. Residence depends on days and other criteria.

If you spend most of the year outside Georgia, another country may also consider you resident.

This question should be discussed with a qualified adviser before you get the status.

Taxes at home

The status in Georgia does not mean you owe no tax in your own country. That depends on the rules there.

Some countries tax their citizens or residents on worldwide income.

A double taxation agreement may help, but every case is checked by a specialist in both countries.

Social contributions

The pension and social contribution rules for an individual entrepreneur are a separate question and depend on status.

Some foreigners do not take part in this system, some do. The accountant explains the rule.

If you have social insurance in your own country, check its continuation there too.

Employees and subcontractors

If you bring in other people to work, it changes the reporting - wages and tax withholding have their own rules.

Under the status, money paid to a subcontractor does not reduce turnover.

If the team grows, an LLC often becomes more logical. We plan that in advance.

Two different activities

If you have several activities - one fits the status, another does not - it complicates the records.

Sometimes one activity is possible under the status and another under a different regime. This should be planned with the accountant.

Mixing activities by mistake can be a reason to lose the status.

Losing the status

The status can end - on exceeding the threshold, on an excluded activity or on a breach of the rules.

After it ends, taxes are calculated under the ordinary rules, and that can be an unexpected cost.

That is exactly why regular contact with the accountant is the best insurance.

Moving to an LLC

Many freelancers start as an individual entrepreneur and move to an LLC as the business grows.

We plan the move in advance: client contracts, the bank, invoices and timings.

LLC registration details are on a separate page.

Individual entrepreneur and residence

Registering as an individual entrepreneur does not by itself give a residence permit.

Business activity can, under certain conditions, be a ground for residence. The conditions change from time to time.

If residence is the goal, we choose the form with these requirements in mind.

Digital nomads

Many remote workers live in Georgia temporarily and choose the individual entrepreneur form.

For them, tax residence and their home country's rules matter most.

Digital nomad questions are also covered in the relocation section.

A contract with a foreign client

A contract with a client should be in the name of your individual entrepreneur, not personally.

The description of services in the contract must be precise. It matters when the status is checked too.

The lawyer prepares a template, in two languages, according to your activity.

Audits

The tax authority can check declarations, invoices and bank movements.

If everything is recorded and the invoices match the account, a check is simple.

In case of a check the accountant represents you, and we interpret.

Closing

Closing an individual entrepreneur is an official procedure: final declarations and ending the registration.

An individual entrepreneur that is not closed keeps its reporting obligations, even if you no longer work.

If you are leaving Georgia, we plan the closure in advance.

Status or ordinary regime

An individual entrepreneur can also work without the status, under the ordinary tax regime. Then expenses count, but the rate is different.

The accountant works out both options with your real figures - turnover, expenses, clients.

The status is often the most advantageous, but not always. The numbers decide, not the advertising.

The first month

In the first month the following are set up: registration, the status application, the bank, portal access and an invoice template.

You give clients the new details, and later payments come into the individual entrepreneur's account.

At the end of the month we check the first declaration with the accountant - after that everything becomes routine.

Portal access

Access to the Revenue Service portal is yours, but it is often managed by the accountant with your consent.

Notifications arrive on the portal - on deadlines, changes, requests. They cannot be ignored.

The accountant tracks notifications and explains the important ones in your language.

Keeping records

Invoices, contracts and bank statements must be kept for the period set by law.

A digital archive is enough, if it is organised and everything is easy to find.

If you leave Georgia, keep the archive anyway - a check can come years later.

Platform fees

Freelance platforms and payment services deduct a fee. The question is which amount counts as turnover - the full amount or the amount after the fee.

The answer depends on the documents and the form of the contract. The accountant checks this for your platform.

Keep the platform statements month by month - they are the basis of the records.

Setting money aside for tax

The turnover tax is small, but it is paid monthly. The money must be in the account on the tax deadline.

Many freelancers put a small part of every income straight into a separate account.

That way you miss no deadline and no unexpected hole appears in the family budget.

Tax in the client's country

Clients in some countries withhold tax on payment, under their own country's rules. This can come as a surprise to a freelancer.

Often the client asks for a residence certificate so they can apply a double taxation agreement.

The Revenue Service issues such a certificate, and the accountant helps you obtain it.

Myths

"1% on any income" - no: only on permitted activities and up to the threshold.

"No reporting needed" - no: declarations are regular. "I pay nothing at home any more" - that depends on the rules there.

These myths often spread online. The accountant checks each case for real.

Common mistakes

Getting the status without checking the activity. No tracking of the threshold.

Skipping a declaration because "there was no income this month". Ignoring home country rules.

A first consultation with an accountant prevents all of this.

What we need from you

A precise description of your activity: what you do, for whom and where your clients are.

Estimated annual turnover and expenses, citizenship and current tax residence.

A copy of your passport and an address option in Georgia.

Price

State fees are official. The accountant's monthly service is a separate line.

Our coordination, translation and the notary are agreed in advance.

We add nothing to our partners' prices.