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Accounting in Georgia

Accounting in Georgia

Investors who plan to start a business in Georgia will need the services of accountants in Georgia to conduct various financial procedures once they start operating the company in this country. The accounting requirements vary depending on the business form that was selected for incorporation. Still, it must be observed that in the case of simpler business structures, such as the sole traders, the procedures for accounting in Georgia are very basic, and the number of accounting documents that must be maintained and submitted is reduced. 

 Quick Facts  
Accounting in Georgia – main services

– bookkeeping,

– maintaining the company’s financial statements,

– preparing financial statements,

– tax planning,

– audit, etc. 

Financial reporting obligations in Georgia

All firms in Georgia must submit financial reports in accordance with IFRS standards.

Our accountants in Georgia offer assistance with preparing and submitting these mandatory reports. 

Taxation of companies in Georgia

 There are four main categories of companies in Georgia based on their financial situation.

Accounting and reporting obligations vary depending on the category to which the company belongs.

Accounting in Georgia for sole traders Sole traders do not have a separate legal personality from the individual operating the business and are not subject to the same accounting procedures as legal entities.
Documents needed for accounting procedures

– balance sheet,

– profit and loss statement,

– cash flow statement 

Laws regarding accounting in Georgia 

– The Law of Georgia for Accounting and Financial Audit,

– IFRS regulations,

– International Standards on Auditing

What is IFRS?

IFRS (International Financial Reporting Standards) are a set of international accounting standards that provide guidelines and rules for how companies, including those in Georgia, should prepare and present their financial statements.

Accounting when opening a business in Georgia

It is advisable to hire an accountant when starting a business in Georgia.

Please contact our specialists for details regarding accounting in Georgia. 

Tax reporting services

Our accountants in Georgia process your documentation and prepare tax declarations according to the Georgian law, providing information on tax liabilities and deadlines.

Main taxes in Georgia

– income tax,

– import tax,

– local taxes,

– VAT, etc.

VAT rate in Georgia

The standard VAT rate is 18%.

Assistance with audit procedures (YES/NO)

YES, our team of accountants in Georgia offer assistance with audit procedures.

Assistance for mergers and acquisitions or company liquidation (YES/NO)

YES

Accounting for non-profit organizations

Non-profit organizations in Georgia are required to maintain financial records and fulfill financial reporting obligations.

Why choose our accounting services in Georgia

– to ensure compliance with local regulations,

– maintaining accurate financial records,

– accounting is an essential component of company incorporation in Georgia

VAT registration Mandatory if the taxable turnover exceeds 100,000 GEL in any continuous 12-month period.

Confidentiality of accounting documents

They are not public, only controlling or supervisory bodies and individuals with the entity’s consent have access to documents.

Fiscal year in Georgia

January 1st – December 31st

Audit required for Enterprises belonging to Group 1 and Group 2 and companies classified as subjects of public interest.
Forensic accounting (YES/NO)

YES

Other taxes in Georgia

– customs duties,

– excise tax,

– withholding taxes,

– social security contributions, etc.

Services for property financial matters

– budgeting,

– tax planning,

– risk management,

– property valuation,

– due diligence, etc.

Corporate income tax rates

– 15% (standard),

– 20% (for certain financial institutions)

Invoicing

Our accountants will generate and send invoices and track their payments.

Fiscal representative services (YES/NO) YES, our accountants can act as fiscal representatives.
Payroll services (YES/NO)

YES

Financial consulting services

Our consulting services include improving businesses’ financial processes.

Accounting for small and medium entities

According to the International Financial Reporting Standards for Small and Medium-sized Entities (IFRS for SMEs)

Record-keeping

6 years

Number of double taxation treaties

58 (approx.)

The investors interested in company formation in Georgia will need to comply with a set of accounting standards and audit procedures.

It is important to know that Georgian companies have to completebookkeeping documents andfinancial records and our team of accountants in Georgia can assist on these procedures. 

Main services provided by our accountants in Georgia 

Legal entities can perform their accounting duties by hiring accountants in Georgia who can manage such activities. At the same time, such companies can also request the assistance of our accountants for services as the ones presented below:

  1. bookkeeping;
  2. maintaining the company’s financial statements;
  3. preparing financial statements. 

Our team of accountants in Georgia can assist foreign and local companies in maintaining the above mentioned documents in accordance with the applicable legislation, which is given by the Law on Accounting and Financial Audit

Investors can also receive assistance in completing audit procedures as well. Audit services can be used for measuring the performance of a business in a given time. Furthermore, our services for accounting in Georgia also include professional assistance onmergers and acquisitionsor company liquidation. 

If you need accounting services in Croatia or other countries, we can put you in touch with our local partners. Our accountants in Georgia cooperate with other teams in different countries. 

What are the reporting obligations of companies in Georgia? 

All companies in Georgia that develop commercial activities, including legal structures that do not have as a main purpose the financial gain (as it can be the case on non-profit organization) must maintain financial documents. 

This is required so that they can justify their financial situation and the ways in which the respective financial assets have been distributed/invested. Thus, all investors who will open a company in Georgiawill need to maintain financial documents. 

The manner in which this is done varies based on 2 main characteristics: 

  1. the company type under which the investor develops a business activity in Georgia;
  2. the category in which the company is included, based on its financial situation. 

According to the accounting legislation in Georgia, there are 4 main categories of companies, as per the regulations of the Law of Georgia on Accounting, Reporting and Audit

These 4 categories of companies have different reporting obligations. While for all companies it is legally required to submit certain financial documents, for others, certain documents will become optional.

In the list below, our team of consultants in company registration in Georgiahave prepared a short presentation regarding the main criteria applicable to the 4 categories of businesses: 

  • the 1st category of companies refers to legal entities that have assets with a value above GEL 50 million, revenues above GEL 100 million and which hire more than 250 employees;
  • the 2nd category refers to businesses that have assets with a value of GEL 10-50 million, revenues of GEL 20-100 million and they hire minimum 51 employees and maximum 250;
  • the 3rd category of companies have assets with a value of GEL 1-10 million, revenues of GEL 2-20 million and they hire minimum 11 to maximum 50 employees. 
  • the 4th category of companies is the one with assets of maximum GEL 1 million, assets of maximum GEL 2 million and with maximum 10 employees. 

These characteristics are very important, as they will define the manner in which accounting in Georgia will be applied to a business. 

Our accounting law firm in Georgia can, of course, provide in-depth details on all the accounting procedures that apply to a certain category. 

It must be noted that if a company meets 2 out of the 3 criteria imposed for each category, then the procedures for accounting in Georgia will begin, meaning the obligation to report specific documents. 

However, it is also important to know that for example, persons who operate an economic activity as sole traders and who, let’s say, would be included in the parameters of the 4th category, will not have to comply with the accounting procedures applicable to this category of businesses. 

This applies solely to business structures in Georgia that are considered legal entities, which implies that they have a separate legal personality than the one of the shareholder, and this is not the case of a sole trader. 

The procedures for accounting in Georgia will require companies to submit the following: 

  1. the balance sheet. 
  2. the profit and loss statement;
  3. the cash flow statement;
  4. the pdf versions of these documents, with the appropriate signatures. 

Please mind that the 3rd document is optional for the 4th category of companies; our accounting firm in Georgia can present additional information. 

Companies that are included in the 1st and the 2nd categories are required to submit the pdf versions of the financial documents with the signature of a company director. Also, for businesses that fall under the 1st and the 2nd categories, the audit procedure is required by law

Georgian law for accounting procedures

The Law of Georgia for Accounting and Financial Audit provides the legislative framework related to the manner in which companies have toprepare and present the financial statementsand keep company’s accounts

The legislation for private entities stipulates that regulations for accounting procedures are also given by international accounting standards – such as IFRS, which are adopted by the International Accounting Standards Board

Audit procedures are to be handled as mentioned by the Article 5 of the law, which states that they have to be performed following the requirements of the International Standards on Auditing

Foreign businessmen are invited to contact our team of accountants in Georgia for in-depth advice on our accounting services

When you will open a company in Georgia, you will need to maintain your financial documents in accordance with the international standards that have been adopted in this country. 

Besides the IFRSGeorgia recognizes IFRS for Small and Medium-Sized Entities, as well as financial standards that are applicable to legal entities that were set up for non-commercial purposes. 

As presented earlier in this article, certain companies will need to be audited. If you open a business in Georgia and you need to perform an audit, this procedure will be done in accordance with the International Standards of Audit

This procedure must be done be accredited individuals or companies, who have expertise in carrying out complex accounting procedures