LLC vs Individual Entrepreneur in Georgia: Which Is Right for Foreigners (2026)
Liability, the 1% turnover regime, profit tax, and setup time — a practical comparison to help foreign founders choose the right structure in Georgia.
Georgia has become one of the easiest countries in the world for foreigners to start a business, but the very first decision — what legal form to use — shapes your taxes, your personal risk, and your paperwork for years. For most foreign founders the choice comes down to two options: registering as an Individual Entrepreneur (IE) or forming a Limited Liability Company (LLC). They are taxed differently, protect you differently, and suit different kinds of business. This guide walks through the trade-offs so you can pick with confidence.
What is an Individual Entrepreneur (IE)?
An Individual Entrepreneur is a registered sole trader — you and the business are legally the same person. Registration is one of the fastest in the world: it is handled at the Public Service Hall (or through a representative by power of attorney) and is usually completed within one business day. The big draw is Small Business Status (SBS), a preferential regime that taxes turnover at just 1% on annual revenue up to 500,000 GEL; revenue above that threshold within the year is taxed at 3%. Crucially, the 1% rate applies to Georgian-sourced income, and certain professional activities (such as legal, medical, audit, and consulting services) are excluded from the regime.
What is an LLC?
An LLC (in Georgian, shps) is a separate legal entity. Its defining feature is limited liability: the company — not you personally — is responsible for its debts and obligations, so your personal assets are generally shielded. An LLC is taxed under Georgia's Estonian-style corporate model, meaning profit tax (15%) is generally due only when profit is distributed to owners, not while it is reinvested in the business. State registration costs 100 GEL for standard processing (one business day) or 200 GEL for expedited service.
Tax: the 1% turnover regime vs. profit tax
This is usually the deciding factor. An IE with Small Business Status pays 1% of turnover — a very low effective rate for a service provider or freelancer with high margins and few costs. An LLC pays 15% on distributed profit. The maths flips depending on your cost structure: a low-cost, high-margin solo business almost always pays less as a 1% IE, while a business with heavy expenses, thin margins, or one that reinvests rather than distributes profit can be better off under the LLC's profit-based model. If your turnover regularly approaches or exceeds 500,000 GEL, the IE advantage narrows and an LLC deserves a closer look.
Liability: the decisive difference
Because an IE is not a separate legal person, the entrepreneur is personally liable for business debts. For a freelancer billing clients for services, that risk is often modest. But the moment you take on inventory, employees, premises, supplier credit, or anything that could generate a claim, the LLC's liability shield becomes valuable. If protecting personal assets matters to you, that alone can justify the LLC even when the IE would save tax.
Cost, setup time, and admin burden
Both structures are quick and cheap to set up by international standards. An IE is essentially free and same-day; an LLC costs 100–200 GEL and is also typically registered within one to three days. Ongoing administration is lighter for an IE on Small Business Status (a simplified monthly turnover declaration), while an LLC has fuller bookkeeping and accounting obligations. Many founders therefore use an accountant for an LLC and self-manage a simple IE.
Which should you choose?
As a rule of thumb: choose the Individual Entrepreneur (1% Small Business Status) if you are a freelancer or solo service provider with Georgian-sourced income, high margins, low costs, and turnover comfortably under 500,000 GEL, and you are comfortable with personal liability. Choose an LLC if you need limited liability, have partners, carry real business risk or significant expenses, plan to reinvest profits, or expect turnover to grow past the small-business threshold. Many founders start as an IE and convert to an LLC as the business scales.
The 2026 work-permit caveat for foreigners
Whichever structure you choose, note an important change: since 1 March 2026 a residence permit or visa no longer automatically grants the right to work or do business in Georgia. Foreign nationals without permanent residency generally need a separate right to engage in labour/entrepreneurial activity, and self-employed foreigners face earlier enforcement deadlines. Factor this into your setup timeline. The specifics are evolving, so confirm your obligations before you register.
FAQ
Can a foreigner own 100% of a Georgian LLC? Yes — there is no local-shareholder requirement, and a non-resident can fully own and manage an LLC.
Does the 1% rate apply to my foreign clients' payments? Small Business Status applies to Georgian-sourced income; how foreign-earned revenue is treated depends on the facts, so seek advice on your specific case.
Can I switch from an IE to an LLC later? Yes. It is common to start lean as an IE and incorporate an LLC once liability, partners, or scale make it worthwhile.
This article is general information, not legal advice. For a recommendation tailored to your situation, book a consultation with Legal.ge.
